DOJ scrutinizes Microsoft buyouts
By Jeff Pelline
August 19, 1997, 10:00 a.m. PT
update The Justice Department is probing
Microsoft (MSFT) for its acquisitions and
investments in the video streaming market, as well
its stake in Apple Computer.
Although Microsoft's $150 million investment in
Apple does not require an antitrust filing, the agency
still can review such investments for possible
antitrust effects, an agency spokeswoman said.
"We're looking at these transactions," she said.
As reported last night by CNET's NEWS.COM,
Microsoft spokesman Mike Murray said he is not
aware of any such review of the Apple-Microsoft
deal. Apple has not been notified about the review
either, according to an Apple spokeswoman.
Murray said Microsoft received "a request for
information" involving its recent acquisition of
VXtreme, as well as an earlier deal to buy a 10
percent stake in Progressive Networks. (The
Justice Department also is reviewing an earlier
video streaming deal involving VDOnet.) But
Murray cautioned: "Just because they are reviewing
[these deals] doesn't mean there are any
anticompetitive issues."
Progressive Networks, which makes RealAudio
and RealVideo software, also received a request
for information in the case.
Microsoft said it will cooperate fully with the
"non-public inquiry." "We are confident that the
Justice Department will conclude that competition is
robust once it reviews all the facts," said William
Neukom, Microsoft's senior vice president of law
and corporate affairs. Besides Microsoft, Oracle,
Silicon Graphics, IBM, and Sun Microsystems have
announced streaming products, the company said.
Microsoft's business practices have come to the
Justice Department's attention before, but this
review marks the first since it launched a bold
acquisition and investment strategy into more
consumer-driven businesses this year, including a
$1 billion investment in cable television giant
Comcast, a 5 percent investment in VDOnet, and
the $150 million investment in Apple. The
investment strategy has come under fire by many
competitors of Microsoft.
The Progressive deal, in which Microsoft holds a
minority, nonvoting interest, gives the software giant
the technology and market penetration it needs to
push its technology as a standard for the streaming
multimedia industry, analysts said. By defining a
standard, the company can neutralize competitors,
analysts say.
Last month, the Federal Trade Commission
rejected the request by three senators to reopen an
independent antitrust investigation of Microsoft's
business practices. The senators felt the Justice
Department's ongoing antitrust investigation was
proceeding too slowly.
The senators were acting on allegations that the
Redmond, Washington, company was not abiding
by a 1994 consent decree that blocked it from
using its Windows operating system to leverage the
shipment of other Microsoft software. Microsoft
executives denied any such breach.
In May, NetAction, an Internet-based consumer
advocacy rights group, opened a campaign to
"mobilize cyberspace consumers to demand
stronger enforcement of antitrust laws to prevent
monopolies." It primarily targeted Microsoft. |
