The US Justice Department announced yesterday that it no longer would seek a court-ordered break-up of software giant Microsoft and would strive to find a remedy in the three-year-old case "as quickly as possible". The department also said it would not pursue the bundling issues in its protracted antitrust suit against the software giant.
The Justice Department stated it had taken the decision to obtain "prompt, effective and certain relief for consumers". The Department said that, since an appellate court agreed that Microsoft illegally maintained a monopoly over the market for computer operating systems, the Bush administration "believes it has established a basis for relief that would end Microsoft's unlawful conduct, prevent its recurrence and open the operating-systems market to competition".
The 18 US states suing Microsoft decided to join the Department of Justice decision for the sake of a speedy, effective result, Iowa Attorney General Mr Tom Miller said.
A judge has ordered the two sides to produce a joint status report by next Friday.
The decision, which takes a possible break-up off the table after three years of bitter litigation, was not totally unexpected. At the time of his confirmation hearings, the US Attorney General, Mr John Ashcroft refused to be drawn on the new administration's commitment to pursuing the lawsuit against Microsoft.
A senior Justice Department official said the decision was not a concession, but an effort to resolve the matter quickly. "I do not view this as a retreat," said the official, who asked not to be named.
By limiting the number of questions before the new federal judge, the official said the case could be resolved more promptly. "Time is of the essence from our standpoint."
Microsoft said it was determined to settle the entire case. "We remain committed to resolving the remaining issues of this case," Microsoft spokesman Mr Jim Desler said.
Mr Jeff Raikes group vice-president of the business productivity group, said: "It is a very interesting and for many, a very exciting announcement. We still need the opportunity to take a look more fully at the statement."
The Justice Department official said the government's proposal would be "prospective" and therefore cover any new Microsoft products such as the Windows XP operating system. But he said the Justice Department would not be seeking "interim injunctive relief", or any immediate order to stop the release of Windows XP.
Instead of seeking a break-up of Microsoft, the US government said it wanted a ruling along the lines of Jackson's original order for restrictions on Microsoft's relations with computer makers.
Judge Jackson had ordered Microsoft to reveal much of the software code of its Windows operating systems, allow computer manufacturers to change the look of Windows on their PCs and set public pricing guidelines for Windows.
Microsoft complained at the time that such a course of action would make it difficult for the giant to conduct business, describing the potential effect of such a decision as "devastating". The company insists its business practices have been tough but fair and that the innovations it added to Windows were designed to meet consumer needs.
Microsoft is struggling to maintain profit growth as sales of computers slump. Analysts say it is keeping the price of Windows XP low, despite its monopoly in the market for computer operating systems, because of concerns about antitrust litigation.
After an initial boost, Microsoft stock fell as the market digested the news. "I'm a little surprised at the stock move," said Parker/Hunter analyst Ms Kimberly Caughey. "I wouldn't say that it removes the dark cloud from over Microsoft, because anything could happen in settlement talks. But it makes that cloud a little less threatening," she said.
