The department also said it will not pursue the bundling issues in its protracted antitrust suit against the software giant.
The agency is taking these steps to obtain "prompt, effective and certain relief for consumers," it said in a press release.
The release follows a judge's order for the two sides to produce a joint status report by Sept. 14.
The government told Microsoft that it does not intend to pursue a breakup and will drop the bundling issue to "facilitate consultations" in the joint report, the department said.
However with Microsoft's new operating system, called Windows XP, about to hit the market, CBS News Correspondent Jim Stewart reports the Justice Department said it would seek to enforce an earlier court ruling that ordered Microsoft to stop pushing around computer manufacturers who didn't want the whole Microsoft product on their machines. And that, say analysts, will make Microsoft rethink how it treats competitors.
"Microsoft certainly has thrown its weight around," analyst James Lucier of Prudential Financial said. "It's a big, tough company, and it's got the ability to act as the playground bully. To some extent this court wil put Microsoft on a shorter leash."
The federal about-face wasn't totally unexpected. At the time of his confirmation hearings to be attorney general, John Ashcroft hedged when asked repeatedly by senators about the government's commitment to pursuing the lawsuit against Microsoft.
Ashcroft for the most part said that was among a host of issues he would need to review.
On Thursday, his department said that since an appellate court agreed that Microsoft illegally maintained a monopoly over the market for computer operating systems, the government "believes it has established a basis for relief that would end Microsoft's unlawful conduct, prevent its recurrence and open the operating-systems market to competition."
Pursuing the tying claim would only prolong the proceedings, the department said.
Microsoft's smaller competitors, however, say it's a case of the Justice Department caving in.
"They've unilaterally disarmed. They've given up their biggest weapon, which is the threat of a breakup," said Glenn Manishin, general counsel of the Computer and Communications Industry Association. "A decade from now we'll see the department still fighting with Microsoft and Congress will have to step in."
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