Microsoft 'close to' American anti-trust settlement

Microsoft shares rose yesterday as it appeared that it had negotiated a settlement with the US government over its monopoly behaviour, as the long-running anti-trust suit seemed near an end.

But the 18 US states which joined the Justice Department in prosecuting Microsoft warned that they might not be satisfied with the result, which followed a court-ordered mediation. If they do not agree by the end of today then the process will be thrown back to the court – potentially putting Bill Gates's company at the mercy of a judge's decision that could even encompass a breakup.

The software giant also faces a separate anti-trust action from the European Commission, which is investigating whether the company illegally ties its Media Player software to the Windows operating system – including its latest offering, XP, launched last week – and the market for low-end servers, used by companies offering Web services.

Under the terms of the US deal that have leaked out, computer makers will have more powers to delete Microsoft icons (though not the actual programs) from the PC's desktop, which the user sees on starting the machine. They will also be allowed to put non-Microsoft programs onto the machines.

Software companies will also get better, and faster access to the programming hooks, known as APIs (application programming interfaces) that Windows uses to communicate with programs.

Microsoft shares jumped at the open of Nasdaq trading, rising as much as 4.5 per cent to an intraday high of $60.81. It was the most active issue on the Nasdaq and among the net leaders.

"A settlement removes a huge legal risk to the company," Thomas Weisel analyst David Readerman said in a research note. "Microsoft avoids an ... AT&T-like court judge oversight of its business."

Justice Department attorneys have publicly said they will ask the judge to impose broad restrictions on Microsoft's business tactics that would be modeled after a set of interim sanctions handed down last year by Judge Penfield Jackson, who presided over the initial court case.

Those interim remedies were designed to guarantee that consumers and PC manufacturers would be given more freedom to decide what software should be preloaded onto their machines, and to make sure that competitors' software applications can run as well on Windows as Microsoft applications.

A Microsoft spokesman declined to comment on the status of the settlement talks.