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MSFT settlement closer?
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March 23, 2000: 11:45 a.m. ET
Negotiations could reportedly lead to restrictions, rather than a break-up
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NEW YORK (CNNfn) - The pace of talks between Microsoft and the government has picked up and a settlement of the landmark antitrust case may now be possible, according to reports Thursday.
Citing unnamed sources close to the case, the Wall Street Journal said the talks still could collapse but that the division between the sides is narrowing. It said the settlement push now focuses on developing restrictions on Microsoft's conduct, rather than restructuring or breaking up the world's dominant maker of personal computer software.
 The restrictions would be aimed at preventing Microsoft (MSFT: Research, Estimates) from using its market power over personal-computer makers and software and Internet companies. If approved by the federal judge overseeing the case, a settlement would end the antitrust action against the Redmond, Wash.-based company.
A Department of Justice spokeswoman told CNNfn.com that the DOJ would not comment on the mediation process, except to say that the report "shouldn't be taken seriously."
However, a source familiar with the case told CNNfn that Judge Thomas Penfield Jackson called lawyers for Microsoft, the Justice Department and 19 states to his chambers Tuesday for a settlement status conference.
Assistant Attorney General Joel Klein, whose office is overseeing the case, testified Wednesday in a congressional hearing that any possible settlement must equal the gravity associated with Microsoft's alleged anti-competitive deeds.
"The findings of fact reveal a serious pattern of anti-competitive conduct," Klein said. "I think that a remedy ought to be commensurate with those practices." Klein declined to comment further on the case's progress.
Sources close to the case told the Washington Post that Jackson-appointed mediator Judge Richard Posner should be credited in bridging the gap between both sides and seeking remedies. Posner, of Chicago, is the chief appellate judge of the Seventh Circuit.
If the continuing talks lead to a resolution, the trial would end, but if negotiations fail, Judge Jackson will hand down his conclusions of law.
Judge Jackson is expected to issue his final ruling in the case shortly. In his preliminary ruling last November, he found that Microsoft used its monopoly power to stifle competition for its Windows software and tried to extend that dominance to the Internet.
The company has disputed the findings and said it would appeal if it loses the case.
The news spurred investor interest, sending shares zooming 7-11/16 to 110-15/16.
"Any time there's uncertainty, it puts pressure on the stock," said Paul Dravis, managing director of Banc of America Securities. "So, if you think that uncertainty is going to be removed from the story, then you're going to have a positive reaction."
"A settlement would be good, a ruling would be bad, both for the government and Microsoft. If there was a ruling, it would probably be negative, Microsoft would appeal it and there would be protracted litigation and in the short term, more third-party litigants pursuing Microsoft. On a settlement, you don't have to worry about either one of those issues," Dravis said. 
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