The shoe falls

CobraBoy! (
Wed, 22 Oct 1997 19:56:11 -0700

WASHINGTON, Oct 22 (Reuters) - A threat by Microsoft Corp. to withhold its
Windows operating system from Compaq Computer Corp., the nation's biggest
personal computer maker, is one of the key pieces of evidence behind the
government's antitrust move against Microsoft.

The threat was disclosed in documents released by the government on

The disclosure came two days after the Justice Department accused
Microsoft of violating an antitrust agreement by forcing computer makers
to include its Web browser on personal computers that came with the
Windows 95 operating system installed.

Meanwhile, a Microsoft executive, Vice President Steve Ballmer, struck a
defiant attitude over the accusations.

``I say to heck with Janet Reno,'' Ballmer said at a conference in San
Jose, Calif.

But stock in Microsoft fell after news reports of the documents were made
public, and its shares closed at $135.69, down $2.81, on Nasdaq.

Attorney General Janet Reno announced earlier this week the Justice
Department had asked a federal court to hold Microsoft in contempt and
fine it $1 million a day for violating terms of a 1995 court order.

``That order barred the company from imposing anticompetitive licensing
terms on personal computer manufacturers,'' she said.

The government exhibits lay out in detail what happened as Microsoft
lowered the boom on Compaq, which had always been considered its closest
ally among PC makers.

Microsoft notified Compaq on May 30, 1996, that it was cancelling the
license agreement for Windows 95 -- an impossible situation for a PC
manufacturer dependent on the monopolist.

One week later Don Hardwick -- group manager of Microsoft's original
equipment manufacturing division -- put in writing the price for Microsoft
to reverse itself.

Hardwick demanded Compaq reinstate ``Microsoft Network and Internet
Explorers icons on the Windows 95 desktop on all Compaq Presario

``If you are willing to give Microsoft a clear written assurance that the
above will be implemented on all Compaq Presario machines within 60 days
of the date of this letter, Microsoft will withdraw its Notice of Intent
to Terminate,'' Microsoft said in its June 6 letter to Celeste Dunn, vice
president of Compaq's consumer software business unit.

That left Compaq with little choice.

``We had a relationship with Netscape and we had been shipping their
product for a while,'' Compaq's Stephen Decker said in Oct. 17 testimony
that was compelled by a government civil investigative demand, the
equivalent of a subpoena in antitrust cases. ``Netscape was actually the
browser partner and we wanted to give that position on the Compaq Presario

Nonetheless, Decker said that because of the heavy pressure from
Microsoft, ``We put the (Microsoft) icon back in.''

A spokeswoman from Compaq had no comment.

Netscape closed at $36.625, down $3.19, on Nasdaq. Compaq closed at
$73.625, down 25 cents, on the New York Stock Exchange.


The idea that Bill Gates has appeared like a knight in shining
armour to lead all customers out of a mire of technological
chaos neatly ignores the fact that it was he who, by peddling
second-rate technology, led them into it in the first place.
-Douglas Adams, on Windows '95

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