U.S. Expands Review of 4 Microsoft Deals

Broadening its scrutiny of Microsoft Corp., the Justice Department said Tuesday that it is reviewing the software giant’s proposed $150-million investment in Apple Computer Inc. and its stake in three smaller companies.

The government wants to find out if some of Microsoft’s latest deals may be stifling competition in the high-tech business, violating an earlier agreement. Separate from Apple, federal antitrust investigators are looking into Microsoft’s purchase of stakes in Palo Alto-based VDONet Corp., Progressive Networks Inc. and VXtreme Inc.--three firms that make video technology for use on the World Wide Web.

Microsoft’s investment in rival Apple, announced Aug. 6, buys it only a minority, nonvoting stake in the struggling Cupertino-based maker of Macintosh computers. But the deal also calls for Apple to make Microsoft’s Internet Explorer browser the easiest way for users of Mac computers to cruise the Internet, dealing a blow to rival browser maker Netscape Communications Corp.

Antitrust experts say this aspect of the deal likely caught the interest of federal investigators, who began a year ago looking into complaints from Netscape that Microsoft was abusing its market clout--charges that Microsoft denies.

With the Apple pact, Microsoft now has agreements with nearly every major PC maker, and Netscape’s Navigator browser, although still dominant, is rapidly losing customers to Internet Explorer.

Microsoft, based in Redmond, Wash., said through spokesman Mark Murray that it was unaware of the government’s review of its stake in Apple, but confirmed that it had received requests for information for its smaller investments in the video technology companies.

Apple spokeswoman Katie Cotton said the company hadn’t received “any official notification” that Microsoft’s investment is under investigation.

Justice Department spokeswoman Gina Talamona would only say that the antitrust division is “looking at Microsoft’s proposed transaction involving Apple.”

Microsoft shares rose $4.94 to close at $128.81. Apple shares rose 81 cents to close at $24.44. Both trade on Nasdaq.