"The offer that Microsoft has made thus far is not a substantial offer," said one official, who asked not to be named. "The states are still willing to receive a substantial offer from the company and are open to serious settlement discussions, but that hasn't happened yet."
The company's billionaire chairman, Bill Gates, is expected to visit Washington today as part of a previously scheduled tour to promote his new book.
Separately, attorneys general from the 19 states suing Microsoft also are meeting in Washington today for their annual conference, and they planned today to discuss the company's offer privately.
California Attorney General Bill Lockyer called the proposal "a minimalist opening offer...that is far from what anyone in our group would expect to be adequate," according to a report by Bloomberg. The proposal, which was delivered to the Justice Department and Iowa Attorney General Tom Miller, was discussed in a conference call among other prosecutors Wednesday, according to Bloomberg.
A spokeswoman in the California AG's office said that Lockyer had not yet seen the proposal and that his comments were based on a briefing he had received.
Microsoft, which recently reiterated its willingness to settle the four-and-a-half month trial, also declined to provide specifics.
"We're not going to make any comments whatsoever about any potential settlement conversations, should they occur," said Microsoft spokesman Mark Murray. "This process is only going to be successful if it can occur in a confidential manner."
Details of the proposal came as Gates reaffirmed his willingness to settle antitrust charges, as long as the world's largest software maker can preserve its right to add new features to its Windows operating system.
"As long as we can keep those intact, we want to settle," Gates said yesterday in an interview with Sir David Frost at an investor conference in New York. "Even before they filed the lawsuit we had a great desire to settle this thing."
On Monday, Joel Klein, the assistant attorney general in charge of the Justice Department's antitrust division, said he had not received any proposal from Microsoft, but was open to discussing a settlement. Justice Department officials have declined further comment.
Government prosecutors allege Microsoft is a monopolist that illegally harmed competitors in its attempt to maintain its Windows dominance and create a new monopoly for Internet software. Microsoft vigorously denies the charges. Some legal observers say Microsoft has made critical mistakes in defending itself in federal court in Washington.
The trial, which is now in recess, is scheduled to resume on April 12, but may be delayed further because of a drug conspiracy case being heard by the same judge presiding over Microsoft's trial.
Word of the proposal comes as state prosecutors from across the nation meet in Washington for an annual meeting of the National Association of Attorneys General. Among the attendees are a number of assistant attorneys general overseeing the joint action against Microsoft, some of whom are believed to be charged with reviewing the proposal.
Officials on both sides say they have always been open to settling the case. But it is unclear that either side's stance has changed since last May, when they entered into negotiations but failed to reach any agreement. Microsoft's insistence that it maintain its right to add new features to its products was a key stumbling block in the failed talks.
Antitrust officials, still skeptical of Microsoft's earlier attempt to settle the case, privately questioned Microsoft's most recent settlement overtures. They criticized Microsoft for talking to the press about a settlement before discussing the matter privately with them. Microsoft, meanwhile, says it is taking serious advice made by U.S. District Judge Thomas Penfield Jackson that both sides try to settle the case while it is in recess.