On-Line Services Urge Microsoft to ‘Unbundle’ Windows 95 : Computers: Software giant says there is no turning back from its decision.
The heads of the nation’s three leading commercial on-line computer services on Wednesday urged Microsoft Corp. not to include its own on-line offering in its Windows 95 operating system scheduled to be released next month.
In a Washington press conference, the chief executives of America Online, CompuServe and Prodigy released copies of a one-page letter they sent to Microsoft Chairman Bill Gates criticizing the arrangement, and said they would also appeal to Congressional leaders to support a Justice Department investigation of the software giant’s proposed on-line service.
“When it comes to the on-line business, we are not going to stand by while Microsoft engages in practices that jeopardize what is now an open, competitive and growing industry,” said CompuServe President Bob Massey in a statement issued before the press conference.
Microsoft is preparing to go before a federal judge Monday to argue that the Justice Department’s recent request for additional information on Microsoft’s new on-line network be turned down.
For months, the Justice Department has been investigating whether Microsoft’s bundling of an on-line service with its new Windows 95 computer operating software violates federal antitrust laws. But the department’s probe has reportedly been proceeding cautiously out of concern that there may not be sufficient legal precedent to force Microsoft to “unbundle” the network from Windows 95.
Even lawyers for the on-line services concede the difficulty of assembling an antitrust case because the technology is new and the Microsoft Network does not yet have a single paying customer.
“It is generally illegal for someone with market power to tie a second product to the first one” like Microsoft is attempting to do by bundling access to their on-line service in the operating system, said Donald I. Baker, a Washington antitrust lawyer, retained by CompuServe. “But antitrust cases turn very heavily on specific facts. . . . Here, there are a lot of unknowns . . . this is a very unusual case.”
Although Microsoft general counsel Bill Neukom and other company executives maintained previously that Microsoft was making contingency plans to sever the network from Windows 95 if necessary, the software giant now says there is no turning back.
“There are no actionable antitrust issues that arise from the fact that we intend to include, with Windows 95, the access code to the Microsoft Network,” Neukom said.
On-line services allow computer users to send electronic mail, retrieve software or text or other electronic information, and participate in discussion groups on topics ranging from home maintenance to O.J. Simpson.
In the three months ending June 30, an average 14,000 people a day joined a commercial on-line service, whose total subscribers now number 8.6 million, according to the Information & Interactive Services Report, a Washington-based trade publication.
Microsoft’s on-line rivals now pay computer makers millions of dollars a year to add their access software to the mix of third-party programs bundled with many new computers, and also distribute access software via mail and computer magazines and other channels. Windows 95, which is expected to sell some 30 million copies by year-end, amounts to superior distribution mechanism that is available only to Microsoft.
Microsoft “has never before taken the step of using the operating system as a marketing tool,” said Steve Case of America Online.
The on-line service providers said letters are being sent to Senate Majority Leader Bob Dole (R-Kan.) and other Congressional leaders asking for their support for the Department of Justice investigation.
Dole said earlier that news media reports indicated the software company was being harassed by “overzealous” government investigators.
