The stakes and the drama, it seemed, could scarcely be higher. Microsoft Corp., emblematic titan of the nation’s high-tech economy, was locked in last-minute, closed-door negotiations with representatives of the Justice Department and 20 state attorneys general.
The goal was to find a way to avert a major antitrust suit, a confrontation that could rival the government’s assault on Standard Oil early this century in defining the ground rules of competition for decades to come.
Then, early Saturday afternoon, word spread that the talks had collapsed.
But, in fact, the negotiations did not break down. By all accounts, they never really started. They coasted to a close with little drama shortly after Jeffrey Blattner, special counsel for information technology in the Justice Department’s antitrust division, finished a phone call to his boss, Joel Klein, assistant attorney general in charge of the Justice Department’s antitrust division.
Blattner walked into the conference room of Microsoft’s Washington law firm and told William Neukom, the company’s senior vice president for legal affairs, “I guess we’re going to have to go our separate ways,” people involved with the talks recalled.
Monday, the government and the states are expected to file antitrust suits accusing Microsoft of unfairly trying to maintain its monopoly in personal computer software and to extend that monopoly into the new markets of Internet software and commerce.
Neither the government nor the states will ask for a delay in shipments of Windows 98, the new version of Microsoft’s operating system. Microsoft is scheduled to ship Windows 98 to computer-makers Monday and make it available on store shelves on June 25.
The suits will ask that Microsoft be forced to loosen its contracts with personal computer-makers to allow them to modify the company’s software considerably.
This step, the government and the states contend, could amount to a competitive new deal for the computer industry and open the door to genuine competition. It would allow PC-makers to filter requests from consumers and decide what users see on their desktop screens instead of giving Microsoft most of that power.
Microsoft says the government’s position amounts to heavy-handed meddling in the marketplace and a threat to its corporate livelihood.
“What the government is asking would significantly hamper us from competing through innovation and would put everything we’ve worked for and built for the last 23 years at risk,” said Bill Gates, Microsoft’s chairman.
