Skeptical government lawyers consider an
11th-hour offer from the Microsoft Corp. to settle its antitrust
trial so inadequate in important areas that there were no immediate
plans to resume negotiations in Chicago, people close to the case
These sources did not rule out the possibility of talks
resuming, and the government continued to evaluate the proposal by
Microsoft to end the case before Tuesday, when the trial judge has
threatened to announce his verdict.
U.S. District Judge Thomas Penfield Jackson, who has hinted he
will rule strongly against Microsoft, has told lawyers in a private
meeting that he will deliver his ruling that day unless there is
progress in settlement talks being organized by U.S. Circuit Judge
Richard Posner in Chicago.
The government on Saturday again reviewed Microsoft's latest
offer, which published reports said included promises to separate
the company's Internet browser software from its dominant Windows
operating system. The proposal, faxed on Friday, was sufficiently
complex that some of the Justice Department's top technical experts
were evaluating it.
But there were new signs suggesting no deal would be struck
successfully before Jackson's deadline.
Lawyers on all sides had no immediate plans to fly to Chicago
for lengthy negotiations, and Microsoft already is considering its
witnesses for the next stage of the trial after the verdict when
Jackson decides the company's punishment.
"I was pessimistic a while back, and I remain skeptical," said
Robert Litan, a former senior Justice official who negotiated with
Microsoft in an all-night session in a related 1994 case.
The Justice Department has backed off proposals to break up
Microsoft to restrain what the judge has characterized as the
company's abuse of its monopoly power over the technology industry.
But it was expected to demand some limits on what features
Microsoft can add to Windows, out of fear the company could
overwhelm smaller rivals offering some fledgling technology that
threatens Microsoft's lucrative flagship Windows software.
"If they're going to be hung up on anything, it will be that
tying issue," Litan said. "If Justice is insisting on some sort
of future judicial determination whether a new (Windows) product
includes an unlawful tie, I can't see Microsoft going for that."
The government also is restrained in seeking a negotiated
settlement by expectations of a favorable ruling from Jackson. He
issued the first phase of his verdict in November with blistering
findings that accepted nearly all the allegations against
In the upcoming phase, Jackson must identify which federal laws,
if any, Microsoft violated.
"The plaintiffs are a bit of a prisoner of exaggerated
expectations that the process to date has created," agreed William
Kovacic, an antitrust expert at George Washington University who
has closely followed the trial.
Kovacic said Assistant Attorney General Joel I. Klein would
"have to stand in front of a sea of microphones and cameras and
explain why this solution provides suitable value for the
litigation position he had acquired. He's going to have to tell
people why he compromised his claim in return for this result, and
I can assure you there will be many skeptics."
Litan said the Justice Department, if it were to agree to
lenient terms for Microsoft, "would be susceptible to the charge
of winning the battle and losing the war."
The government's negotiating position also is tainted by its
past experiences. Microsoft Chairman Bill Gates, who played chess
on some of the earliest computers in middle-school, was thinking
moves ahead of government lawyers in a previous court fight years
Microsoft proposed agreeing to never require Windows customers
to also buy any of its other products. But the company's lawyers
also considered adding a provision that Microsoft would never be
blocked from "developing integrated products which offer
Gates bristled after reviewing a draft the night before
negotiations resumed. He ordered his lawyers to remove the last
four words, a subtle change that would return to haunt the
Justice accepted the provision as part of its 1995 consent
decree, and Microsoft later claimed the language allowed it to
bundle its Internet software into its Windows operating system a
core complaint in the government's current antitrust case.
Litan said such loaded clauses are "all they're going to be
looking for" in the government's current review of Microsoft's
offer. "They don't want to get snookered."