Microsoft Will Let Gateway Customize PC Buyers’ Screens
Microsoft Corp. on Wednesday yielded some control over its software to a major maker of home computers, showing flexibility that could bolster its defense against the government’s antitrust case.
Microsoft agreed to give Gateway Inc., the nation’s fourth-largest maker of personal computers, more freedom to customize the screen people see when they turn on their PCs.
“We have gained some flexibility in our negotiations with Microsoft,” Gateway Chief Executive Ted Waitt said.
Gateway’s exception in its Windows 98 license lets users who buy a Gateway computer and sign up for the Gateway.net Internet service see the Windows 98 start-up screen for a brief moment followed by a customized Gateway screen that lets users choose a Web browser and an e-mail address. Also, Gateway now will offer both Internet Explorer from Microsoft and Netscape Communications Corp.’s Navigator browser. Before this, Gateway only offered Explorer.
Word of the deal came nine days after 20 states and the federal government sued Microsoft, claiming its contracts with PC companies imposed too many restrictions. Microsoft is accused of making it difficult for the computer makers to promote features and programs from Microsoft rivals, including Netscape’s browser for viewing and retrieving information on the Internet.
Microsoft spokesman Jim Cullinan declined to say whether Microsoft was negotiating similar deals with other PC makers. But he said “Gateway does have a special circumstance” because it owns an Internet-access service.
“I think it’s a step in the right direction, and maybe will signal a trend. But really nobody can say at this point it is the beginning of a different kind of practice on the part of Microsoft,” said Richard Blumenthal, attorney general in Connecticut, one of the 20 plaintiff states.
Gateway said the choice of Internet browsers was restricted to computer users who sign up for Gateway.net, which has about 100,000 subscribers.
Several major Internet service providers require people accessing the Net to do so using Microsoft’s browser. The government also is trying to loosen Microsoft’s restrictions in its contracts with Internet service providers.
“This is something we negotiated with Microsoft,” said Gateway Chief Operating Officer Jeffrey Weitzen. “This is just the first implementation of this. There’s a lot of potential for that screen; it’s very important to us.”
Microsoft’s new flexibility could help it regain the public-relations initiative in its escalating battle with antitrust lawyers. Microsoft suffered a setback Friday when a federal judge set the software maker’s antitrust trial for Sept. 8.
The agreement with Gateway “could demonstrate to the court and public at large that Microsoft . . . is more flexible than it was made out to be,” said Jonathan Jacobson, an antitrust lawyer in the New York office of Akin Gump.
Still, simply giving buyers of one computer brand a choice of another browser may do little to help Netscape regain lost ground. Netscape saw its market share slide to about 60% after computer makers began installing Microsoft’s free Internet browser.
“It’s like an election. This isn’t dictating the winner, it’s simply saying, ‘We’ll hold an election.’ People may not choose Netscape,” said Greg Blatnik, a computer industry analyst with Zona Research Inc. in Redwood City, Calif. Netscape officials did not immediately return telephone calls Wednesday.
Gateway and Hewlett-Packard Co. had said in government depositions that they wanted more control of the start-up screens and that Microsoft’s licenses thwarted them from doing so.
Dell Computer Corp. and Compaq Computer Corp. said they have no plans to customize their start-up screens and aren’t seeking to change the terms of their licensing agreements with Microsoft.
