Chances of Microsoft settlement become more remote

Washington, Jan 17th, (ExpressIndia) -- Chances of a settlement in the Microsoft Corp. antitrust case were never very good, but after a week of raucous public debate over breaking up the company the possibility of a deal seemed more remote than ever.

Both sides had promised Judge Richard Posner -- the chief of the United States Court of Appeals for the Seventh Circuit acting as a private mediator in the case -- to stay quiet during the talks. Talks began after U.S. District Judge Thomas Penfield Jackson found in early November, 1999, that Microsoft had used monopoly power to harm consumers, competitors and other companies.

The quiet lasted from late last year until last week, when USA Today reported the government was going to propose breaking the company into two parts. Representatives of the Justice Department and the states expressed anger and frustration -- both privately and in public statements -- about what they said was an incorrect characterization of the discussions. Even worse from their point of view was the fact that they had been described at all. The Justice Department and the states both released statements saying the USA Today story contained significant errors.

The story inevitably sparked many others, including one by Reuters, which reported that the government planned to seek a break-up of Microsoft in some form. All of the stories appeared to be incomplete and missed important aspects of the evolving government plan, which remains secret, persons familiar with the case say. But government officials say they can't discuss the case at all without running the risk of violating a pledge of secrecy. "Because of the current posture of the case it would be inappropriate for us to debate the merits of any particular remedy," said Gina Talamona, a Justice Department spokesman.

That put Microsoft in a quandary. It, too, had promised the judge not to discuss the subject of remedies. But it faced a changed landscape, analysts say. "All of a sudden we were no longer debating whether structural remedies are appropriate," said Ed Black, chairman of the Computer and Communications Industry Association. "Instead, it's what kind of structural remedies," he said. "And I think Microsoft got very worried, very concerned, that momentum was building that structural remedies were inevitable."

On the morning the stories appeared, Microsoft announced a hastily organized press conference for 1:30 p.m. that day, without mentioning the subject. As it turned out, the subject was Bill Gates' decision to give up his post of chief executive officer to his old Harvard chum, Microsoft President Steve Ballmer.

Gates, who will remain as chairman, said he would focus on software. Ballmer's most highly quoted statement had nothing to do with his new job, though. Ballmer said it "would be absolutely reckless and irresponsible for anyone to try and break up this company." Black speculated the press conference was deliberately timed to change the direction of public discussion about a break-up. He said Microsoft was taking a "chicken little" approach, saying "the sky is falling and the industry and economy will go to hell if you touch Microsoft." But by Microsoft's lights it was faced with a deliberate press campaign by the opposition.

In a teleconference, Ballmer said he believed the talk of a break-up was purposely leaked by Justice Department officials in hopes of pressuring Microsoft to settle quickly. "I believe the leaks are deliberate. I don't think there's any doubt about that," Ballmer said. Against that background, the company will file its next papers in the case on Tuesday. If no settlement is reached, the case will continue as scheduled. Judge Jackson is set to hear oral arguments Feb. 22.