Microsoft Settlement Prospects Cling to Life

The derailed settlement talks between the U.S. Justice Department and software giant Microsoft (Nasdaq: MSFT) may be back on track today, as reports indicate that the mediator in the case has asked the judge to delay issuing his opinion in hopes of a breakthrough.

The possibility of a settlement seemed all but dead as Microsoft’s stock price fell over $7 (US$) yesterday in anticipation of a harsh judicial blow to the company. All indications were that U.S. District Court Judge Thomas Penfield Jackson would issue a ruling as early as today.

However, Jackson’s hand-picked mediator, U.S. Circuit Judge Richard Posner, reportedly asked the judge to delay that ruling as government attorneys continued to examine Microsoft’s settlement proposal.

Microsoft’s offer reportedly falls far short of the government’s settlement plan, but does meet a threshold for the talks to continue.

Devil in the Details

The government and Microsoft have been meeting since Jackson issued his findings of fact last year in a scathing indictment of Microsoft’s business practices.

The Justice Department reportedly has sought the breakup of the company, though that draconian measure is viewed in some circles as a negotiating ploy to get the notoriously tough Microsoft to offer up more concessions.

Reports today say that Microsoft handed Posner a proposal last Friday that would allow computer makers and competing software companies to design their products to be more integrated with its Windows operating platform.

The upshot would be that the company would allow access to much of its source code, reports say.

The government also wants Microsoft to release its browser, Internet Explorer, and other applications from the Windows platform, as well as to refrain from pricing Windows to punish competitors.

Other Bones of Contention

Even if agreement were reached on those issues, other areas of contention may impede a settlement. It is unclear whether the government or the court would be charged with acting as watchdog over Microsoft’s software development. The company would be sure to balk at either possibility, and may push for the formation of a standards board made up of software makers as an alternative.

Microsoft’s share price remained steady in early trading today, as investors waited to see if there was any fire amid the smoke.