State attorneys general preparing for antitrust settlement talks with Microsoft will ask the software giant to give up control of the Windows operating system, possibly through an auction, The Seattle Times reported.
The paper said the idea for a forced auction of Windows licensing rights was one of several proposals the attorneys general will take to a negotiating session with Microsoft executives Tuesday.
Under the proposal -- presented as the best way to redress what Microsoft's critics see as past abuses of its monopoly power -- intellectual property rights to Windows 95, Windows 98, and Windows 2000 would be sold to two or three companies.
Microsoft would retain the right to market and develop its own versions of the software, and Microsoft shareholders would get "reasonable compensation," according to the report, published Sunday.
"The proposal would actually break up and render impotent the Windows monopoly, which is the source of Microsoft's power," the state report concluded.
If a forced auction is unacceptable, the states say their goal could be attained by demanding that Microsoft make Windows available on an open source basis to third-party developers, or at least disclose certain parts of the source code.
Microsoft, which tightly guards its source code, would "retain the right to charge a reasonable licensing fee" for any third-party use of the intellectual property, according to the states' report.
The state report also lists the idea of breaking up Microsoft into several companies as an option, although it notes several drawbacks to that idea, the newspaper said.
Microsoft has made an initial settlement proposal, under which it would change the way it licenses software to computer makers and Internet companies, that has been rejected as inadequate by at least some state attorneys general.
In the meeting Tuesday, which will include representatives of the US Justice Department, states will demand that Microsoft go further in an effort to open the operating system market to other competitors, according to the report.
Antitrust regulators, joined by 19 states, sued Microsoft in May, charging the Redmond-based company had abused its monopoly power to expand its operating system dominance into new markets, such as Web browsers.
A trial that began in October went into a lengthy recess last month, but not before US District Judge Thomas Penfield Jackson admonished all parties to seek a settlement before final witnesses take the stand beginning sometime in April or May.
Copyright© 1999 Reuters Limited.
