Washington, May 16 (Bloomberg) -- Settlement talks betweenMicrosoft Corp.
and antitrust enforcers broke off with noagreement, clearing the way for
antitrust suits to be filedMonday by the U.S. Justice Department and 20
states to challengethe software giant's business practices.
Microsoft Corp. said it wouldn't accede to the JusticeDepartment's
``unreasonable demands'' to make changes in the wayit integrates its
Internet Explorer browser into Windows 98, nowdue to be shipped Monday to
PC makers. ``We're working to make Windows 98 work well with theInternet,
but the government believes that is illegal,'' saidMicrosoft spokesman Jim
Cullinan. ``In America, every companymust be free to innovate and build
better products for consumers.That is a principle worth standing up for.''
The Justice Department issued a brief statement saying onlythat ``the
discussions between the Department of Justice, acoalition of state
attorneys general and Microsoft ended todaywithout resolution. At this
point they are not expected toresume.''
Barring any last-minute developments, the end of talks meansthat the
Justice Department and 20 states will file lawsuitsMonday alleging that the
Redmond, Washington-based software makerabuses its market dominance to
stifle competition in the softwareindustry.
Held Off Lawsuits
The discussions were convened Friday, a day after enforcersagreed to hold
off filing lawsuits until Monday to see if theyand the company could reach
a settlement and avoid court action.The talks lasted just a day and a half
before they broke off atmidday today, the Justice Department said.
Microsoft had said it wanted the talks to succeed to avert alawsuit it
said would hurt the company, consumers and thesoftware industry. ``We've
made significant offers, but the government ismaking unreasonable demands
that would threaten our productdesign and ability to innovate,'' Cullinan
said. ``We are willingto continue to talk to avoid costly and destructive
litigation,but the government claims are without merit.''
The Justice Department entered into the discussions becauseit was anxious
to avoid a costly battle that could take years tofight in court,
particularly because of its poor track record inrecent decades, said
William Kovacic, an antitrust law professorat George Mason University.
Still, Justice Department antitrust chief Joel Klein, isunder pressure to
obtain terms from Microsoft that will satisfyMicrosoft competitors who were
critical of a 1994 consent decreethe Justice Department had negotiated with
the company. ``There are a lot of people with their noses up against
thewindow and looking in, and they are going to scream bloody murderif they
don't come back with something substantial,'' Kovacicsaid before the talks
broke off.
Significant Offer
Kovacic said a non-negotiable item for the government wouldhave been its
insistence that Microsoft open up the Windows 98platform to make it easier
for rival Internet browser companiessuch as Netscape Communications Corp.
to place their product oncomputer desktop screens.
As the Justice Department prepared last week to file itslawsuit, Microsoft
approached Klein and made a significant offerto try to head off the case,
said a senior Justice Departmentofficial. Klein and Microsoft Corp.
Chairman Bill Gates spoke bytelephone into the wee hours Thursday morning.
The next morning, Klein met with several state attorneysgeneral and the
Justice Department announced that lawsuits wouldnot be filed while
discussions were held for several days withMicrosoft. The company said it
would hold off until Monday itsplans to ship Windows 98 to PC makers, a
delay of three days.
Analysts had predicted it would be difficult for both sidesto find a
middle ground. ``Each side has a menu. The government has a menu of
thingsthey want and Microsoft has a menu of things they are willing togive
up,'' said Kovacic, a former Federal Trade Commissionofficial
Microsoft was willing to take a stab at avoiding aprotracted lawsuit
because it knows its ``best people are goingto spending lots of hours
helping lawyers'' during a court fight,Kovacic said. ``Every hour spent
helping the lawyer is an hourspent not developing a new product.''
Government Concerns
Even though large companies like Xerox Corp., International Business
Machines Corp. and Eastman Kodak Co. won lengthyantitrust battles, ``they
were weaker companies when the battleended.
At issue are government concerns that Microsoft is using itsdominance of
the operating system market to crowd out competitionfrom other software
applications and Internet browsers, notablyNetscape Navigator.
The Justice Department has contended that Microsoftillegally integrated
its Internet Explorer into Windows 95 toleverage control of the browser
market. Microsoft is appealing ajudge's order that it offer PC makers a
version of Windows 95without the functioning browser.
Similar concerns are being raised over Windows 98, which hasmuch more
highly integrated Internet browser function than theprevious product. The
company argues it has the right to place whatever functions it wants into
the operating software todeliver product innovation to consumers.
