Microsoft Faces Federal Contempt Charge

Microsoft faces federal charges of contempt on Tuesday for allegedly violating a judges order requiring the software giant to sell computer makers its Windows 95 software without bundling in a Web browser.

The Justice Department has asked U.S. District Court Judge Thomas Penfield Jackson to fine the worlds largest software manufacturer $1 million a day for violating his Dec. 11 preliminary injunction.

The government says the fine is needed to force the Redmond, Wash., software giant to adhere to a 1995 consent decree designed to increase competition in the software industry.

The government stepped in last fall, after Microsoft threatened to cut off Compaq Computer Corp.s access to Windows 95. Compag needs Windows to stay in business.

Compaq was doing business with Microsofts bitter rival, Netscape Communications Corp., which has the lead in the market for browsers although Microsoft is gaining. Browsers are used to access the World Wide Web on the Internet.

Microsoft objected that Compaq chose to remove an icon for its Internet Explorer Web browser from the Windows 95 desktop.

Microsoft told Compaq in a June 6, 1996 letter that it must restore Microsoft Network and Internet Explorer icons on the Windows 95 desktop on all Compaq Presario machines.

Otherwise, Microsoft warned, it would terminate Compaqs 1992 license agreement for Windows. The Justice Department says Microsofts threat violated the consent degree, which says Microsoft may not tie the sales of one product to another.

Microsoft has argued that Internet Explorer is an integrated part of Windows 95. Under the consent agreement, Microsoft can sell integrated products.

Judge Jackson appointed Harvard law professor Lawrence Lessig, an expert in both computers and the law, to gather evidence and make recommendations to him by the end of May.

In the meantime, he issued his preliminary injunction to preserve the status quo, saying that for the time being, Microsoft must offer the products separately.

Microsoft complied by offering an outdated version of Windows 95 or one it said would not work. Microsoft argued that its Internet Explorer Web browser could not be removed without damaging Windows 95.

At a hearing on the matter, Jackson said he had seen a court employee demonstrate the removal of Internet Explorer. He said Windows 95 appeared to work flawlessly after the Microsoft Web browser was removed and asked the company to explain why computer makers should not be allowed to do the same.

Microsoft contends it has followed Judge Jacksons order.

The courts order was very specific: Allow computer manufacturers to install Windows 95 without the files that comprise the retail version of Internet Explorer 3.0. Microsoft has complied fully with the courts order, the company said in an information book distributed to reporters late last week.

The Justice Department said Jacksons order was never that specific.

Jackson ordered the company to cease and desist ... from the practice of licensing the use of any Microsoft personal computer operating system (including Windows 95 or any successor version thereof) on the condition, express or implied, that the licensee also license and preinstall any Microsoft Internet browser software (including Internet Explorer 3.0, 4.0, or any successor versions thereof) pending further order of the court.

Microsoft says its interpretation of the broadly worded order comes from one portion of a sentence on pages 15 and 16 of the 19-page ruling. The Justice Department says that sentence is merely part of the judges reasoning and not part of his order, which is only on page 19.

While the two sides struggle over this, Microsoft has appealed the preliminary injunction, asked for the removal of Lessig and made a series of other motions. It files papers on a frequent basis.

Last week Mirosoft said perhaps its presentation of its perspective has been too strident. Chief Operating Officer Robert Herbold said in an interview that the company and the government had said things that might better have not been said.

One thing we have to do is, first of all, respect the Department of Justice and respect the judge, and were sorry if we have made any statements that would suggest we do anything but respect them, he said.