Half of states agree to Microsoft deal

WASHINGTON -- Half the 18 states that sued Microsoft have agreed with the Justice Department to settle the landmark monopoly case, leaving a judge to decide how to resolve the antitrust suit against the American software giant.

The agreement places the nine states and the federal government in a position to end their historic litigation against Microsoft, and the rest of the parties to argue what sanctions the court should impose on the company.

Yet some leading states that signaled they'll move forward in the trial left open the possibility of an eventual settlement.

Connecticut Attorney General Richard Blumenthal said he would closely scrutinize the deal reached between Microsoft and the other states. Similarly, Iowa Attorney General Tom Miller, who led the case for the states, said his experts "continue to look at the agreement."

But as the coalition of states splintered, Miller acknowledged: "We've parted ways in some respects today."

U.S. District Judge Colleen Kollar-Kotelly on Tuesday scheduled hearings to consider the settlement and set a schedule for the antitrust lawsuit to proceed. The judge also ended her order requiring the parties to meet nonstop with a court-appointed mediator.

Before the hearing, New York Attorney General Eliot Spitzer announced his state would join Illinois, North Carolina, Kentucky, Michigan, Ohio, Wisconsin, Louisiana and Maryland in approving a revised settlement they negotiated through the night with Microsoft. Wisconsin was the surprise defection, since a top antitrust lawyer there, Kevin J. O'Connor, has long been a key participant in the case.

Some want more time

"We have gotten a remedy proportionate to the findings affirmed the D.C. Circuit," Spitzer said, referring to the federal appeals court ruling this summer that concluded Microsoft was an illegal monopoly but should not be broken into two companies.

Officials familiar with the talks said six states want more time to consider settlement and remain open to the deal. California, Massachusetts and Minnesota are prepared to continue with the antitrust litigation against the software giant, the officials said.

Spitzer said the revised settlement was sufficient for his state after Microsoft made some additional concessions. As for the holdout states, "if they can get more I will be thrilled," he said.

The Justice Department's head of antitrust, Charles James, said the U.S. government also will sign the re-negotiated agreement.

"I'll leave it to others to describe whether these were substantive changes," James said. He said the deal was "good for consumers, and we think it's good for the technology economy."

Microsoft made clear it was done negotiating. "Microsoft believes the settlement process has come to an end," attorney John Warden told the judge. "The issues in this case have been beaten to death, and they have been beaten to death by people who are worn out."

But Warden said the company would welcome any of the undecided states to sign onto the deal.

The late concessions would broaden the disclosures Microsoft must make to rivals about the operation of its powerful server software.

By adding the phrase "or the Internet" to one section, lawyers for the states explicitly required Microsoft to reveal technical details about servers other than just those used for office networks. That slight change could broaden the settlement to cover Microsoft's future business strategies of providing Internet services.