MS trial: Legal eagles' meeting bears no fruit

Microsoft and the US government officials will go back to the negotiating table next Tuesday in a bid to thrash out a settlement plan.

Microsoft chairman Bill Gates this week said the company had made a settlement offer to the Justice Department and states -- an offer described by some state attorneys general as inadequate.

"We'll have talks on Tuesday," Attorney General Patricia Madrid told reporters on Thursday. Madrid was one of at least six attorneys general, including Tom Miller, who met for an hour at the Washington Court Hotel this morning. They discussed the content of a settlement offer from Microsoft, but the meeting broke without a firm decision.

Miller is heading up the Microsoft case on behalf of the states suing the software giant. He briefed his colleagues at a meeting of the National Association of Attorneys General. When the meeting wound up, the attorneys general were uncharacteristically close-mouthed: "The defendant has the right to have none of the [settlement] facts disclosed," Miller said.

Earlier reports said that under Microsoft's proposal, the company would change the wording of its licensing contracts with PC makers and Internet service providers to eliminate the requirement of using Microsoft products exclusively or near-exclusively.

But industry observers don't hold out much hope about reaching an accord. Dwight Davis, an analyst at Summit Strategies, said he spoke this week with Microsoft legal consultant Charles Rule, of the law firm Truly, Covington and Burling. Rule, he said, is not optimistic. "I'd be astonished if a settlement came out of this," said Davis.

Settlement terms high on the DOJ's priority list -- such as the control of Windows code, contractual changes and a possible company breakup -- would never be considered by Microsoft, Davis said.

"He's comfortable with the posture of the company, especially the written testimony," Davis said. "He really doesn't feel the theatrics have played well except to an eager media." Assuming a settlement is only a remote possibility, both sides now prepare for a hearing next week on rebuttal witnesses. Sources said both sides have submitted lists but have not disclosed who was on them.

Observers believe Microsoft's rebuttal list will focus mainly on witnesses who demonstrate there is strong competition in the market -- specifically after the America Online, Netscape and Sun merger and business partnership.

Nineteen states and the federal government are suing Microsoft for allegedly abusing a monopoly in the market for software used to operate personal computers. The leader of the states, Attorney General Tom Miller, declined to comment after Thursday's meeting of the attorneys general.


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