Microsoft Settlement Talks Collapse

Despite an intensive effort over the past few weeks between Microsoft Corp., the Justice Department and 19 states to settle a landmark antitrust lawsuit, the software giant said Saturday negotiations had proven unsuccessful.

In a statement released Saturday afternoon, Richard Posner, chief judge of the U.S. Court of Appeals, said he had called off discussions. Posner took the lead role in mediating settlement talks at the request of U.S. District Judge Thomas Penfield Jackson, who is hearing the government’s antitrust suit against Microsoft (MSFT).

“I regret to announce the end of my efforts to mediate the Microsoft antitrust case,” he said in a brief statement.

Posner went on to say it became clear the differences between the two sides were “too deep-seated to be bridged.”

Saturday’s news means Jackson will likely issue a ruling in the case early next week. He had been poised to rule on the case weeks ago, but held off after Posner expressed hope that a settlement could be reached.

Jackson’s next step is to issue the conclusions of law. That will be followed by additional hearings, after which he is likely to detail the sanctions Microsoft will face.

In a brief statement, Microsoft Chairman Bill Gates expressed disappointment that the talks had ended. Still, he insisted his company negotiated with the government in good faith.

“We went the extra mile to resolve this case, but the government would not agree to a fair and reasonable settlement that would have resolved this case in the best interests of consumers and the
industry,” Gates said.

He went on to say Microsoft did offer concessions, but refused to elaborate. Last week, Microsoft made its most sweeping proposal to date, offering to split its Internet browser
software from its Windows operating system, end preferential pricing for favoured customers and make it
easier for rivals to write software for Windows.

Microsoft President and Chief Executive Officer Steve Ballmer again expressed confidence in the company’s case despite the fact Jackson earlier wrote the company was guilty of abusing its monopoly power.

(Reuters news service contributed to this report)