US Report: Antitrust suit against MS likely

ZDNN, US ZDNet US

Published: 18 May 1998 10:09 BST

Settlement talks between Microsoft and government regulators broke down Saturday, setting the stage for the filing of a major antitrust suit against the software maker today. Officials close to the negotiations said that some 20 states and the U.S. Department of Justice (DoJ) intend to file against Microsoft Monday morning, barring a last-minute recapitulation by Microsoft.

The actions are not expected to delay shipment of Windows 98 to PC makers in the US today. State and federal regulators have indicated they will not seek a preliminary injunction against the product after the talks broke apart around noon ET.

The Justice Department confirmed in a brief statement that the talks were over. "The discussions between the Justice Department, a coalition of State attorneys general and Microsoft ended today without resolution," it said. "At this point they are not expected to resume."

Officials said that the talks deteriorated after Microsoft had apparently withdrew a major concession it had offered Thursday to allow computer makers to modify the startup screen consumers see when they switch on their computer for the first time.

State attorneys general from 20 states were expected to speak on a conference call today or Sunday to nail down final details of Monday's filing and for a final headcount for states participating. The Justice Department and 20 states had been poised to file antitrust suits Thursday but held off and agreed to hold talks in return for Microsoft agreeing to delay the shipment of its Windows 98 operating system until Monday.

A Microsoft spokesman said the company had worked hard to make the negotiations succeed because the company believed a lawsuit would be bad for consumers, taxpayers and whole high-tech industry. "We've made a number of significant offers to address the government issues but the government is making unreasonable demands that would threaten our product design and our ability to innovate," company spokesman Greg Shaw said. "We're still willing to negotiate further but we cannot agree to the governments' unreasonable demands," he said.

Shaw said state and federal lawyers had wanted to force computer makers to ship Windows 98 with a rival Internet browser made by Netscape among other unreasonable demands. "Which would be a lot like asking Coca-Cola to ship three Pepsis with every sixpack," Shaw said.