U.S. Won’t Act in Time to Stop Windows 95 : Computers: Aug. 24 debut of Microsoft software is virtually assured. On-line competitors express disappointment.
In a blow to Microsoft Corp.’s on-line competitors, the Justice Department said Tuesday that it is unlikely to decide whether to take antitrust action against the personal computer software giant in time to stop the Aug. 24 debut of Windows 95, the newest version of the popular operating system software.
In a terse, two-sentence statement, the department’s antitrust division said the investigation will continue. It had been widely speculated that the department would file a lawsuit this week to block the shipment of Windows 95, expected to be one of the most successful products in the history of the computer industry with sales of 30 million copies by year’s end.
Central to the investigation was whether Microsoft’s inclusion of its Microsoft Network on-line service with Windows 95 will give it unfair advantage in the market for on-line information services.
“We’re pleased that any uncertainty that our customers or partners felt about the Windows 95 launch has now been removed,” Microsoft spokeswoman Mich Matthews said. “We’re full-steam-ahead for Aug. 24.”
On-line service providers, which have stepped up their lobbying efforts with the Justice Department as the deadline neared, expressed disappointment.
“Microsoft is using its dominance in operating systems to muscle its way into and dominate our industry, and that’s not fair,” CompuServe spokesman Pierce Reid said, echoing a frequent complaint by his colleagues.
On-line service providers America Online, Prodigy and CompuServe have paid frequent visits to Assistant Atty. Gen. Anne K. Bingaman and her staff. This month the trips to Washington became more frequent.
However, four high-technology companies pleaded with Bingaman on Monday not to stop the introduction, saying they had millions of dollars invested in the development and promotion of Windows 95 products and that any delay would cause untold damage to the personal computer software industry.
One of them, Gordon Eubanks, chief executive of Cupertino, Calif., PC software maker Symantec, said his company had already manufactured 1 million copies of its Windows 95-compatible products. “This is very good news,” Eubanks said Tuesday. “The government is showing good sense.”
However, the door is still open for the Justice Department to take action against Microsoft.
Gary Reback, a partner with the law firm Wilson, Sonsini, Goodrich & Rosati, said Justice officials have told his high-technology clients “that they’re not waving a white flag. They’re going to continue to demand additional documents and will take a very proactive stance on this.”
In previous court filings, Justice officials said they had hoped to file an injunction in time to halt the product’s release. But as they continued mulling over their options, the time needed to stop Windows 95 ran out. Legal experts said Microsoft would probably be given about 20 days after an injunction was filed in which to prepare for a hearing.
If Windows 95 is pulled from the market, Microsoft can file a countersuit against the government charging “irreparable harm” and requesting millions of dollars in monetary damages. That makes it less likely that a federal judge would approve such an action, antitrust lawyers said.
William Baxter, a former assistant attorney general under President Ronald Reagan who presided over the breakup of AT&T;, said the Justice Department’s case against Microsoft is weak because it is attempting to prove that the company will dominate a market before it has even entered it.
On-line service providers say they will be satisfied if Microsoft would include their services with Windows 95, something that Bill Miller, marketing director for the Microsoft Network, said his company is unwilling to do.
“We’re not in the business of distributing other companies’ software,” Miller said. “It’s an outrageous thing for our competitors to ask of us. Anyway, we’re not hearing any hue or cry from our customers to do that.”
Said Prodigy marketing director Brian Ek, “One of two things would make us happy: Either they come out of the box or we go in.”
Meanwhile, Microsoft disclosed higher-than-expected prices for the Microsoft Network, a move that on-line service providers believe is a response to the Justice Department investigation. Microsoft denied the accusation.
Standard service will cost at least as much as any of the three major on-line service providers. Microsoft plans to charge $4.95 a month, including three free hours with any additional time costing $2.50 an hour. But accessing some information centers will cost extra, Miller said, offering few specifics on what kind of services will command a premium. Most of the 200 information centers that will be available on the day the network debuts will not cost extra, he said.
Microsoft will limit membership to 500,000 subscribers in the first six months of operation and a million after a year. Together, the rosters of the three leading on-line service providers total 7 million.