=========================================
NT antitrust's next battleground By Dan Goodin Staff Writer, CNET NEWS.COM
May 13, 1998, 12:00 p.m. PT
special report While the marriage of Microsoft's Internet Explorer to its
Windows 95 and Windows 98 operating systems so far has been the most
visible front in the war between the company and antitrust enforcers,
Windows NT is likely to become the next high-profile battleground,
according to regulators and outside observers.
Microsoft has already announced plans to succeed Windows 98 with Windows
NT-based technology, now a souped-up operating system that runs corporate
workstations and servers. Antitrust regulators, already criticized by some
for going after Windows 95 too late in the game, are determined not to make
the same mistake again.
"Obviously, Java and NT are the next issues and the issues over which I
believe we can have a dramatic impact because we still have time," said one
state official who asked not to be named. "We won't run into the problems
of eminent distribution of the product" with Windows NT, which runs a
fraction of workstation and server systems in operation today, but
represents the fastest growing portion of Microsoft's business.
The official added that investigators now are determining whether
Microsoft's migration to NT constitutes an illegal extension of Microsoft's
alleged monopoly power in the market for desktop operating systems. Among
other things, they are looking at the integration of existing Microsoft
products, such as those found in Microsoft BackOffice, with Windows NT 5.0,
the update rumored to be released early next year.
Investigators may also look at other practices associated with NT, such as
a requirement that applications developers design programs that run on both
Windows 95 and Windows NT to display Microsoft's Windows Compatible logo.
True or not, such reports are sure to fuel allegations that Microsoft is
leveraging its dominance in Windows 95 and Windows 98 to promote NT.
In addition to building a case charging illegal maintenance or illegal
extension of an existing monopoly, regulators may try to make use of a
federal judge's recent decision in a separate case that Intel held a
monopoly in the market for Intel-based chips. (See related story)
Defining a market has always been crucial in determining whether a given
product constitutes a monopoly. If a market for operating systems, for
instance, includes small handheld devices, Windows' influence would be
considered relatively small. If, on the other hand, the market was defined
more narrowly to include only Intel-based machines, Microsoft's control
would be considerable.
Translating the market analysis in the Intel decision to Microsoft gives
regulators unprecedented new advantages. Under such a scenario, Windows
NT--or other popular products, for that matter--could be deemed a market in
and of itself, for purposes of antitrust law.
Rich Gray, an antitrust attorney with Bergeson, Eliopoulos, Grady & Gray,
said prosecutors taking on Windows NT would have to show either that
Microsoft used the dominance of Windows 95 and Windows 98 to prop up NT, or
that, based on the Intel decision, NT is a market in and of itself. If they
were able to accomplish either, Windows NT could replace Windows 98 as the
center of future antitrust battles.
"It's the browser issue [in the current investigation concerning Windows
98] multiplied by many, many different technologies, ranging from audio and
video streaming, to voice recognition, to authentication, and other
security issues," said Gray, referring to just a few of the features being
integrated into NT. "The potential issues in product integration at the
Windows NT level are almost endless."
Rick Rule, a Microsoft consultant who headed the Justice Department under
the decidedly free-market Reagan administration, discounted the chances of
a case successfully being brought against NT.
He explained that, contrary to assertions by Microsoft competitors and
others, including Sen. Orrin Hatch (R-Utah), no one has ever proven that
Microsoft has a monopoly in any market.
"I think pretty clearly the law would require someone to show that
Microsoft has a monopoly in some market to begin with," said Rule, now in
private practice at Covington & Burling. Even if prosecutors proved
Microsoft held a monopoly, Rule added, "you still have to prove with
respect to NT that Microsoft has used exclusionary or predatory conduct and
that the conduct creates monopoly power or at least the dangerous
possibility of monopoly power."
He said government inquiries into NT were nothing new. "Microsoft is in a
position today where it can't expect to sneeze without having the
government inspect the handkerchief," he said.
There is no reason to believe a legal challenge of Windows NT will ramp up
any time soon. For one thing, prosecutors on both state and federal levels
appear to have their hands full deciding whether to take action against
Windows 98, which Microsoft says will be shipped to computer makers Friday.
"We can't really speculate on what type of action the states or the
Justice Department may bring," Microsoft spokesman Tom Pilla said. "We
continue to work with them to make sure they have the information they
need."
And in the meantime, regulators will want to think long and hard about the
issue before they act.
Said Bergeson, Eliopoulos's Gray: "The real question on Windows NT is how
much influence and power should Microsoft be able to exercise over the many
different software products that do now or could in the future reside on a
server. The proper role of the government is to come in as cop and say
[when Microsoft] has gone too far."
