Microsoft, DOJ Close to Settlement Deal?

Microsoft Corp. and the U.S. Department of Justice (DOJ) have apparently reached a tentative agreement to settle
the government’s ongoing antitrust suit against the software maker, according to published reports.

According to the reports, the two sides have negotiated a deal which will not require Microsoft to make changes in its software, but
carries some provisions intended to alter the company’s business practices.

However, the agreement appears to have been reached without help from the 18 states which are also pursuing the case, many of which
have taken a much harder stance against Microsoft’s antitrust violations than the federal government has. According to reports, the
states are now reviewing the settlement agreement. But several states last week signaled the possibility that they may choose to
pursue the case without the federal government when they hired Brendan Sullivan, one of the nation’s top trial lawyers.

The settlement reportedly does not prohibit Microsoft from bundling software like its Web browser or media player with its Windows
operating system — one of the issues that launched the three-year-long case in the first place. However, it does call on the
company to give PC manufacturers more freedom in pre-installing non-Microsoft software on their machines and require Microsoft to
disclose certain technical information — presumably APIs — to rivals.

The settlement also reportedly includes terms of a settlement Microsoft proposed last week, including an agreement not to threaten
or retaliate against any software or hardware maker supporting rival software makers’ products, and a ban on forced upgrades of
Windows. Microsoft suggested a time limit of four years on the deal, but the DOJ has reportedly negotiated that period up to five
years, with a provision to extend it for two more years if Microsoft violates the terms. The settlement agreement would also
establish a three-person review committee to oversee compliance with the terms of the agreement.

U.S. District Judge Colleen Kollar-Kotelly is overseeing the case, and has imposed a Friday deadline for all sides to settle the
case. Failing that, she will oversee trial proceedings to determine what penalties to impose on Microsoft’s business practices and

If Microsoft and the DOJ agree to settle the case, Kollar-Kotelly will still have to review the settlement under the Tunney Act. If
the states are not happy with the settlement, they could choose to challenge it during the judge’s review. Alternatively, the states
could choose to pursue the case on their own.

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