Microsoft May Face New Antitrust Case

US justice department investigators believe they have enough evidence to bring a new antitrust case against Microsoft Corp before the end of the month, the Wall Street Journal reported yesterday.

The new case, if it goes forward, would allege illegal maintenance and extension of Microsofts control of personal-computer operating software, in violation of the Sherman Antitrust Act, the Journal said, citing people close to the probe.

It also would repeat an existing charge that Microsoft violated a 1995 antitrust settlement by bundling Internet software with Windows, extending to its new Windows 98 software last falls charge that Microsoft uses Windows as a weapon against business rivals, the paper said. The investigators are taking final depositions from senior Microsoft officials and issued new civil subpoenas last week to major PC makers, including Compaq Computer Corp, company spokesmen said.

 

They are racing to complete their work before Microsofts planned May 15 release to computer makers of Windows 98, the next version of its PC operating software, the Journal said. If the case moves forward, prosecutors are expected to ask a federal court here for immediate temporary restrictions on Microsofts practices plus unspecified permanent sanctions, it said.

The temporary restrictions are likely to include a requirement that Microsoft give PC makers a choice of whether to install Windows 98 with or without Microsofts Internet software, as well as relief from alleged exclusionary contract terms imposed on PC makers and companies that provide Internet services, the Journal said.

Antitrust chief Joel Klein is still weighing legal tactics and hasnt yet signed off on filing a new case, the paper said. Klein is expected to give Microsofts lawyers a final opportunity to head off new charges against the company in a face-to-face meeting late next week.

Investigators have obtained important internal Microsoft documents that support a broader case against Microsoft, the Journal said. One striking example is a confidential 1996 strategic plan calling for a six-month attack on Netscape Communications Corps lead in Internet software, which the plan called scary.

The plan directed managers to gain exclusive licensing of Internet Explorer to the five largest Internet-service providers; these companies are major distribution channels for Internet software.

You should be able to break most of Netscapes licensing deals and return them to our advantage because our browsers are free, the Journal quotes the plan saying. It also called for squeezing Netscape sales to corporate buyers by exploiting companywide Windows licenses that include the rights to Microsofts Internet software at no additional cost.

We should have absolutely dominant browser share in the corporate space, the plan says, according to the Journal. Many of our customers already have a license for Internet Explorer but dont know it.

Salesmen pitching corporate users, Netscapes largest sales channel, must make it clear that it does not make any sense to buy Netscape Navigator.