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Mighty Microsoft Stalled By Federal Judge Sporkin

Antitrust settlement against computer-software giant is in limbo

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WHEN Microsoft Corporation and the United States Justice Department reached an antitrust settlement last July, it appeared that a grueling four-year investigation had ended in the computer giant's favor.

Rivals of the world's largest software company hoped to see restraints put on the titan's market influence, but they were disappointed at the limited terms of the consent decree.

But Stanley Sporkin, a persnickety, book-reading US Federal District judge in Washington, D.C., rejected the settlement on Tuesday, opening the door again for tougher measures against the Redmond, Wash., company.

''The picture that emerges from these hearings is that the US government is either incapable or unwilling to deal effectively with a potential threat to this nations economic well-being,'' wrote Judge Sporkin in his decision.

Sporkin rejected the settlement, which barred certain marketing practices that gave computer manufacturers an incentive to put Microsoft's operating-system software on all computers they ship, hurting competition. An operating system is a computer's core software, on top of which run ''applications'' programs for various tasks. Some 85 percent of all computers sold use the Microsoft operating system.

Sporkin's ruling reflects ''a growing appreciation of technology and its impact,'' says Chris Letocq, an analyst with SoftTracks Inc., a Los Altos, Calif., research firm.

It is unclear, however, whether the judge's ruling will stand and ultimately have much impact on the industry.

A follow-up hearing is scheduled for March 16. Among the possible results:

*The Justice Department and Microsoft's lawyers may fight back, arguing that the judge overstepped his authority by labeling the agreement ''too little, too late.''

*New negotiations between the parties could lead to a broader settlement agreement, possibly including some restrictions on Microsoft's moves into the area of applications software.

*If a satisfactory deal is not reached, the Justice Department could file a lawsuit against Microsoft. Neither side relishes this lengthy, messy option.

*The Justice Department could walk away from the matter, as the Federal Trade Commission chose to do when it investigated Microsoft. It could focus instead on Microsoft's $1.5-billion buyout of Intuit, Inc., the leading personal-finance software company. Microsoft is awaiting Justice Department approval of that deal.

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