An internal Microsoft e-mail seems to suggest that it is looking to agree a settlement with lawyers bringing the anti-trust case against it. And the $570 billion software giant, which last year was found to be a monopoly in one of the most sensational corporate trials in US history, believes concessions it is offering government anti-trust lawyers go beyond what would be determined by any judicial ruling.

The Observer is the only UK newspaper to have obtained a copy of an internal e-mail sent by Microsoft chief executive Steve Ballmer to the company's 30,000 employees. The e-mail states that Bill Gates, Microsoft founder and former chief executive, thought to be distancing himself from the trial in an attempt to calm tensions, is still very much involved in the case. Extracts read: 'Billg... is focused on these efforts and we are working closely with our legal team.'

Ballmer states: 'We have made, and will continue to make, substantial proposals to settle this case. While we're very sure of our legal position and we're prepared to take it all the way to appeal, we've learned that discretion is the better part of valor, so we are working very hard to resolve the case through settlement.'

Significantly, Ballmer then goes on to add: 'We believe we've put more on the table than the judicial process would ultimately provide, even if we lost the case... We do not know if these efforts will result in a settlement or not, but you can be sure that we are working hard and creatively, and will continue to do so.'

Ballmer warns staff that 'in the days ahead, we will see even more rumors and speculation about the settlement process' and signs off by urging them to treat such stories 'with a big grain of salt'.

Microsoft's concession apparently hinges around opening up its Windows computer code so that rivals can use it to develop alternative products. The software company is also understood to be preparing to unbundle its Internet browser from its Windows software. It was the linkage between these two products which led to the anti-trust trial.