U.S. Says Microsoft Settlement Is Best It Can Get

Microsoft Corp.

Attorneys for Microsoft and the federal government are seeking to persuade U.S. District Judge Colleen Kollar-Kotelly that their settlement is in the public interest despite objections from nine states seeking harsher sanctions.

The settlement terms "go beyond those that we would likely have obtained had we litigated," said Justice Department attorney Philip Beck of the nearly four-year-old case.

Kollar-Kotelly did not give any indication of whether she is inclined to accept, reject or modify the settlement, but questioned some of its features in the opening hour of a hearing that is expected to go into Thursday.

She voiced concern about whether the settlement's definition of some types of software was too narrow and whether the settling parties were correctly interpreting an appeals court decision in June which upheld a lower court's finding that Microsoft had illegally abused its monopoly.

Under the settlement proposal reached in November, computer makers would get more freedom to feature rival software on the machines they sell. It also would require Microsoft to share some of the inner workings of its Windows operating system with rival software makers.

Nine of the 18 states in the lawsuit agreed to sign on to the settlement. But another nine -- California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia -- still are pursuing the case, saying the settlement is too weak.

Kollar-Kotelly's endorsement of the settlement is required under a federal law called the Tunney Act that governs federal antitrust settlements.

Separate hearings on the calls for harsher remedies are due to start next Monday, although Microsoft has asked for a two-week delay to study some refinement of the demands that include selling a version of Windows that can be stripped of features like the Internet browser.

Beck said the Justice Department could not have demanded any sanctions designed to take away Microsoft's Windows monopoly unless it could prove that competitors, like Netscape with its Web browser, would have succeeded but for Microsoft's behavior.

But Kollar-Kotelly said the appeals court had set that as the standard for breaking up the company. The appeals court in June ruled against breaking up the software giant.

The judge also wondered if the settlement's definition of "middleware" was broad enough and wanted more details of a three-member panel that would oversee the settlement.

Middleware software, such as an Internet browser, sits between the computer users and the operating system and could be a threat to Microsoft's Windows.

"I do want to know whether you are taking a different approach (from the appeals court) and if (so), I want to know why," Kollar-Kotelly said.

Judges typically give deference to the Justice Department in antitrust settlements but the Microsoft settlement confronts Kollar-Kotelly with an unprecedented situation, according to legal experts.

That's because the courts have already ruled against Microsoft. All previous settlements under the Tunney Act, in contrast, have involved cases that never got to trial or a verdict.

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