To: scott maragioglio who wrote (22687 ) 11/11/1997 3:15:00 PM From: Glenn D. Rudolph Respond to
Microsoft says government "sides" with rivals
Reuters Story - November 11, 1997 14:29
%US %WASH %ELC %ENT %JP %DPR MSFT NSCP DELL CPQ 6701.T V%REUTER P%RTR
(Adds background; stands for MICROSOFT 1STLD on Bizschedule)
By David Lawsky
WASHINGTON, Nov 11 (Reuters) - Microsoft Corp. Tuesday
defended itself against allegations of illegally using monopoly
power, charging the government is "taking sides" to prevent the
software company from improving consumer products.
Microsoft's 43-page document is the latest volley in its
battle with the government, which is trying to win $1 million a
day in fines against the company for alleged violations of a
1995 agreement meant to foster competition.
The government also wants U.S. District Judge Thomas
Penfield Jackson to order Microsoft to drop secrecy language
requiring personal computer manufacturers to notify Microsoft
before talking with government investigators.
In its 1995 consent decree with the government, Microsoft
agreed not to tie the purchase of one product to another but
retained the right to develop new, integrated products.
Microsoft now contends that is a false distinction.
"There is no reason why a 'separate product' cannot also be
part of an 'integrated product,'" the company argued. It said
the government is merely trying to disable its ability to
compete.
"Although the DOJ (Department of Justice) professes not to
be 'taking sides' in a competitive battle that continues to
provide clear benefits to consumers, that is precisely what the
DOJ is doing," the company said in its filing.
Microsoft is fighting for dominance in the Web browser
market with Netscape Communications Corp., which holds a
majority of that market.
Last month, the government released documents showing
Microsoft threatened to cut off its vital Windows 95 operating
system software to any PC manufacturer highlighting Netscape's
Navigator on its "desktop" screen instead of Microsoft's
Internet Explorer.
The government called those threats an attempt by Microsoft
to leverage its monopoly position so it could muscle out the
competition. Windows is used on an estimated 90 percent of all
PCs worldwide.
But Microsoft argued in its brief that it is protecting the
integrity of Windows 95, asserting the government "is just
wrong." Microsoft said removing Internet Explorer could impair
other parts of the operating system.
Microsoft, based in Redmond, Wash., also denies it holds a
monopoly.
"Windows 95 is unquestionably popular with consumers, but
that does not establish that Microsoft wields monopoly power,"
it said. Monopolies are not illegal, but the use of monopoly
power to force companies to purchase other products is.
One of the most contentious issues in the government's
battle with Microsoft is over secrecy. Microsoft requires many
computer manufacturers to sign secrecy agreements as one of the
conditions for obtaining Windows 95.
Some of the "non-disclosure agreements" say companies may
not talk to government investigators -- even if they are
subpoenaed -- before notifying Microsoft.
Microsoft says it will not interfere with government
investigators and contends any bid to force it to change its
secrecy agreements is beyond the scope of the consent decree.
Key to arguments on both sides are PC manufacturers
themselves. The government compelled testimony from PC
manufacturers in a bid to prove they were forced to drop
Netscape Navigator. But Microsoft offered its own depositions,
from the same manufacturers, to buttress its case.
Dell Computer Corp., Compaq Computer Corp. and NEC Corp.
affiliate Packard Bell all said the integration of Internet
Explorer into Windows 95 did not diminish their willingness to
install alternative Web browsers if justified by demand.
Microsoft stock rose $1 to $131.19, while Netscape stock
dipped 75 cents to $32.375, both in early afternoon trading on
Nasdaq.
