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Microsoft, Justice Department Near Possible Settlement Deal

By Jube Shiver Jr.
LOS ANGELES TIMES -- WASHINGTON

As the government’s antitrust trial against Microsoft Corp. enters a lengthy recess after 64 days of testimony, experts say the software giant’s near-disastrous defense has made the prospect of a settlement increasingly likely.

The government and Microsoft publicly reject any notion that they are interested in negotiating. But both sides -- while vowing to appeal any decision against them all the way to the U.S. Supreme Court -- are under pressure to talk as they confront a crucial month-and-a-half recess during which they will assess their options and prepare for the trial’s end game.

Legal experts and officials close to the government and Microsoft say it is in the both parties’ interests to negotiate. It seems increasingly likely, these experts say, that U.S. District Judge Thomas Penfield Jackson will uphold at least some of the government’s antitrust charges -- a move that could make the software giant more vulnerable to costly private antitrust lawsuits that could drag on for years.

“This case started because the government wanted more than Microsoft wanted to give ... but Microsoft may be more willing to talk” now given their poor trial performance, said Harry First, an antitrust professor at New York University Law School.

Even ardent Microsoft supporters -- such as University of Virginia economist David E. Mills -- say the company has suffered “embarrassing events” in court that could push it to the negotiating table. “It’s always possible that somebody will come up with an exit strategy that will be agreeable,” Mills said, adding such an outcome would be preferable to a ruling that places Draconian regulatory restrictions on Microsoft.

“I think there’s going to be some kind of compromise because right now the cards look stacked against Microsoft,” said Jonathan Haller, a technology industry expert for Current Analyst, a Sterling, Va., financial consulting company. “They are going to have to pay a fine or give competitors access to their code and back off on their aggressive industry practices” in order to placate the government.