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Microsoft at the table
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July 23, 2001: 3:50 p.m. ET
Software maker reportedly seeks antitrust resolution with U.S., states
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NEW YORK (CNNfn) - Executives and attorneys of Microsoft will meet in Washington this week with U.S. Justice Department and state officials to discuss a possible settlement of the company's ongoing antitrust lawsuit, according to published reports.
None of the parties involved would comment on the meeting, news of which was leaked to the Wall Street Journal and first reported in its Monday edition.
Citing sources familiar with the matter, the Journal said the talks are expected to focus largely on procedural issues, and mark the first across-the-table encounter between the parties since a unanimous federal appeals court last month overturned a lower court's antitrust ruling to split Microsoft (MSFT: Research, Estimates) into two companies as a remedy for anticompetitive practices.
On June 28, the U.S. Court of Appeals for the District of Columbia overturned a lower court's order that Microsoft be broken into two companies and remanded other parts of the judge's order to the U.S. District Court in Washington for consideration by a different judge.
While the appeals court overturned the breakup order, it left open the question of whether Microsoft acted illegally when it tied its Internet Explorer Web browser to its dominant Windows operating system, ordering the lower court to reexamine that issue.
Microsoft has expressed its willingness to settle the matter out of court, taking steps including changing its contracts with computer manufacturers to allow them to remove Internet Explorer from the versions of Windows they install on new PCs.
But at the same time, Microsoft has asked the appeals court to reconsider its conclusion that the company illegally "commingled" computer code of its Internet Explorer browser and the Windows operating system, which was key to the government's case.
Microsoft also has told the appeals court it still is considering whether to seek a Supreme Court review of its decision and will notify the court of its intention to do so within seven days of its disposition of its request for a rehearing on the commingling of code question.
Some legal experts have interpreted Microsoft's latest moves as part of a strategy aimed at delaying the enforcement of any anti-enforcement penalties until after the release of its newest operating system offering, called Windows XP.
Scheduled for release Oct. 25, it integrates features such as instant messaging, streaming media and Internet authentication capabilities into the operating system. Windows XP is part of a broader strategy Microsoft calls .NET, through which it is trying to extend its Windows franchise by giving consumers access to Microsoft programs and services over the Internet.
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At least two of the state attorneys general involved in the case – Richard Blumenthal of Connecticut and Tom Miller of Iowa – have said they're concerned about Microsoft's plans for Windows XP and .NET, which they said signify that the company continued to engage in anticompetitive practices.
They said they are worried about the bundling of new features in XP, which they believe is similar to how Microsoft bundled Windows and Internet Explorer, leading to the antitrust lawsuit.
Although they have not said they intend to do so, neither Blumenthal nor Miller has ruled out the possibility of asking a court to temporarily bar Microsoft from selling Windows XP until the antitrust questions can be addressed, a scenario some legal experts say is unlikely if the current court proceedings are to drag on past the scheduled launch date.
"Microsoft wants to read [last month's] verdict almost literally. But they have been adjudicated to be a monopolist," said Andy Gavil, Howard University law professor.
"The timeline is getting very tight now to do anything about Windows XP. It's in no hurry to do anything before Windows XP is in user's hands."
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Under the current time frame established by the appeals court, the case will not be returned to the U.S. District Court in Washington until Aug. 12. giving the two sides the opportunity to file additional legal motions or even take the appeals court decision to the U.S. Supreme Court.
The Justice Department has asked the appeals court to expedite that mandate, citing "the exceptional importance of this case and the strong public interest in prompt entry of a decree providing an effective remedy for Microsoft's illegal conduct."
Microsoft on Friday formally opposed the DOJ's request, asking the appeals court first to address the company's request for a rehearing of its conclusion that it illegally "commingled" computer code of its Internet Explorer browser and the Windows operating system.
Shares of Microsoft (MSFT: down $2.25 to $66.93, Research, Estimates) were down more than 3 percent in afternoon Nasdaq trade Monday. 
--from staff and wire reports
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