U.S. Expected to File Suit Over Microsoft’s Windows 98

The Justice Department was back in court against Microsoft Corp. on Thursday in a dispute that foreshadows possible new, major government action within days against the software giant.

The government filing included revealing depositions from two Microsoft executives who said they had decided to press ahead with development of the company’s Windows 98 operating system despite a troubling court order issued last December.

That order said Microsoft could not bundle its operating systems with its Web browsers. Instead, it had to offer computer makers an alternate version.

Although no final decision has been made, attorneys close to the case say the Justice Department will file suit before next Friday, when the Redmond, Wash.-based company is due to begin shipping its new Windows 98 operating system software to computer manufacturers.

The Justice Department’s primary focus is expected to be the integration of Microsoft’s Internet Explorer browser into Windows 98. The government has already challenged Microsoft’s bundling of Explorer with Windows 95, Microsoft’s current operating system that is used on about 90% of all computers.

Microsoft stock fell $3 on Thursday to close at $83.38 on Nasdaq. The stock has dropped 16% from its all-time closing high of $98.88 on April 22.

The Justice Department is expected to ask the courts to force Microsoft to sell a version of Windows 98 without a browser attached or to hide the Explorer icon on the desktop so new computer users won’t turn to that browser first to get onto the Net.

In addition, the government is expected to challenge Microsoft’s push to develop a version of Sun Microsystem’s Java programming language that would work exclusively on Windows.