MARKOFF: Microsoft Trying to Dominate the Internet

Rohit Khare (
Tue, 16 Jul 96 12:51:19 -0400

I spoke to him on background for this; it's an extremely good article. If you
can get paper copies, go take a look at the WinVaccum graphic that goes with

What's scary is that the Intel initiative was SOOO blindsided, even *I*
didn't hear about it. ( )



July 16, 1996

Microsoft Trying to Dominate the Internet


As a captain of industry and the richest man in America, Bill Gates has often
been compared to industrial titans of the past.

And just as the railroad tycoons of the 1800s set the gauge for the nation's
railroad tracks, Gates' Microsoft Corp. seems intent, its critics say, on the
modern-day equivalent: controlling many of the basic technical specifications
of the global Internet.

The result could be a rapid end to the furious pace of entrepreneurial
innovation that has marked the Internet in recent years, critics say, just as
hegemony of Microsoft's Windows software has often been blamed for limiting
technical innovation in personal computing.

Lately, there has been much publicity for Microsoft's new-found focus on the
Internet, starting with a celebrated speech last December in which Gates said
his company would cooperatively "embrace and extend" industrywide Internet
technical standards.

The public spotlight has focused on new software features and product release
dates, as the company tries to catch up with Internet leaders -- like
Netscape Communications Corp., maker of the Navigator browser for the World
Wide Web, and Sun Microsystems Inc., whose Java software is designed to move
computing power onto the network from the desktop -- that have been seen as
the biggest threat in years to Microsoft.

But while these well-chronicled contests continue, far more meaningful
skirmishes are occurring among little-known industry groups that set the
arcane -- but crucial -- technical specifications that determine whether and
how well various makes and models of hardware and software can work together
on the Internet.

It is on this front where Microsoft may be in the best position to use its
current market power to influence technology's future. And it is a measure of
Microsoft's intensity that one of these struggles has even placed the company
at odds with its symbiotic hardware partner, Intel.

Rather than merely embrace and extend the Internet, the company's critics now
fear, Microsoft intends to engulf it.

Microsoft executives insist that the company intends to cooperate with
Internet standards groups. But according to industry executives who have
observed Microsoft's activities in these standards sessions, there is evidence
that the company is attempting to employ the same sort of business practices
that helped it rise to dominance in the personal computing industry -- and
that have repeatedly drawn the scrutiny of federal antitrust investigators.

Just as Microsoft did with PC technology, these executives fear, the company
intends to subsume more and more of the Internet's basic technology in

Indeed, even while it works behind the scenes to shape future technical
standards to its competitive advantage, Microsoft has begun to absorb into
Windows various Internet capabilities -- such as the company's Explorer
browser for the World Wide Web and Front Page set of tools for creating Web

By offering such products as part of Windows, critics contend, Microsoft
could wage an Internet war of attrition against rivals large and small --
whether ascendant powers like Netscape or established tool makers like Adobe
Systems Inc., producer of Web-page designing software called Pagemill.

"There are societal consequences to Microsoft's strategy," said Gary Reback,
a Silicon Valley lawyer who has battled Microsoft in court and before the
Justice Department in recent years on behalf of a number of its competitors.
"Here is a new technology and a whole new wave of commerce, and Microsoft
wants to suck it in to the operating system to maintain its monopoly."

Microsoft insists that using the Windows vacuum cleaner as a way to suck away
revenue from competitors is simply good business.

"Yes, that is our business strategy," said Paul Maritz, the executive vice
president for the company's Internet business. "But not out of spite. What
you're seeing here is competition, which is good and healthy. Now we have
Netscape's Navigator and Sun's Javasoft as our new competitors."

Reback, though, has been trying to raise alarms with the Justice Department,
which last year was intensely investigating the potential antitrust
implications of Microsoft's placing an icon for its on-line Microsoft Network
on the main screen of Windows 95.

Justice officials decline to comment, but as Microsoft has turned its focus
from subscriber-based on-line services to the more open Internet and World
Wide Web, the antitrust investigation has reportedly become moribund -- though
it is not officially closed.

