Many of the 18 US states suing Microsoft Corp are prepared to reject as inadequate the antitrust settlement negotiated between the software giant and the US Justice Department, people close to the discussions said.
The decision, was expected to be announced late yesterday at a US District Court hearing, spoils hopes by Microsoft and the Bush administration for a speedy resolution. The judge indicated that if she does not get full agreement from all the states, she would move into the trial's next stage to determine the penalties to impose on Microsoft.
The dramatic rift in the coalition of states grew Monday during intense lobbying over how to proceed, with some states hinting they were inclined to settle. Trying to preserve the fragile negotiations, the court-appointed mediator, Eric Green of Boston, met Monday with officials from New York, Ohio, Connecticut, California, Iowa and Massachusetts. Meanwhile, conference calls among states continued until nearly midnight.
"We're going to get some evidence whether any of the states have the will and resources to take the case to closure," said antitrust expert Andrew Gavil of Howard University in Washington, DC.
The settlement, already negotiated between Microsoft and the Justice Department, requires the company to provide technical details to help rivals make products compatible with its monopoly Windows operating system and to give an oversight panel full access to its books and plans for five years. It also bans exclusive contracts with computer makers that would put rival software vendors at a disadvantage.
But critics portray the 21-page agreement as rife with loopholes, such as one clause that permits Microsoft to restore, after 14 days, any changes made to Windows by computer makers. It also allows Microsoft to maintain the secrecy of any technical details of its anti-piracy, security, antivirus or encryption technology.
The attorney general in California, Bill Lockyer, has become one of the harshest critics of the settlement. Since his state can more easily afford the continuing court fight, he has also emerged as a key coordinator in the continuing case. Lockyer, whose state is home to Silicon Valley and many of Microsoft's toughest rivals, confidently predicted that most of the 18 states would reject the settlement at the court hearing.
"Most of the states will ... indicate they're going to continue their efforts to get the appropriate and necessary remedies," said Lockyer, who complained that a bitter lobbying campaign had "devolved from policy into finger-pointing."
Lockyer added that his resolve had hardened after listening over the weekend to advice from technical experts and officials from Microsoft's competitors, such as IBM, AOL Time Warner Inc, Sun Microsystems Inc and Novell Inc.
The attorney general in Massachusetts, Thomas Reilly, was among the earliest to announce his opposition to the settlement.
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