Microsoft talks continue today Negotiators for U.S., states, software giant meet all day; Software


WASHINGTON -- Settlement talks between Microsoft Corp., the states and U.S. antitrust enforcers began in earnest yesterday as negotiators faced difficult obstacles to an agreement that would avert a lengthy court battle.

After a full day of bargaining, the lawyers recessed in the evening without offering any hints of how the talks went. The closed-door meetings were to resume today.

William Neukom, Microsoft's general counsel, arrived in Washington late Thursday with several attorneys for negotiations with the U.S. Justice Department and representatives from about 20 states who were prepared to sue the software giant over its business practices.

The company headed off the suits at the last minute Thursday by postponing, until Monday, shipments of its new Windows 98 operating system to computer makers. The delay was seen as an olive branch for the talks, and state and federal antitrust enforcers agreed to hold off filing suits while the talks proceeded.

Shares of Microsoft rose 50 cents to $89.4375, the latest sign that investors believe the software giant will weather its legal difficulties. The stock has increased nearly 30 percent since early December, when a federal judge ordered Microsoft to give PC makers a version of Windows 95 without its Internet browser.

Joel I. Klein, who heads the Justice Department's Antitrust Division, and Microsoft CEO Bill Gates spoke on the telephone into the wee hours Wednesday night, setting the stage for the hard bargaining that began yesterday, said a person familiar with the talks.

Both sides are meeting in Klein's conference room at the Justice Department. The negotiators include Klein, Neukom, Richard Urowsky, a private attorney also representing Microsoft, and two state attorneys general, Richard Blumenthal of Connecticut and Tom Miller of Iowa.

The lawsuits, including one by Maryland, are aimed at forcing the company to drop restrictions it placed on PC makers dictating how Windows 98 would be loaded into their computers and displayed on their desktop screens.

Microsoft has repeatedly said it won't agree to any settlement that takes away its freedom to integrate whatever it wants to Windows. " Our freedom to integrate and innovate is one issue we will defend," said Jim Cullinan, a Microsoft spokesman

Pub Date: 5/16/98

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