By Lamia Abu-Haidar and Dan Goodin
October 23, 1997, 8:00 p.m. PT
update As key pieces of evidence emerged in the
Justice Department's antitrust case against
Microsoft (MSFT), details were revealed of how
the software company required computer makers
to bundle its Internet Explorer browser with its
Windows operating system.
The documents, part of the evidence released by
the government Monday, outline exactly how
Microsoft forced computer
vendors like Compaq
Computer, Gateway 2000, and
Micron Electronics to include
Internet Explorer and
Microsoft Network icons on all PCs that came
preinstalled with the Windows 95 operating system.
The first hearing on the charges that the software
giant violated a 1995 court settlement aimed at
curbing anticompetitive tendencies is set for
October 27 at 9:30 a.m. ET before U.S. District
Court Judge Thomas Penfield Jackson. A court
spokeswoman said the hearing will be for
scheduling upcoming proceedings.
Among the evidence the court eventually will hear
includes the following: a June 6, 1996 letter from
Don Hardwick, Microsoft's group manager of
OEM sales, to Celeste Dunn, Compaq's vice
president of consumer software business. In it,
Hardwick said Microsoft would terminate
Compaq's Windows 95 license agreement unless
the computer vendor carried the Explorer icon on
the desktop. Compaq, at the time, was selling PCs
equipped with Microsoft's rival Internet browser,
Navigator by Netscape Communications.
"We would like to resolve the above-mentioned
Notice of Intent to Terminate letter in as quick and
mutually agreeable a manner as possible," wrote
Hardwick. "To accomplish this, Microsoft is
requesting that Compaq replace the Microsoft
Network and Internet Explorer icons on the
Windows 95 desktop on all Compaq Presario
machines."
Less than three weeks later, Hardwick sent another
letter acknowledging Dunn's agreement to replace
the icons and rescinding Microsoft's threat of
termination.
Another key piece of evidence is an October 17
deposition, in which Compaq's Steven Decker
testified that although Netscape was its browser
partner, Compaq put Microsoft's icon back onto its
Presario line because of heavy pressure from the
software giant.
In addition, James Joseph Van Holle of Gateway
2000 testified in a September deposition that
Microsoft had not renewed Gateway's Windows
95 license agreement but merely extended it
instead. Van Holle testified that he believed
Microsoft was using the Windows 95 license
agreement as leverage while it negotiated
distribution of other products with Gateway. (One
other document examined by CNET's
NEWS.COM is an "interrogatory," or written
answers to Justice Department questions, in which
Gateway elaborates on its software license with
Microsoft.)
Finally, in a similar unfolding of events, Eric
Browning, a department manager at Micron, said in
a declaration that Micron executives contacted
Microsoft to see if the company could remove the
Internet Explorer icon. Microsoft's response was
no, he stated.
"In my view, it is desirable for Micron to be able to
choose which browser(s) it preinstalls and to be
able to customize the preinstalled browser(s),"
Browning wrote. "By contrast, it is my
understanding that as a result of the terms of the
Microsoft license agreement covering Windows 95
(and Internet Explorer), Micron is prohibited from
customizing or modifying in any way the version of
Internet Explorer that comes bundled with
Windows 95."
At least one of the computer vendors is attempting
to downplay the significance of the evidence it
provided to the Justice Department. In a prepared
statement, Micron's chairman and chief executive
Joe Daltoso, said: "We do not understand why
some reports have characterized this
declaration--which the Justice Department
compelled us to provide--as a complaint against
Microsoft," adding that his company's negotiations
with Microsoft were standard practice in the
industry.
Daltoso appeared to smooth over statements made
by Browning, Micron's manager, saying that
Explorer "is our solution of choice."
At a news conference in San Jose, California,
Microsoft executive vice president Steve Ballmer
summed up the software company's attitude
succinctly: "I say to heck with Janet Reno."
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