Not all legal experts, however, see an antitrust threat in Microsoft's
Internet activities.

"Maybe it's not a polite way of doing business, but it's not Microsoft's
responsibility to be polite," said William Baxter, a Stanford law professor
who headed the Justice Department's antitrust division for three years in the
Reagan administration.

Still, many companies have grown wary of Microsoft's intentions since it set
its sites on the Internet.

On Dec. 7, the same day that Gates was delivering his "embrace and extend"
speech at Microsoft headquarters in Redmond, Wash., a small group of software
developers from Intel Corp. was meeting in Silicon Valley with Microsoft

The group was trying to hammer out details of a new technical standard
designed to improve and streamline all aspects of computer security and
privacy on the Internet, regardless of the brand of hardware or software used.

For five months, Intel had been quietly orchestrating this effort, which had
the preliminary support of a group of influential companies that included
Netscape and Sun Microsystems. Apple Computer Inc. was also considering coming
aboard. But while Microsoft's commitment looked increasingly likely, it was
still not certain.

Intel executives were encouraged by the Dec. 7 meeting, however, and they
came away hoping to deliver a finished set of specifications at an industry
technical conference the next month.

Only a week before the planned announcement, however, Microsoft shocked
Intel: not only did the company abruptly pull out of the consortium -- it also
said it planned to work against the group's efforts.

Intel executives decline to discuss the matter. But according to several
people familiar with the meetings, Microsoft's rapidly evolving Internet
strategy now regarded the specifications backed by Intel as a subset of the
computer operating system. And the operating system, came the word from
Redmond, was something that Microsoft "owned."

The tentative coalition became undone. Without Microsoft's support, the other
members drifted away to try their luck with other Internet standards-setting
groups. And while Intel would subsequently publish its security plan, the
Common Data Security Architecture, on its _corporate Web site_, today it goes
largely unread, like a fading billboard on a side road nobody travels any

Significantly, late last month Microsoft posted its own version of a very
similar document, called the _Microsoft Internet Security Framework_, on the
company's Web site, as early notification of the security and privacy
specifications the company intends to place in future versions of Windows.

Microsoft executives insist that there was nothing duplicitous in the
company's withdrawal from the Intel consortium. The company simply concluded
that it would be better to pursue standards-setting within the established
Internet committees, rather than ad hoc groups like Intel's, Maritz said.

"The bottom line on this is we decided to work through the Internet
Engineering Task Force and World Wide Web Consortium," he said, referring to
established Internet standards organizations.

Microsoft is still getting acculturated to these technical circles, which
continue to reflect the Internet's roots in the computer-hacker culture of the
1960s and '70s that was based on an ethic of freely shared work.

"The jury is still out on Microsoft's intentions," said Jeffrey Schiller, a
computer security expert at the Massachusetts Institute of Technology who is
chairman of the Internet Engineering Taskforce's working group on security

But old habits, apparently, die hard. In a separate Internet standards forum,
Microsoft earlier this year proposed a proprietary technology the company
called Active VRML, or Virtual Reality Markup Language, to a small Internet
group that is setting specifications for virtual reality systems on the

Mark Pesce, a San Francisco-based computer researcher who was co-inventor of
the original version of VRML technology, recalled that during the standards
meetings Microsoft executives did not appear to be willing to compromise on
technology ideas.

"Microsoft was not interested in half and half," Pesce said. "It was their
way or else."

In May, the VRML standards committee rejected the Microsoft proposal. But
industry executives say the company is now trying to reposition Active VRML as
a technology for viewing multimedia images on the Web -- an approach that
would compete head on with an increasingly popular technology called
Shockwave, from Macromedia Inc., a leader in software tools used by multimedia

Microsoft says it is just reacting to a competitive threat. But some legal
experts say that if the company's activities have ever warranted federal
antitrust scrutiny, its rapid assault on the Internet would seem to raise many
of the same questions.

"The hurdle the government will have to get over is today they see Netscape
with a commanding lead and all the hype around the growth of the Internet,"
said Garth Saloner, an economist at the Stanford Business School. "What will
happen when they see that six or nine months down the road they've been run
over, and at that point it is too late?"