Justice Dept. Renews Probe of Microsoft
In a sign the federal government may be renewing its long-standing probe of Microsoft Corp., the software giant disclosed Thursday that the Justice Department has asked it for information on how it sells products for the red-hot Internet software market.
Industry experts speculated that the Justice Department is seeking to determine whether Redmond, Wash.-based Microsoft, whose MS-DOS and Windows software operates 80% of the world’s personal computers, is unfairly trying to achieve similar dominance over the fast-growing Internet by offering customers free software that allows them to navigate the World Wide Web.
“There’s a pattern of misbehavior here,” said Tim O’Reilly, president of O’Reilly & Associates, a Sebastopol, Calif., company that sells Internet software that competes with Microsoft’s offerings. O’Reilly said he was interviewed by government attorneys last month.
Added Susan Creighton, an attorney for Netscape Communications, Microsoft’s chief competitor in the Web browser market: “We have wondered where they (Justice) have been for several months. They’ve gotten a torrent of complaints from Microsoft’s competitors. My guess is that their phones have been ringing off the hook.”
Justice Department spokeswoman Gina Talamona declined comment on Microsoft’s statements Thursday but confirmed that the agency is continuing its 3-year-old probe of the software giant.
At issue is how Microsoft sells two major types of Internet programs: browsers, which allow users to navigate the graphics-heavy World Wide Web portion of the Internet; and servers, which are programs used to manage sites and pages on the Web.
Among other stratagems, Microsoft is giving away its Explorer browser for free. More important, the company plans to include Explorer as an integrated part of its forthcoming Windows 97 operating system.
Because many personal computers are sold with Windows software included, that could give Explorer an unfair advantage among new PC buyers, rivals say. Windows 97 is due out late next year.
Although Mountain View-based Netscape also gives away its Navigator browser for free and currently controls more than 75% of the browser market, many in the marketplace fear that the fledgling company may not have the financial and marketing muscle to outlast a concerted Microsoft assault.
In a letter sent to the Justice Department on Aug. 12, Netscape alleged that Microsoft was using its dominance in personal computer operating systems to coerce computer makers, Internet service providers and others into making Microsoft’s software buyers’ only choice for accessing the Internet.
In an interview Thursday, Microsoft general counsel William Neukom suggested that the probe is focusing more on the browser market than on server software.
“We only know in the most general way that they want information regarding our browser technology,” Neukom said. “Where this goes, how broad it becomes, what will be expected of us, is something we don’t know at this point.”
Under Anne K. Bingaman, chief of the Justice Department’s antitrust division, the government has had Microsoft’s business practices under scrutiny since 1993. Two years ago, the agency entered into an agreement with Microsoft that forced the software giant to stop the way it was discounting its operating system software to maintain a competitive edge over rivals.
But Bingaman has announced she is leaving the Justice Department by the end of November. Software makers have been looking for signs indicating how her successor, Principal Deputy Assistant Atty. Gen. Joel I. Klein, will handle the Microsoft allegations.
