Microsoft Settlement: 9 States In, 9 States Out

Microsoft Corp., the U.S. Department of Justice and nine statesreached a proposed settlement in the antitrust case Tuesday. But with 9 otherstates and the District of Columbia passing on the settlement, the case remainsfar from over.

U.S. DistrictJudge Colleen Kollar-Kotelly scheduled two tracks to accommodate the now splitcase. She scheduled hearings on one side to consider the settlement andhearings on the other side to continue the antitrust lawsuit.

Some mediaoutlets were reporting splits among the states, indicating that six were stillconsidering signing on to the deal. Massachusetts, the first to publicly rejectthe deal, California and Minnesota appeared to be taking the hardest lineagainst the settlement. Both California and Massachusetts are home to some ofthe strongest industry critics of Microsoft.

Other states fornow rejecting the deal are Connecticut, Iowa, Florida, Kansas, Utah, WestVirginia and the District of Columbia. In a statement, Connecticut AttorneyGeneral Richard Blumenthal showed the ambivalence of some state attorneysgeneral about rejecting the deal in his public comments Tuesday.

"My presentintention is to continue as a party to the litigation, rather than sign thesettlement submitted to the court today," said Blumenthal, citing"flaws" and "ambiguities" in the settlement. But he addedthat, "The agreement reflects good progress and shows how much we haveaccomplished already in our legal action."

Blumenthal saidhe will review the final changes made in the last-minute negotiations betweenthe states, the DOJ and Microsoft. "I plan to make a final decision withinthe next few days."

A DOJ spokesmancharacterized the final changes as relatively minor. Given that several statesare now staunchly outside the process, there is potential for the entire dealto fall apart. Under a federal law called the Tunney Act, the public must get achance to make comments on an antitrust settlement between the federalgovernment and a monopolist. Some legal observers say the fact that some of theparties criticizing the settlement will include states named in the antitrustfilings will give their comments considerable weight.

The main pointsof the settlement reached Wednesday and presented to the court on Friday givePC makers the right to make changes to Windows, create an icon for removingMicrosoft middleware from a system, make APIs open, give other companies achance to review source code in a "secure" setting and create anindependent oversight committee with access to Microsoft's financial books andtechnical materials.

JudgeKollar-Kotelly had given the states until Tuesday to reach a deal.

States signingon to the settlement are New York, Illinois, North Carolina, Kentucky,Michigan, Ohio, Wisconsin, Louisiana and Maryland. New Mexico settled withMicrosoft earlier. –Scott Bekker