Bill Gates' anti-trust saga reaches its endgame

In June this year, a US Appeals Court broadly accepted the original judgement, made in June 2000, that Microsoft's business practices had violated anti-trust laws.

But it threw out the proposed remedies - especially the suggestion that Microsoft should be broken up into two separate companies.

One reason for setting aside the remedies were media interviews given by the original judge in the Microsoft case, which, according to the appeal judges, showed bias against the company.

It is a new "remedy" that is now being thrashed out.

Shape of the future

However, the fine details of the settlement are still under discussion and talks could still fall apart.

Microsoft has only commented that it is "working hard to achieve a settlement", stressing that there is nothing firm in place as yet. But the shape of a likely deal is slowly emerging.

It would leave the software giant's latest launch, Windows XP, unchanged in exchange for an agreement to disclose technical information to Microsoft rivals, said Paul Abrahams, Silicon Valley bureau chief for the Financial Times after speaking with the firm.

The deal would also give PC manufacturers more latitude in to load non-Microsoft software into the machines they sell.

But attorney generals from the states of Iowa, California, Connecticut and New York may be inclined to take a tougher line, Mr Abrahams told BBC Radio 5Live.

'Tougher measures'

The two sides, including prosecutors from the states, are thought to have met late into Wednesday night with mediator Eric Green in Washington.

Talks between the justice department and the attorney generals are reported to have continued on Thursday, with some states demanding tougher measures against Microsoft, sources quoted by Reuters news agency said.

The US Department of Justice, together with officials from the states, have declined to comment.