Justice seeks $1 million a day
contempt fine against
Microsoft
October 20, 1997
Web posted at: 2:00 p.m. EDT (1800 GMT)
WASHINGTON (AP) -- The Justice
Department asked a federal court Monday
to hold the computer software giant
Microsoft Corp. in contempt for requiring
personal computer manufacturers to license and distribute its
Internet browser, Internet Explorer.
The department said the company violated a 1995 court order the
government obtained to bar the company from anticompetitive
licensing practices. The government sought a $1 million a day fine.
"Microsoft is unlawfully taking advantage of its Windows
monopoly to protect and extend that monopoly," Attorney General
Janet Reno told reporters.
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A Microsoft spokeswoman said the
company had no immediate comment
but would put out a statement and
likely hold a news conference later
Monday.
"This is a very serious abuse," said
Assistant Attorney General Joel I.
Klein, head of the Justice
Department's antitrust division. He said Microsoft's action was
designed to undermine the dominant market position of its major
competitor for Internet browsers, Netscape.
Internet browsers are important, Klein said, because they "could
erode Microsoft's operating system monopoly" in the Windows
operating system. "This kind of product forcing is an abuse of
monopoly power and we seek to put an end to it."
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Klein emphasized that the Justice Department is still investigating
other practices by Microsoft but declined to give details.
The Justice Department objected to Microsoft's requirement that
computer manufacturers who want to license the Windows 95
operating system also license its internet browser, known as
Internet Explorer. Most personal computer makers install
Windows 95 at the factory.
Klein said, "These are two different
products." He said they should be sold
as two separate products, but he
adamantly said the government was
not taking sides in the war for browser
market share between Microsoft and
Netscape, whose browser is known
as Navigator, or any other company.
"Each of Microsoft's products should
compete on its own merits," Klein said.
Microsoft's new browser software blurs the line between personal
computers and the Internet. By working closely with Microsoft's
Windows 95 operating software, Internet Explorer lets people
easily point and click between desktop files and Web sites.
"Anyone can give away a browser, but no one can force it onto a
computer desktop unless you have monopoly power," Klein said.
Antitrust law does not bar monopolies achieved by a company's
talent and ingenuity, but does prevent abuse of that monopoly.
"When you use that power to snuff out a new entrant, that's what's
prohibited," Klein said.
The department asked the U.S. District Court here to fine
Microsoft $1 million a day until it stops requiring personal
computer manufacturers to accept Internet Explorer as a condition
of receiving Windows 95.
The government also asked the court to require Microsoft to notify
consumers who own personal computers with Windows 95 that
they are not required to use Internet Explorer and to give them
instructions on how to remove the visual Internet Explorer icon
from their computer desktop if they choose.
The department also asked the court to strike down parts of
Microsoft agreements with customers that the government said
could be used to withhold vital information.
Microsoft has advised the department it would not insist on prior
disclosure when the department approaches companies or
individuals and assures them it will keep the information
confidential, the department said. Klein said this agreement did not
cover people who come forward voluntarily.
Microsoft's stock immediately turned lower after the
announcement. The shares, which had gained as much as $3 earlier
in the session, were down $2.25 to $130 by early afternoon on
Nasdaq Stock Market.
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