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MSFT decision postponed
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March 28, 2000: 6:41 p.m. ET
Justice Department and states request 10-day extension to seek settlement
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NEW YORK (CNNfn) - The Justice Department and the 19 states suing Microsoft have asked the federal judge overseeing the case to extend his deadline for issuing a verdict by 10 days so they can continue settlement talks through a federal mediator, sources close to the case told CNNfn.
U.S. District Judge Thomas Penfield Jackson had been expected to hand down his conclusions of law in the landmark antitrust case Tuesday. However, a clerk in the U.S. District Court for the District of Columbia said that would not occur.
"(The delay) has come from chambers, but that is the only guidance I have," said Joe Alexander, administrative assistant to the chief judge. "The conclusions of law will not be issued today."
In "findings of fact" issued Nov. 5, Judge Jackson found that Microsoft had used monopoly power to deprive consumers of software innovation, distort competition, and harm competitor Netscape Communications Corp. If no settlement is reached, Judge Jackson will follow those findings of fact with a ruling on whether Microsoft violated antitrust law. The judge is widely expected to come down heavily on Microsoft if he issues those conclusions of law.
An industry figure said the mediator appointed by Jackson -- U.S. Court of Appeals Judge Richard Posner in Chicago -- did not want to give up now, having invested four months in trying to bring the case to a conclusion.
"This is a strong-willed mediator who does not want to declare the mediation process dead yet," said Ken Wasch, president of the Software and Information Industry Association.
"The delay is a positive sign, because I think they will need that much time to achieve a consensus," said George Washington University Law School professor Bill Kovacic, who has followed the Microsoft case closely.
To reach a settlement, Microsoft, the federal government, and the states will have to draft an agreement in principle about how the software giant will change its behavior, Kovacic said. Then, the opposing sides will face the much longer and more complex task drafting those principles into the language of a consent decree.
Justice Department attorneys distrust Microsoft because they feel the company worked around a 1995 consent decree designed to prevent Microsoft from using its dominance of PC operating systems to crush competition in the Web browser market. The 1995 consent decree prohibited Microsoft from bundling two separate software products by requiring customers to buy one as a condition of getting the other. Microsoft responded to that restriction by integrating its Explorer browser into the Windows operating system and marketing them as one product.
"The Justice Department's awareness of Microsoft's adroitness and adaptability is much keener than it was in 1994, when the previous consent decree was being negotiated," Kovacic said. "In addition, the group of attorneys at Justice is much more knowledgeable about the software industry than they were six years ago."
"If you don't trust the other person, you don't negotiate well with them," said Robert Lande, a professor at the Baltimore School of Law. "Microsoft has had two years to figure out a behavioral remedy that has lots of loopholes and escape clauses in it."
To make matters worse, there have been widespread reports of dissention between the state attorney generals about what remedies to demand from Microsoft, further complicating the settlement process.
Antitrust experts said that the federal government and the states are likely to demand that Microsoft sell Windows to PC makers on equal terms, rather than offering less favorable terms to companies that cooperate with Microsoft's competitors. In addition, the government is likely to insist that Microsoft to reveal more of Windows' application programming interfaces, or APIs. APIs perform an important role in helping programmers develop new applications to run on an operating system. Other potential elements of a settlement include prohibiting Microsoft from enticing competitors to forego product development efforts and requiring the software giant to offer a version of its Windows operating system that can hide or suppress the Explorer Web browser.
If Microsoft fails to reach a settlement and Judge Jackson finds that the software giant violated antitrust law, then the proceedings would enter a remedy phase where the court would determine what sanctions to take against the software giant. The most extreme measure that has been discussed by federal prosecutors and the states is a breakup of the company into several independent units, although that outcome now is considered to be unlikely.
 Microsoft stock closed Tuesday up 1/4 at 104-5/16, showing mild optimism that a settlement can be reached.
-- CNNfn's Steve Young and Reuters contributed to this report. 
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