Barry, don't have those 13 states, but here's possibly good news (at least from a "Wintel" stock point of view) in a San Jose Mercury News article:
"Microsoft moves soften its aggressive tactics"
exchange2000.com
Posted at 12:29 a.m. PDT Friday, May 1, 1998
Microsoft moves soften
aggressive tactics
BY RORY J. O'CONNOR AND JODI MARDESICH
Mercury News Staff Writers
Three times in six weeks, on the eve of a crucial
interaction with the federal government, Microsoft
Corp. has seemed to flinch.
In each case the software giant -- embroiled in an
antitrust battle that could redefine the company --
made hasty, technical changes to its licensing
practices. Microsoft officials say each change was a
business decision, unmotivated by the company's
legal troubles.
Yet taken together, the moves softened some of the
company's most aggressive tactics in its competition
with rival Web browsers and content providers. For
example, Microsoft says it will no longer insist that
content partners promote only the Internet Explorer
browser on some parts of their Web sites.
Observers agree that the changes leave Microsoft in
a stronger position as it battles -- in federal court and
the court of public opinion -- the charge that it
competes unfairly. By eliminating practices that were
hard to explain away, the company can focus
attention on what it considers its strongest argument:
that Microsoft's competitiveness is good for
consumers, because it ensures them the most
innovative products.
''Each one of those was a smart move to defuse
potential problems on the antitrust front,'' said Rich
Gray, a partner specializing in antitrust and
intellectual property at Bergeson, Eliopoulos, Grady
& Gray, a San Jose law firm.
It remains to be seen how well this new posture will
work. One of the most important players in the chess
match, the Justice Department, has nothing to say
about the changes or their potential impact on the
pending case regarding Microsoft's promotion of
Internet Explorer.
Nor do the concessions appear to have sidetracked
federal or state antitrust enforcers, who continue
pursuing a broader antitrust case against the
company. Officials of several states said Thursday
they may file a joint case within a couple of weeks --
a time frame dictated by the upcoming release of
Windows 98. The Justice Department said its
investigation into the company remains open.
But the company's critics concede that the changes
address some of their sharpest complaints -- even as
they raise questions about whether Microsoft can be
trusted to maintain them.
''They could be significant,'' said Mitchell S. Pettit,
director of ProComp, an industry lobbying group
formed to oppose Microsoft. ''The real question is,
are they permanent or are they temporary examples?
(To make them permanent) they could have an
agreement with the Justice Department on that.''
Provisions defended
Microsoft, of course, wants no such agreement. The
company's chief operating officer, Robert J.
Herbold, said the trio of contractual modifications
were business decisions. He also defended the
original licensing provisions as ''completely legal
and common in all sorts of businesses, including the
software business.''
The timing of the concessions, though, has been hard
to ignore. Each time, public sentiment or media
coverage was mounting against Microsoft, just
before strategic appearances before each of the three
branches of government. Like steak thrown to an
angry guard dog, the Microsoft concessions appeared
designed to appease first a vexed Senate Judiciary
Committee, then indignant Justice Department
attorneys, and finally a trio of federal judges.
The first concession came in early March, on the eve
of a Senate hearing featuring testimony by company
Chairman Bill Gates. Microsoft announced the day
before the hearing that it would ease restrictions in
contracts with 40 Internet service providers that had
prevented them from promoting competing browsers
on parts of their Web sites.
Formerly, the companies had been prohibited from
referring to competing browsers on the first page
seen by consumers who chose the provider from a
list within Windows' Internet setup routine. That's a
powerful requirement: In a recent Georgia Tech
survey of Web users, the study found that most
novices chose the browser their ISP promotes.
Then, just before Microsoft chief attorney William
Neukom was scheduled to meet with Justice
Department antitrust chief Joel Klein in Washington,
D.C., on April 10, the company made a similar
concession to several of its closest content partners.
They would now be free to promote any Internet
browser on the main page of their site reached from
Microsoft-supplied icons on the Windows desktop.
The most recent concession occurred on April 20,
when the company said it would permit its primary
customers, computer manufacturers, to remove the
channel bar'' component of Windows when
configuring their machines for sale to consumers.
The channel bar contains icons that, with a single
click from the main Windows screen, send
consumers directly to the Internet sites owned by
Microsoft or some of its closest partners, like Disney
Online and Pointcast.
PC manufacturers already had the option to ship
computers to corporate customers without the
channel bar. Now they can take the channel bar off
retail computers as well. Microsoft said users have
always had the option to customize their own channel
bar.
The changes clearly address some of the issues for
which Microsoft has received the greatest criticism.
''I think it is an attempt to blunt and take away a
couple of the more visibly obnoxious aspects of their
policies which were untenable,'' said company critic
Ed Black, president of the Computer and
Communications Industry Association, a lobby that
includes arch-rival Sun Microsystems as a key
member.
Gates came under intense questioning from senators
about the prohibitions on promoting rival browsers,
most notably Navigator from Netscape
Communications Corp. Sen. Orrin Hatch, R-Utah,
chairman of the committee, pressed the Microsoft
CEO repeatedly about the potential anti-competitive
nature of the provisions.
Gates was hard-pressed to respond. But now, with
the practices repealed, he and other company
officials can make a more vigorous argument: that
Microsoft seeks only to make better products for
consumers, and that the government should do
nothing to interfere in such a market-based activity.
It's an argument far more likely to resonate with the
public than points of contracts or licensing that
restrict mention of Microsoft competitors. And
Microsoft officials are already using it to justify
much of what they are doing with Windows.
Herbold, for example, used that argument to
proclaim Microsoft's right to control the appearance
of the initial display on PCs using Windows. If users
were to turn on the PC and see a screen designed by
the computer manufacturer rather than Microsoft,
''they're going to be potentially feeling like they got
cheated. . . . We have that right to say, hey, we're
here.''
Opponents say Microsoft still engages in plenty of
practices that are not so easily defended.
Adding NetShow
For example, the company is adding NetShow, a
player for viewing streaming audio and video via the
Internet, into a future version of Windows -- a move
that may stymie competition in the market for those
players. And the company has begun giving
customers discounts on Windows 98 if they buy a
palmtop computer that uses Windows CE,
Microsoft's stripped-down operating system. That's a
tactic that puts Palm Computing, whose Pilot
competes with CE palmtops, at a disadvantage.
Gary Reback, a partner with Wilson Sonsini
Goodrich & Rosati, a Palo Alto law firm that
represents Netscape, believes Microsoft's recent
concessions serve to deflect attention from other
areas where Microsoft is crossing the line. ''They
want you to focus on (the concessions dealing with
browsers), and they're going to go off and kill the
next round of technology, which will be dead before
you even knew they could come into existence.''
Microsoft officials deny that. But they also pledge
that they won't make more changes that could be
labeled ''concessions'' -- at least for now.
''As we sit here, the answer is no, but you shouldn't
view that as a decision forever in time,'' Herbold
said.
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