Microsoft blinked in its staring match with federal and state officials on Thursday, calling off Friday?s shipment of Windows 98 to PC makers while the adversaries negotiate a last minute compromise.
The Department of Justice (DoJ) and a coalition of State attorneys general are holding off their planned antitrust suits for the duration of the talks.
If the DoJ and the attorneys general of between 10 and 20 US states (including California, Florida, Massachusetts and New York) were bluffing these past few days, they did it very convincingly. The DoJ had scheduled a press conference at noon on Thursday to announce its antitrust suit against Microsoft, and details about the content of the states? complaint had been leaked to the press earlier this week.
On Thursday morning, states lawyers were reportedly stationed at the US District Court in Washington DC, ready to file their brief.
And then Microsoft issued a brief statement: ?The Microsoft Corporation confirmed that it has completed all work to develop Windows 98, but has agreed with the Department of Justice and State attorneys general not to release the product to computer manufacturers until Monday. The company confirmed that it has taken this step so that discussions with the Government which have been proceeding for over a week, can continue.?
A statement from the DoJ confirmed the news. ?The Department of Justice, a coalition of state attorneys general, and Microsoft are engaged in discussions. They have reached an agreement under which, while the discussions continue over the next several days, Microsoft will not ship Windows 98 and the Department of Justice and the states will not file lawsuits.?
This mirrors earlier instances where Microsoft has remained immutable until the very last minute.
In 1995, Microsoft accepted to sign a consent decree with the DoJ to stave off an antitrust case against the company. Though the consent decree was ambiguously worded and has been criticised for being too weak, it has provided the DoJ with the basis for its current case against the company.
In January of 1998, Microsoft narrowly escaped being held in contempt of court when it accepted to comply with an injunction to ship a version of Windows 95 without the Internet Explorer icon. And in March, Bill Gates revised some contracts with Internet service providers just before testifying at a hearing of the Senate Judiciary Committee.
By delaying the shipment of Windows 98 to PC makers voluntarily, Microsoft has ? at least temporarily - averted a potentially far more damaging preliminary injunction to halt the release of the operating system. The software giant now appears to be prepared to make considerable concessions.
Some US media reports say the antitrust case that the states were about to file on Thursday, would not force Microsoft to alter its Windows 98 software. Rather, they were to demand a number of concessions from Microsoft, leaving PC manufacturers more free to install software from other vendors (including browsers but also office suites) and to customise the way Windows 98 boots up. A separate case filed by the DoJ was rumoured to focus more narrowly on the Internet Explorer browser.
Neither of the parties is commenting on the progress of the negotations. Reuters reported late on Thursday that the parties were ?not close? to an agreement.
News of the negotiations was received enthusiastically on Wall Street, where Microsoft shares closed up $2 at $88.94.
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