--Go sell crazy somewhere else, we're full up here. ...Nicholson
<> tbyars@earthlink.net <> --============_-1316756217==_ma============ Content-Type: text/enriched; charset="us-ascii"
<color><param>0000,00D7,0000</param> Washington, May 16 (Bloomberg) -- Settlement talks betweenMicrosoft Corp. and antitrust enforcers broke off with noagreement, clearing the way for antitrust suits to be filedMonday by the U.S. Justice Department and 20 states to challengethe software giant's business practices.
Microsoft Corp. said it wouldn't accede to the JusticeDepartment's ``unreasonable demands'' to make changes in the wayit integrates its Internet Explorer browser into Windows 98, nowdue to be shipped Monday to PC makers. ``We're working to make Windows 98 work well with theInternet, but the government believes that is illegal,'' saidMicrosoft spokesman Jim Cullinan. ``In America, every companymust be free to innovate and build better products for consumers.That is a principle worth standing up for.''
The Justice Department issued a brief statement saying onlythat ``the discussions between the Department of Justice, acoalition of state attorneys general and Microsoft ended todaywithout resolution. At this point they are not expected toresume.''
Barring any last-minute developments, the end of talks meansthat the Justice Department and 20 states will file lawsuitsMonday alleging that the Redmond, Washington-based software makerabuses its market dominance to stifle competition in the softwareindustry.
Held Off Lawsuits
The discussions were convened Friday, a day after enforcersagreed to hold off filing lawsuits until Monday to see if theyand the company could reach a settlement and avoid court action.The talks lasted just a day and a half before they broke off atmidday today, the Justice Department said.
Microsoft had said it wanted the talks to succeed to avert alawsuit it said would hurt the company, consumers and thesoftware industry. ``We've made significant offers, but the government ismaking unreasonable demands that would threaten our productdesign and ability to innovate,'' Cullinan said. ``We are willingto continue to talk to avoid costly and destructive litigation,but the government claims are without merit.''
The Justice Department entered into the discussions becauseit was anxious to avoid a costly battle that could take years tofight in court, particularly because of its poor track record inrecent decades, said William Kovacic, an antitrust law professorat George Mason University.
Still, Justice Department antitrust chief Joel Klein, isunder pressure to obtain terms from Microsoft that will satisfyMicrosoft competitors who were critical of a 1994 consent decreethe Justice Department had negotiated with the company. ``There are a lot of people with their noses up against thewindow and looking in, and they are going to scream bloody murderif they don't come back with something substantial,'' Kovacicsaid before the talks broke off.
Significant Offer
Kovacic said a non-negotiable item for the government wouldhave been its insistence that Microsoft open up the Windows 98platform to make it easier for rival Internet browser companiessuch as Netscape Communications Corp. to place their product oncomputer desktop screens.
As the Justice Department prepared last week to file itslawsuit, Microsoft approached Klein and made a significant offerto try to head off the case, said a senior Justice Departmentofficial. Klein and Microsoft Corp. Chairman Bill Gates spoke bytelephone into the wee hours Thursday morning.
The next morning, Klein met with several state attorneysgeneral and the Justice Department announced that lawsuits wouldnot be filed while discussions were held for several days withMicrosoft. The company said it would hold off until Monday itsplans to ship Windows 98 to PC makers, a delay of three days.
Analysts had predicted it would be difficult for both sidesto find a middle ground. ``Each side has a menu. The government has a menu of thingsthey want and Microsoft has a menu of things they are willing togive up,'' said Kovacic, a former Federal Trade Commissionofficial
Microsoft was willing to take a stab at avoiding aprotracted lawsuit because it knows its ``best people are goingto spending lots of hours helping lawyers'' during a court fight,Kovacic said. ``Every hour spent helping the lawyer is an hourspent not developing a new product.''
Government Concerns
Even though large companies like Xerox Corp., International Business Machines Corp. and Eastman Kodak Co. won lengthyantitrust battles, ``they were weaker companies when the battleended.
At issue are government concerns that Microsoft is using itsdominance of the operating system market to crowd out competitionfrom other software applications and Internet browsers, notablyNetscape Navigator.
The Justice Department has contended that Microsoftillegally integrated its Internet Explorer into Windows 95 toleverage control of the browser market. Microsoft is appealing ajudge's order that it offer PC makers a version of Windows 95without the functioning browser.
Similar concerns are being raised over Windows 98, which hasmuch more highly integrated Internet browser function than theprevious product. The company argues it has the right to place whatever functions it wants into the operating software todeliver product innovation to consumers.
