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Microsoft seeks to settle
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March 24, 2000: 7:53 p.m. ET
Software giant offers its terms to resolve the government's antitrust case
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NEW YORK (CNNfn) - Microsoft on Friday made an offer to settle its historic antitrust case with the government, after the judge presiding over that case said he was ready to hand down a final ruling as early as next Tuesday, according to sources familiar with the negotiations.
U.S. District Judge Thomas Penfield Jackson imposed the deadline during a private meeting with lawyers earlier this week in Washington, prompting Microsoft's last-minute proposal, sources said.
Government officials are currently reviewing the details of Microsoft's offer. Executives at Microsoft (MSFT: Research, Estimates) declined to comment on the matter. The company has been under increasing pressure to settle the case since Jackson labeled it a monopolist late last year.
News that the two sides in the case were nearing a resolution broke earlier this week, sending Microsoft shares sharply higher. The stock edged down 3/16 to 111-11/16 on heavy volume Nasdaq trade Friday.
 Since Jackson handed down his "findings of fact" in the case last November- in which he said that Microsoft has monopoly power in the market for PC operating systems and harmed consumers through its anti-competitive behavior - Microsoft has said it was interested in settling the case.
However, the Redmond, Wash.-based software giant has been adamant in its refusal to accept a break-up of the company as an alternative.
The two sides have been working toward a settlement, meeting separately with Judge Richard Posner, a Chicago-based U.S. appeals court judge appointed by Jackson as a mediator in the case.
Negotiations were strained at the outset, marked by Microsoft Chairman Bill Gates' defiant posturing and the Justice Department's "personalization" of the case, saying that Gates personifies everything they think is wrong with the company. In January, Gates passed the torch to Steve Ballmer, who assumed the role of chief executive and began overseeing the negotiations.
Some of the attorneys general from the states involved in the suit have said they would seek harsh remedies against Microsoft should the judge, in his "conclusions of law" ruled that the company violated antirust laws. And several trial watchers have characterized the Justice Department as leaning toward a breakup as well.
Others have said that the government lawyers have been backing away from proposals to break up Microsoft.
"The prospects all along for structural relief were somewhat remote," said Mark Schechter, a former Justice Department official who participated in a 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," Schechter said.
The two sides are expected to meet with Jackson over the weekend to discuss Microsoft's proposal, in which it agrees operational changes including setting equal pricing for its Windows operating system to PC makers; giving software developers more access to the Windows source code; and separating its Internet Explorer Web browser from the operating system, according to a report published Friday by Dow Jones news service.
However, ABC News, citing an anonymous source, said Microsoft had agreed to government oversight of some of its business practices, but not to limits on the features and functions it could add to its Windows software.
In its complaint against Microsoft, the government said that, by integrating the Explorer browser with Windows operating system, Microsoft used its operating-system monopoly to thwart competition in the Internet browser market, an issue that was particularly contentious during the trial.
Whatever the specifics of Microsoft's proposal, market analysts are seeing the outcome of the weekend's discussions as critical to the company's future.
If the two sides cannot come to an agreement and Jackson holds to his Tuesday deadline and hands down a ruling that Microsoft has violated antirust laws, it could have a devastating impact on its stock, according to Goldman Sachs analyst Rick Sherlund.
"I think that would take the stock down a lot," Sherlund said in an interview on CNNfn's Moneyline News Hour Friday. "It would open them up to massive follow-on litigation." 
-- from staff and wire reports
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