The US Justice Department says it has reached a settlement with Microsoft that calls for outside firms to have more involvement in the development of the software giant's Windows operating system.
The agreement, which must be approved by a federal judge and is not yet endorsed by the states that joined the case, falls far short of splitting the company in two - a remedy sought by the previous administration under President Clinton.
The settlement would allow computer manufacturers to work with other software developers and place their products on Microsoft's Windows system, and prevent the software giant from punishing anyone who makes or uses competing products, the department said.
It would also require Microsoft to provide software developers the necessary interfaces to inter-operate with Windows as well as offer uniform licensing terms to key computer makers.
"This historic settlement will bring effective relief to the market and ensure that consumers will have more choices in meeting their computer needs," US Attorney General Mr John Ashcroft said in a statement.
Mr Alan Loewenstein, a portfolio co-manager at John Hancock Technology Fund, which owns shares in Microsoft, said the proposed settlement looked very favourable to the company.
"It's the best thing for the company. They didn't split the company up. They didn't say you have to unbundle things," said Mr Loewenstein.
Computer makers and consumers would be allowed to substitute competing software on the Windows system, according to the settlement.
The software maker would be banned from signing exclusive agreements that require exclusive support or development of Microsoft software. This will allow rival manufacturers to work with Microsoft and at the same time support and develop rival products.