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MS: No breakup - restrictions maybe

Microsoft says it considers any breakup a 'regulatory death sentence.' It would go along with 'common-sense' restrictions

Microsoft told lawmakers that any breakup of the software concern would amount to a "regulatory death sentence", but signalled that it would accept some "common-sense" restrictions on its conduct to settle the government's antitrust claims.

Microsoft previously argued that it isn't a monopoly and shouldn't be subject to any restrictions on its conduct. But it is changing its tone as settlement talks continue in Chicago and both sides prepare to return to federal court here for closing arguments next week.

"Microsoft is quite seriously trying to settle this case, and we believe a common-sense settlement should be possible," Microsoft wrote in an email to congressional offices on Friday. It rejected any breakup as "extreme and unwarranted... a regulatory death sentence while the high-tech economy whizzes by on Internet time."

The settlement effort, shrouded in secrecy since it began in Chicago late last year, has been mediated by a federal appeals court judge, Richard Posner. While a number of proposals remain on the table in that effort, participants say that without a substantial shift by one side or the other the talks are unlikely to yield an agreement before the two sides return to court for the trial's final round.

Preparing final arguments Legal teams on both sides are preparing closing arguments for Judge Thomas Penfield Jackson scheduled for 22 February; that date is expected to be pushed back if progress is being made in Chicago. Jackson, who pressed both sides to enter the talks, found Microsoft to be a predatory monopolist in a preliminary ruling delivered 5 November.

There are signs Microsoft's new wave of lobbying here is gaining traction. House Minority Leader Richard Gephardt Tuesday encouraged both sides to come to terms in the settlement talks. "Negotiation is always better than litigation," he said in response to an inquiry, adding that any agreement should "protect innovation while ensuring that the laws are enforced."

Tom Daschle, the Senate Minority Leader from South Dakota, issued a similar statement, saying "the current mediation provides both parties a unique opportunity to resolve this dispute in a way that strikes a balance between the importance of antitrust law and innovation."

A Justice Department spokeswoman declined to comment. In the past, officials have said they would only accept a settlement that restores competition to the industry and removes Microsoft's ability to repeat the antitrust violations alleged at trial. One person in the government camp said Microsoft was trying to look reasonable without putting anything significant on the table.

Microsoft has sharply boosted its political contributions since its latest antitrust problems began two years ago, initially favouring Republicans but more recently giving to Democrats as well. The Redmond, Washington software maker has built a strong presence in Washington, countering similar efforts by competitors.

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