Re: Letter to U.S. Department of Justice regarding
Microsoft and Internet Browser Market
The following is a sign-on letter to the U.S. Department of Justice asking that the agency take action to prevent Microsoft from monopolizing the
market for Internet browsers. Specifically, the letter asks DOJ to stop Microsoft from engaging in predatory pricing of Microsoft Explorer
(MSE), and that Microsoft be prevented from bundling MSE with operating system (OS) software such as Windows 95. If you are interested in
adding your name, send the following information to James Love <love@cptech.org> by October 10, 1997.
Mailto: love@cptech.org
Name: ____________________
Title (optional): ___________________
Affiliation (optional): ____________________
City, State: ____________________
Internet address: ____________________
Comments: ____________________
the letter follows ------------------------------------------------------
Joel I. Klein
Assistant Attorney General
Antitrust Division
U.S. Department of Justice
Washington, DC
antitrust@usdoj.gov
Dear Mr. Klein:
We are writing to ask the Department of Justice (DOJ) to protect consumers by taking action to prevent Microsoft from using anticompetitive
practices to monopolize the market for Internet browsers. Specifically, Microsoft should not be permitted to drive Netscape and other products
out of the market by offering the Microsoft Explorer (MSE) for free; and Microsoft should not be permitted to bundle the MSE with its operating
system, or integrate the MSE with the operating system in ways that are unavailable to other firms.
As you know, Microsoft now has achieved a remarkable degree of monopoly power in the worldwide market for the operating system (OS) for
personal computers. The problem with this monopoly is not so much that Microsoft overprices the OS. The problem is that Microsoft has used
its monopoly in the OS market to gain unfair advantages in the markets for applications and services which work with the OS. There is ample
evidence that Microsoft has used its control over the proprietary operating system in a number of anticompetitive ways, such as closely
controlling access to information about the current and future functionality of the OS, making it difficult for competitors to design products which
fully exploit the capabilities of the OS, while remaining compatible with current and future versions of the OS.
When Microsoft engages in anticompetitive behavior to monopolize applications markets, it effectively drives products out of the market. This
has the effect of reducing competition, not only in terms of the prices that are charged, but even more importantly, in terms of innovation. As you
know, software products compete on more than price, and we are very concerned about the impact of Microsoft’s monopoly power on
software innovation.
It is the responsibility of DOJ to ensure that Microsoft does not use its OS monopoly to monopolize the market for applications. More needs to
be done in this area. The unfolding drama in the market for Internet browsers is our immediate concern.
The Importance of the Browser Market
Today Internet browsers operate on top of the Microsoft OS to manage a large number of important applications which run over the Internet. In
addition to providing the user interface for viewing and interacting with Web pages, browsers can launch new applications, such as streaming
audio or video. Independent developers write plug-ins and other applications that work with the browsers. Microsoft correctly sees this as a
threat to their OS monopoly. If there are several browsers in the market, it is more probable that the standards for browsers, web pages and
various applications will be open, rather than proprietary. We are concerned that if Microsoft succeeds in bankrupting Netscape or driving
Netscape from the browser market, by pricing the MSE at zero, Microsoft will exercise too much power in key areas of standard setting for
Internet applications.
We also believe consumers have suffered from the dearth of competition among firms that could offer competing browser products, if the prices
for browsers were greater than zero. While consumers do benefit currently from head-to-head competition between Netscape and Microsoft,
the predatory pricing of the MSE has discouraged other firms from entering the market. The predatory pricing of the MSE has also changed the
functionality of browsers in important ways, particularly in terms of consumer preferences for privacy.
Since Netscape or new entrants have difficulty in charging the consumer for their browsers, they have to rely upon business plans that use the
browser as an interface for commercial transactions. This has had a profound effect on the design of Browser features, and it is likely to have
very important effects on future Internet standards for information flows.
Consider, for example, the dilemma faced by Netscape. Netscape is now largely unable to charge consumers for the browser, but it hopes to
set non-zero prices for its server software. Important features in the server market may involve such issues as tracking the identity of consumers,
broadcasting advertisements, or tracking the redissemination of information. In each of these areas, consumers may prefer privacy or the ability
to better avoid commercial content. This presents conflicts. But the predatory pricing of the MSE pushes Netscape (and Microsoft) to model
the functionality of the browser to suit the server market, rather than address the concerns of end users. In our view, this is a consequence of
Microsoft’s predatory pricing.
Our objection to the predatory pricing of the MSE is not a general complaint about free software or even promotional offers. Indeed, we
support many of the freeware, shareware and free promotions that are offered on the Internet. What is different about the MSE case is that
Microsoft is clearly seeking to drive competitors out of the browser market to extend its current OS monopoly power to the platform for a new
generation of Internet applications.
DOJ Should Seek Remedies
We urge DOJ to immediately take steps to protect competition and open standards in the area of Internet browsers. Microsoft should be
prevented from charging a zero price for the MSE, which it spends untold millions of dollars to produce, advertise and distribute. Microsoft
should also not be permitted to bundle or integrate its browser into the OS, which is a monopoly. This matter is extremely important to the future
of an open and competitive platform for Internet communications.
In considering this issue, DOJ should appreciate the social significance of Internet communications. The market for Internet browsers is
particularly important because it concerns the technologies used to facilitate publishing and broadcasting information over the Internet. The public
interest in avoiding the monopolization of this market is substantial.
Sincerely,
Names added here... |
