Microsoft offers to embed competitors' software
March 27, 2000
by Staff and Wire Reports
Microsoft has offered to embed competitors' software into Windows as part of its proposal to settle federal antitrust charges, according to several news reports.
The Wall Street Journal reported Monday that personal-computer and software makers would be allowed to modify the secret "source code" underlying Windows to add rival products such as Internet browsers or media players. Microsoft (MSFT) also would offer a version of Windows without its own Internet software, sources told the Journal.
Microsoft's shares were down 4 1/4 to 107 7/16 in midday trading Monday.
Microsoft sent a detailed proposal Thursday night that included this and other proposals to Federal Appeals Judge Richard Posner of Chicago, who was appointed mediator in the case, which began with a suit in 1998 filed by the Justice Department and 19 states.
Posner has met separately with Microsoft and representatives of the Department of Justice extensively throughout the last several months.
Original deadline was Tuesday
District Judge Thomas Penfield Jackson, the presiding judge in the antitrust trial, had given the two sides a deadline of Tuesday before he hands down his conclusions of law, in which all sides expected him to find that Microsoft violated antitrust laws. But sources say that talks are likely to continue through the week, since Microsoft is addressing many of the government's major concerns.
Microsoft said over the weekend it was prepared to add to and clarify language in its proposal. It also agreed that terms of any settlement would apply to all current and future versions of Windows, including its much-heralded Windows 2000 for corporate networks, and its successors.
Sources also told the Journal that the settlement proposal also contains language that would limit Microsoft from rewarding or punishing PC makers by banning price discrimination for Windows licenses.
Although the competitive landscape has changed dramatically since the antitrust action began, the talks have been influenced by the perceived failure of a 1995 consent decree to rein in Microsoft's anti-competitive business practices and what the government attorneys have described as Microsoft's repeated and flagrant antitrust violations.
Government leery
Microsoft has denied that it breached the spirit or the intent of the decree. Government negotiators seem particularly leery that Microsoft's detailed proposal submitted last week was loaded with loopholes and hidden escape clauses meant to neuter any deal, sources told the Washington Post.
Judge Jackson has already found Microsoft holds monopoly power and abused it in dealings with rivals, customers and other companies. Much of the case centered on Microsoft's "browser war" with Netscape Communications. Netscape, which has since been acquired by America Online (AOL), at one time dominated the market for browsers to peruse the World Wide Web.
Microsoft saw Netscape as a threat to its dominance of personal computer operating systems, the judge found.
After Microsoft was unable to persuade Netscape to stop competing, the Redmond, Wash., firm bundled its own browser together with its operating system, withheld crucial information from Netscape, and pressured computer makers which needed its operating system to help crush Netscape, the judge found.
Netscape's market share and stock price dropped and it eventually sold out to America Online.
Similar behavior
Jackson found that Microsoft acted in a similar way in dealing with others, such as Apple Computer (AAPL), Intel (INTC), RealNetworks (RNWK) and IBM (IBM).
Once the judge rules that Microsoft violated the law, he will have to decide on a remedy -- a process that will likely take many more months. A final decision is expected around October, experts say.
The Wall Street Journal, Washington Post and Reuters contributed to this report. |
