Report: DOJ, Microsoft close to settlement as time runs out

We've heard it all before, but with time running out in the Microsoft antitrust case, there is a new sense of urgency for the company to settle with the government, lest it be broken up in a manner which hasn't been seen since the old AT&T scattered to the windows in the early 1980's. And there are signs that a settlement is a very real possibility: According to a report in the Wall Street Journal this week, Judge Thomas Penfield Jackson pulled the representatives from the DOJ and Microsoft Corporation into his chambers recently and told them that time was running out. The judge's ruling on whether Microsoft broke any laws is due soon, and given the judge's findings of fact in November, such a ruling is sure to be severe.

Also bolstering settlement possibilities is talk that the distance between the two sides is slowing closing: Justice is said to have originally favored a breakup of the company, while Microsoft was obviously looking for less restrictive behavioral changes. But a settlement would end the case only if the company agreed to severe restrictions, which represents some concessions from both sides. Of course, the government tried this once before in the mid-1990's: Microsoft's alleged disregard for the resulting consent decree played a large part in bringing them back to court for the wider antitrust charges it now faces.

According to sources close to the settlement talks, Microsoft would agree to end discriminatory pricing of Windows to PC makers and publicly disclose information about the Windows source code so that other companies could more easily create improvements, add-ons, and applications. Perhaps most astonishingly, the company may actually agree to remove the deep-seated integration of Web technologies, such as Internet Explorer, from Windows, and offer them only as separate products or in a less integrated fashion with the OS. Of course, the integration of IE into Windows is the crux of the case from Microsoft's standpoint, so this will surely be the sticking point if the settlement fails to succeed.

Working against the settlement, of course, is the notion that the government and Judge Jackson will do everything they can to defeat Microsoft. Given the mindset of the judge, Microsoft may indeed be better served by waiting for the appellate round, where the company has historically fared better. But after years of bad publicity and damaging public revelations about Microsoft's business practices, the software giant may be better off simply putting an end to this tawdry affair. And if that means making a few concessions so that it can maintain its position of power in the industry, it's obvious worth it for the company to do so