=========================================
NT antitrust's next battleground By Dan Goodin Staff Writer, CNET NEWS.COM May 13, 1998, 12:00 p.m. PT
special report While the marriage of Microsoft's Internet Explorer to its Windows 95 and Windows 98 operating systems so far has been the most visible front in the war between the company and antitrust enforcers, Windows NT is likely to become the next high-profile battleground, according to regulators and outside observers.
Microsoft has already announced plans to succeed Windows 98 with Windows NT-based technology, now a souped-up operating system that runs corporate workstations and servers. Antitrust regulators, already criticized by some for going after Windows 95 too late in the game, are determined not to make the same mistake again.
"Obviously, Java and NT are the next issues and the issues over which I believe we can have a dramatic impact because we still have time," said one state official who asked not to be named. "We won't run into the problems of eminent distribution of the product" with Windows NT, which runs a fraction of workstation and server systems in operation today, but represents the fastest growing portion of Microsoft's business.
The official added that investigators now are determining whether Microsoft's migration to NT constitutes an illegal extension of Microsoft's alleged monopoly power in the market for desktop operating systems. Among other things, they are looking at the integration of existing Microsoft products, such as those found in Microsoft BackOffice, with Windows NT 5.0, the update rumored to be released early next year.
Investigators may also look at other practices associated with NT, such as a requirement that applications developers design programs that run on both Windows 95 and Windows NT to display Microsoft's Windows Compatible logo. True or not, such reports are sure to fuel allegations that Microsoft is leveraging its dominance in Windows 95 and Windows 98 to promote NT.
In addition to building a case charging illegal maintenance or illegal extension of an existing monopoly, regulators may try to make use of a federal judge's recent decision in a separate case that Intel held a monopoly in the market for Intel-based chips. (See related story)
Defining a market has always been crucial in determining whether a given product constitutes a monopoly. If a market for operating systems, for instance, includes small handheld devices, Windows' influence would be considered relatively small. If, on the other hand, the market was defined more narrowly to include only Intel-based machines, Microsoft's control would be considerable.
Translating the market analysis in the Intel decision to Microsoft gives regulators unprecedented new advantages. Under such a scenario, Windows NT--or other popular products, for that matter--could be deemed a market in and of itself, for purposes of antitrust law.
Rich Gray, an antitrust attorney with Bergeson, Eliopoulos, Grady & Gray, said prosecutors taking on Windows NT would have to show either that Microsoft used the dominance of Windows 95 and Windows 98 to prop up NT, or that, based on the Intel decision, NT is a market in and of itself. If they were able to accomplish either, Windows NT could replace Windows 98 as the center of future antitrust battles.
"It's the browser issue [in the current investigation concerning Windows 98] multiplied by many, many different technologies, ranging from audio and video streaming, to voice recognition, to authentication, and other security issues," said Gray, referring to just a few of the features being integrated into NT. "The potential issues in product integration at the Windows NT level are almost endless."
Rick Rule, a Microsoft consultant who headed the Justice Department under the decidedly free-market Reagan administration, discounted the chances of a case successfully being brought against NT.
He explained that, contrary to assertions by Microsoft competitors and others, including Sen. Orrin Hatch (R-Utah), no one has ever proven that Microsoft has a monopoly in any market.
"I think pretty clearly the law would require someone to show that Microsoft has a monopoly in some market to begin with," said Rule, now in private practice at Covington & Burling. Even if prosecutors proved Microsoft held a monopoly, Rule added, "you still have to prove with respect to NT that Microsoft has used exclusionary or predatory conduct and that the conduct creates monopoly power or at least the dangerous possibility of monopoly power."
He said government inquiries into NT were nothing new. "Microsoft is in a position today where it can't expect to sneeze without having the government inspect the handkerchief," he said.
There is no reason to believe a legal challenge of Windows NT will ramp up any time soon. For one thing, prosecutors on both state and federal levels appear to have their hands full deciding whether to take action against Windows 98, which Microsoft says will be shipped to computer makers Friday.
"We can't really speculate on what type of action the states or the Justice Department may bring," Microsoft spokesman Tom Pilla said. "We continue to work with them to make sure they have the information they need."
And in the meantime, regulators will want to think long and hard about the issue before they act.
Said Bergeson, Eliopoulos's Gray: "The real question on Windows NT is how much influence and power should Microsoft be able to exercise over the many different software products that do now or could in the future reside on a server. The proper role of the government is to come in as cop and say [when Microsoft] has gone too far." </color>
--
Go sell crazy somewhere else,
we're full up here. ...Nicholson
<<> tbyars@earthlink.net <<>
--============_-1316756217==_ma============--