>>>>
The eventual winner in the browser competition, they say, could
play an
important and lucrative role in setting technology standards for
the Internet.
<<<<
September 20, 1996
Justice Department Examining
Microsoft's Internet Strategy
By STEVE LOHR
he Justice Department is opening a new phase of its
long-running
investigation of Microsoft Corp. by examining the company's
sales
practices in the fast-growing market for the software used to
browse the
Internet.
Microsoft issued a brief statement Thursday saying that the Justice
Department had notified the company that it would receive "a
written request
for information" from the department's antitrust division.
Neither the Justice Department nor Microsoft would comment on the
details
of the notification. But it came in a telephone call earlier this
week from the
Justice Department to the office of William H. Neukom,
Microsoft's senior
vice president for law and corporate affairs.
Microsoft officials said the government's written request, known
as a civil
investigative demand, was expected to be received in the next day
or two.
In the market for browser software, Microsoft is sparing no
effort to catch
up to the leader, Netscape Communications Corp. of Mountain View,
Calif.
Many analysts regard the browser software used for surfing the
Internet to
be a crucial gateway for computing in the future.
The eventual winner in the browser competition, they say, could
play an
important and lucrative role in setting technology standards for
the Internet.
In the last month, Netscape has accused Microsoft of going beyond
vigorous competition into the realm of illegal tactics in the
browser war. In
two letters last month to the Justice Department, a lawyer
representing
Netscape charged, among other things, that Microsoft had violated
its 1994
consent decree with the government.
Specifically, the letters accused Microsoft of using its
dominance of the
market for operating system software with its popular Windows
program to
force personal-computer makers to give Microsoft's browser,
Explorer, a
more prominent place on the screens of new machines than Netscape's
Navigator.
In its 1994 settlement with the government, Microsoft admitted no
wrongdoing but it did agree not to use its dominance of the
operating system
to give the company an advantage over rivals in other niches of
the software
market.
"We think Microsoft is violating the consent decree left and
right," Jim
Barksdale, the chief executive of Netscape, said in an interview
last month.
In its statement Thursday, Microsoft left no doubt that the
government's new
inquiries will be focused on the browser market or that Microsoft
believes
the Justice Department is reacting to complaints of its rivals.
Referring to the latest version of Microsoft's browser, released
last month,
Neukom said: "Internet Explorer 3.0 is consistently rated better
than
competing technology and is winning strong consumer support. In
response,
some of our competitors have resorted to a public relations
campaign of
baseless allegations."
In letters to the government last month, the lawyer representing
Netscape
contended that Microsoft was charging some personal computer
makers an
additional $3 for Windows 95, if they gave Netscape's Navigator
equal
prominence on the screen of new machines with Microsoft's Explorer.
The letters were written by Gary Reback, a partner
for Wilson Sonsini Goodrich & Rosati, a Palo Alto,
Calif., law firm, and a long-time adversary of
Microsoft.
Microsoft denies the charges that it offers a $3
discount on Windows 95 for discriminating against
Netscape. In a briefing paper responding to the
letter from Reback to the Justice Department, Microsoft said,
"There is not
and has never been any $3 discount for making competing browsers
less
accessible."
Microsoft is a powerful force in the computer industry, and the
manufacturers rely on loading Microsoft's popular software on their
machines. In the past, only head-to-head competitors have accused
Microsoft of illegal practices.
A few trade publications did report on the $3 discounts, quoting
anonymous
sources. But in interviews last month, executives at three major
personal
computer makers, who also did not want to be quoted by name, in part
because they also deal with Netscape, said their current
contracts with
Microsoft did not include discounts for giving Explorer a favorable
on-screen placement.
Thursday, Reback welcomed the Justice Department's action. "In
the face of
such manifestly anticompetitive behavior by Microsoft, the
government
couldn't continue to sit there and do nothing," Reback said. "But
we're
encouraged by this. There is still time for the government to
take action to
benefit consumers."
In Reback's view, the browser is to the Internet era of computing
what the
operating system has been to personal computers -- the gateway to a
technology. "What's at stake here is access to the Internet,"
Reback said.
But some analysts question whether the browser will be either as
important
to Internet computing as the operating system has been to personal
computers -- or as lucrative for the market leader.
Charles F. Rule, a partner at Covington & Burling, who is a
former head of
antitrust at the Justice Department, said it would be difficult
for the
government to ignore the recent charges against Microsoft.
"It's not at all clear that the browser is going to be as
important as the
operating system," Rule said. "But I think Justice probably has
to look into
the charges that Microsoft is violating the consent decree.
That's an
enforcement issue for Justice, and the Reback letter levels some
fairly
serious charges."
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--** History 101** Hiroshima 45 - Chernobyl 86 - Windows 95 ============================================= "The only problem with Microsoft is they just have no taste, they have absolutely no taste, and what that means is, I don't mean that in a small way I mean that in a big way. I have a problem with the fact that they just make really third rate products."
Steve Jobs, Triumph of the Nerds, PBS Documentary
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