US Report: Settlement negotiations could change Windows 98

As Microsoft delays shipment of Windows 98 to PC makers at least until Monday while it discusses a possible settlement with state and federal antitrust officials, attorneys for both sides are huddled in negotiations.According to attorneys close to the negotiations, Assistant Attorney General Joel Klein and state attorneys general from Connecticut, New York and Iowa are pushing a series of concessions from Microsoft in lieu of filing against the software giant.

As Microsoft delays shipment of Windows 98 to PC makers at least until Monday while it discusses a possible settlement with state and federal antitrust officials, attorneys for both sides are huddled in negotiations.

According to attorneys close to the negotiations, Assistant Attorney General Joel Klein and state attorneys general from Connecticut, New York and Iowa are pushing a series of concessions from Microsoft in lieu of filing against the software giant.

Though details are subject to change by the hour, Microsoft has tentatively agreed to do away with all exclusionary agreements related to its operating system, sources said. Under that scenario, computer makers would be free to offer any browser they wished on any computer they sold, free of interference from Microsoft.

Microsoft claims computer makers have always had that right but the Justice Department has claimed otherwise. The case it filed against Microsoft last October included statements from a Compaq official who said Microsoft threatened to revoke its license for Windows operating systems if it featured a browser made by rival Netscape on its computers. Microsoft, facing similar accusations over its use of a "channel bar" on its Internet Explorer browser, said in early March it would no longer require exclusivity agreements from companies featured on that computer control panel.

Antitrust officials are weighing a request that they do not interfere with Microsoft's ability to control the "boot-up sequence," or the order in which different sounds, icons and graphics appear on the computer desktop. Though Microsoft officials say they need the right to dictate such interface details in order to preserve the integrity of their product, critics say such restrictions give Microsoft impermissible power over what consumers see, use and buy over the Web.

By controlling the use of "bookmarks," desktop icons and channels such as those found on Microsoft's Internet software, the company could soon control the future of online commerce. Though estimates vary, The US Commerce Dept. recently estimated more than $300bn (£184bn) in goods and services will likely be sold over the medium by the year 2002.

John Chapman, an attorney at the Computer and Communications Industry Association in the US, said news of a pending settlement does not bode well for groups such as his. CCIA and others claim strong measures are necessary to keep Microsoft from illegally using its 95 percent share in PC operating systems to put rivals out of business.

"It's a mistake for the Justice Department and the states to try to accommodate Microsoft at the 11th hour and not fulfil their responsibility to file the case and extract a far more favourable settlement," he said. "The mistake they made two years ago was to take a quickie from Microsoft."

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