Microsoft Meets Judge Dread

Microsoft was waiting to learn its fate last night in the long running anti-trust case brought against the software group by American federal and state prosecutors.

US district judge Colleen Kollar-Kotelly was due to hand down her ruling on the case after Wall Street's close last night. The verdict could have profound effects on the world's largest company.

The judge has been reviewing a settlement reached by Microsoft, the federal government and nine states. But matters have been complicated by another nine states holding out for tougher penalties. She could endorse the settlement, or impose harsher sanctions - or a mix of the two.

The judgment is unlikely to be the end of the four-year case, as appeals are almost certain to be filed. "It might not be resolved for another two years," said University of Baltimore law professor Robert Lande. "No one should count their winnings yet."

Microsoft was found to have violated anti-trust laws, illegally maintaining its monopoly in operating systems by using its muscle against rivals and PC makers. Its Windows operating system and software runs on 90% of the world's home and business computers.

An appeals court last June upheld the verdict but rejected an earlier determination to divide the company. The case was then transferred to Judge Kollar-Kotelly to resolve the issue of what the appropriate remedies should be. Microsoft reached the settlement with the justice department 12 months ago after the judge had urged the various parties to broker a deal.

The settlement gives computer-makers greater freedom to load rival software on their PCs by allowing them to hide some Microsoft icons on the Windows desktop.

The firm would be prevented from retaliating against companies choosing non-Microsoft products and not be allowed to enter into deals requiring exclusive support of Microsoft software. The business would be forced to offer uniform terms to manufacturers and release some technical data so software designers would be able to write better programmes for Windows.

But rivals including Sun Microsystems and AOL Time Warner have complained the remedies do not go far enough.

The states refusing to settle are seeking greater disclosure of the Microsoft code to allow rival software firms to develop better Windows-compatible products. They also want a version of Windows with removable features to create a better environment for competing versions of accessories.

Bill Gates, the founder of Microsoft, warned of dire consequences if the tougher penalties are agreed - including thousands of job losses and the end to innovation at the software company.

During the hearings Mr Gates said they would lead the company into a "10-year period of hibernation".