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Microsoft Offers Detailed Settlement Proposal

Microsoft offered some concessions Friday to the U.S. government in an attempt to settle its landmark antitrust case prior to an expected ruling Tuesday, but U.S. lawyers may not be interested in the technology megacorporation's proposal.

It was unclear what was fully contained within the document, which was faxed to government lawyers Friday and was described as technically complicated. Government lawyers carefully reviewed the offer until late Friday night then decided the proposal did not merit flying to Chicago on Saturday, said the sources, who spoke on condition of anonymity.

The government was expected to ask Microsoft through the weekend to clarify some of its proposals. Face-to-face discussions still could take place on Sunday or Monday.

Though no details of the agreement have been released, ABC News — citing an anonymous source — reported that Microsoft agreed to government oversight of some of its business practices but not to limits on what features or functions it could add to its dominant Windows software.

ABC also reported that Microsoft offered to release some of its prized source code — the blueprints of software — but insisted that the company not be required to admit it violated the law.

Such an admission could be used against Microsoft in roughly 115 related private lawsuits that have been filed against the software giant.

Dow Jones news service, also citing anonymous sources, reported late Friday that Microsoft agreed to separate its Internet browser software from its dominant Windows operating system.

The Tuesday deadline was imposed by U.S. District Judge Thomas Penfield Jackson during a private meeting with lawyers earlier this week in Washington. Penfield, who has compared Bill Gates' control of the software industry to John D. Rockefeller's oil monopoly, is widely expected to find that Microsoft violated the Sherman Anti-Trust Act of 1890 if the case comes to a verdict, and his deadline renewed the urgency of the stalled Chicago negotiations.

The negotiations are being overseen in Chicago by a respected federal appeals judge, Richard Posner. Both sides have met separately with Posner in Chicago for months but have only met together for one introductory session in late November. By early Friday evening, none of the top lawyers in the case had traveled to Chicago, and it was unclear whether face-to-face talks were expected over the weekend.

Posner has demanded strict secrecy about the talks, and lawyers for Microsoft, the Justice Department and the 19 states involved in the suit declined to speak publicly about the settlement offer or their plans for the weekend.

"We are not going to comment on anything related to potential mediation efforts," Microsoft spokesman Mark Murray. "We believe it's important for any mediation efforts to proceed in a confidential manner."

A spokeswoman for the Justice Department said she would have "no comment about the mediation process."

But sources close to the investigation say a break-up of the mammoth software company is unlikely.

Though judge has alleged the company has abused its monopoly power over the technology industry, other sources close to the antitrust case have indicated government lawyers are backing away from proposals to break up Microsoft.

"The prospects all along for structural relief were somewhat remote," said Mark Schechter, a former senior Justice official who participated in 1994 settlement talks with Microsoft in a related case. "The issue on the table is whether Microsoft will make a proposal with sufficiently extensive behavioral provisions to satisfy the government's concerns."

Industry sources and antitrust experts following the case said they believe the government — no longer pursuing a breakup — may try instead to impose restrictions on what new features or technologies Microsoft can add to its dominant Windows software.

The government has alleged Microsoft illegally bundled its own Internet browser software with Windows to compete with popular rival software from the former Netscape Communications Corp.

The Justice Department and 19 states sued Microsoft in 1998, and experts estimate it could take until October this year for the case to be completed.

Last Nov. 5, at the end of the first phase in the trial, Judge Jackson found that Microsoft held monopoly power in its Windows computer operating system and had used it to harm consumers, rivals and other companies. But he stopped short of any legal conclusions.

On Feb. 22, at a hearing to help him decide whether Microsoft's actions violated the law, the judge likened the software giant to the sweeping Standard Oil monopoly, which was broken up by government trust busters nearly 90 years ago.

Commenting on the control of Microsoft tycoon Bill Gates over the Windows operating system used on most personal computers, Jackson noted its likeness to the 19th century monopoly of oil baron John D. Rockefeller.

"Mr. Rockefeller had fee simple (absolute) control over his oil," Jackson said. "I don't really see a distinction."

The Sherman Antitrust Act of 1890, which Microsoft is accused of violating, was prompted in large part by the abuses of the Standard Oil Trust.

Microsoft has made clear that it would find a break-up unacceptable.

The AP and Reuters contributed to this report.

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