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Wednesday, 7 November, 2001, 09:31 GMT
Q&A: What next for Microsoft?
Microsoft's attempts to hammer out a solution to its anti-trust case are mired in uncertainty. As the company, the federal government and states bicker over the details of a deal, the outlook for the firm seems little clearer than when the preliminary agreement was announced last week. BBC News Online looks at what is likely to happen next.

Why did the deal fall apart?

The states have often been the forgotten partner in the anti-trust suit against Microsoft.

They have also maintained remarkable cohesion over the three-year process.

But they have made their presence known most during the two rounds of settlements talks over the last two years, and settlement talks have been one of the few places that has divided the states' camp.

The states have consistently pushed for the harshest remedies against the software giant, and some court watchers believe that it was the insistence by the states in last year's settlement talks that led to their collapse.

But the states coalition was strained during those talks, and cracks were seen in their united front.

In this round of talks, it is not surprising that the states that came out against the settlement are ones with technology companies that are averse to Microsoft, says Howard University law professor Andrew Gavil.

California Attorney General Bill Lockyer said that his opposition to the settlement after he spent the weekend listening to technical experts from Microsoft competitors, including IBM, AOL Time Warner, Sun Microsystems and Novell.

So what happens to the settlement - is that off?


The judge has established a two-track process for proceedings.

One track would follow the hearings required to approve the settlement. The other track would be a continuation of the anti-trust suit and could lead to remedy hearings next year.

US Justice Department anti-trust chief Charles James said that the settlement would serve as a baseline for any additional remedies.

The judge could build on the settlement with the hopes that it might lure more states to settle and bring the case to a resolution.

And what are the next steps in the court case - can just a few states fight on?

The settlement always faced the judge's review, and that process will begin as soon as Microsoft, the federal government and some of the states sign the settlement.

That will begin a 60-day period of public comment followed by hearings.

Before the states' coalition splintered, legal experts had said that the judge was unlikely to reject the agreement, but with the states' coalition split, experts say that the case is in uncharted legal territory with no clear precedents.

In addition to the settlement review, Judge Kollar-Kotelly has also set in motion the process for remedy hearings.

She rejected a Microsoft motion that said the dissenting states lacked legal standing to proceed without the federal government.

The judge had previously laid out a schedule for the remedy hearings process. The hearings are set to begin next March.

If this drags on, will it hurt the stock markets?

It would - or to be more precise, a rapid solution would benefit the markets.

What stock markets hate more than anything is uncertainty, and the Microsoft case has provided that in huge quantities for the past three-and-a-half years.

The software industry is crucial to the US economy, and accounts for a hefty chunk of its stock market capitalisation.

No matter how unfavourable the eventual settlement seems to Microsoft, its shares - and those of most of its competitors - should bounce sharply once a deal is formalised.

And the preliminary draft agreement certainly seems far more favourable to the software giant than earlier proposals - in particular the initial demand that it should be broken up.

Battered by the internet slump, the economic slowdown and the effects of 11 September, tech industry investors are desperate for good news.

So if things are that urgent, when can we expect the trial to end?

Some of the dissenting states have said that they are still open to a settlement, and the judge has stated her preference for a quick settlement of the case.

The judge may suggest remedies during the hearings that could lure more states to sign off on a settlement, and legal experts say that the judge could suspend the remedy hearings phase if she believes the two sides are close to settling.

Barring a settlement, the case is far from over.

The settlement

Appeal court ruling

Appeal hearing

See also:

07 Nov 01 | Business
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05 Nov 01 | Business
24 Oct 01 | Science/Nature
06 Sep 01 | Business
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