Court Seeks Deal Between Microsoft, Justice

W A S H I N G T O N, D.C., Sept. 28, 2001 -- The new judge in the Microsoft antitrust case today urged the parties to make a renewed effort to settle the four-year-old dispute.

At a hearing in Washington, D.C., U.S. District Judge Colleen Kollar-Kotelly said several times that the software giant and the Justice Department should make an active effort to reach agreement.

The judge, in a written order following the hearing, cited the Sept. 11 terrorist attacks as reason to speed toward a resolution. "The court cannot emphasize too strongly the importance of making these efforts to settle the cases and resolve the parties' differences in this time of rapid national change," wrote Kollar-Kotelly.

The developments follows a recent decision by the Justice Department to drop plans to split up the company. Government prosecutors said they would instead seek to limit the firm's anticompetitive practices. Microsoft's Windows operating system runs on more than 80 percent of personal computers.

Kollar-Kotelly gave the parties until Nov. 2 to reach a deal. She also indicated that she would appoint a mediator if the parties failed to settle on their own by Oct. 12 — a tactic that failed once before, wire reports said.

If there was no settlement by November, a hearing would follow Nov. 5. The government would then have until Dec. 7 to put forth a proposed remedy, with Microsoft having until Dec. 12 to respond. A followup hearing would be held around March 11. The Supreme Court could, in the interim, take up the case, but experts are believed to consider that unlikely.

"Good luck with settlement efforts," Kollar-Kotelly told the parties as the proceeding ended.

Earlier Ruling Found Monopoly

Kollar-Kotelly took over the case after a federal appeals court tossed out an earlier ruling to split up the company, along with the judge, Thomas Penfield Jackson, who had ordered it.

In its June 28 ruling, the federal appeals court did uphold Jackson's finding that Microsoft had illegally taken advantage of its operating systems monopoly. It then left to be resolved by Kollar-Kotelly whether or not Microsoft can legitimately "bundle" programs (such as its Internet Explorer browser) into its operating systems.

At the time of the June ruling, Microsoft co-founder and Chairman Bill Gates seemed to open the door to more talks. But it's not clear whether some of the 19 state attorneys general who had joined the federal government in the suit would resist a deal, as they did in last year's settlement talks.

The company also still faces civil lawsuits charging it with illegal practices such as unfair pricing, thanks to the federal appeal court's upholding of findings that Microsoft has acted as a monopoly to preserve its Windows dominance.

But the October release of the company's newest highly touted operating system, Windows XP, is now far less of a problem for the firm, given the ruling protecting bundling of software applications.

XP has a variety of multimedia features that move Microsoft further away from simply managing of software, and places the company more squarely in the role of being a multi-faceted provider of home entertainment.

--ABCNEWS' Jason Ryan contributed to this report.