Talks between Microsoft a group of 20 state attorneys general and the U. S. Department of Justice broke down on Saturday, according to DoJ officials, with no future discussions planned going forward. Settlement talks that started last week temporarily halted a planned antitrust battle due to be launched against Microsoft by the DoJ and the states on Thursday.
The sides agreed to meet on Friday and through the weekend in hopes that an agreement could be reached that would avert a historic antitrust lawsuit against Microsoft. The DoJ and the states agreed to hold back on filing their suit at the eleventh hour and Microsoft agreed to delay the shipment of Windows 98 to computer makers by three days - from Friday, May 15, to Monday, May 18 - while the sides met for settlement discussions.
In a short statement released by the DoJ on Saturday, the government said, "discussions between the Justice Department, a coalition of states attorneys general and Microsoft ended today [Saturday] without resolution. At this time they are not expected to resume."
Justice department and state officials were unavailable for comment at press time.
But Microsoft officials said the software company could not agree to some of the Justice Department's demands. Among the items cited by Microsoft officials was the DoJ's request that they include Netscape's Navigator browser in Windows 98. It is unclear what exactly led to the talks breaking down. Reportedly the talks ended when Microsoft withdrew one of its concessions from last week - one that would have allowed computer makers to have more customisation over the desktop interface of the computer. Other sources say the talks may have broken down over the integration of the Internet Explorer browser into Windows 98.
In a statement issued late Saturday, Microsoft said it expects a suit to be filed against it Monday, calling such an action "without merit and (it) would hurt consumers and the America software industry."
Among the concessions that government regulators demanded, according to Microsoft, were that the company give up its right to display the Windows user interface, and give up its right to display Web browsing functionality as a part of Windows.
Joel Klein, the DoJ's assistant attorney general for antitrust, along with officials from Texas, Iowa and Connecticut represented the government during the talks. Microsoft was represented by Bill Neukom, the company's head lawyer, and other officials.
At this time it appears likely that a lawsuit will be brought against Microsoft today, the day the company is scheduled to ship Windows 98 to OEMs in the US. If a suit is filed against Microsoft, it would rank in importance with historic antitrust lawsuits previously filed against AT&T and IBM.
The states and the DoJ have been investigating Microsoft for more than a year, with sources close to the case saying that the issues likely to be part of a suit against the company include: the integration of Internet Explorer with Windows 98, restrictions placed on OEMs about how they might alter the Windows desktop interface, contractual relationships Microsoft has with Internet service providers, the integration of software applications into Windows, and Microsoft contracts that limit and control the types of software or content that can be added to the desktop interface shipped with each copy of Windows on a PC.
Microsoft has fought back, holding a rally in New York and sending letters to the DoJ and Wall Street analysts, even publishing essays arguing that it should be free to innovate its software going forward.