The Justice Department on Monday charged Microsoft Corp. with forcing computer-makers to install its Internet browser and asked a judge to slap it with an unprecedented $1 million a day in fines–the latest eruption of hostilities between the government and one of the nation’s dominant corporations.
The government charged that Microsoft is violating an antitrust agreement by compelling computer-makers to include its Internet Explorer World Wide Web browser in every installation of Microsoft Windows 95, which holds a virtual monopoly among computer operating systems.
It violates a 1995 court order, the department asserts, under which Microsoft agreed not to require manufacturers to obtain licenses for other products as a condition to receive the Windows license.
“Forcing PC manufacturers to take one Microsoft product as a condition of buying a monopoly product like Windows 95 is not only a violation of the court order, but it’s plain wrong,” Atty. Gen. Janet Reno said in announcing the action. “The Department of Justice will not tolerate that kind of conduct.”
The department asked a federal court to order Microsoft to stop requiring acceptance of Explorer to receive Windows 95. For every day the software titan refuses to do so, Justice has requested that Microsoft be slapped with a $1 million fine, the largest ever sought by the department in an antitrust matter.
Microsoft, for its part, said in a statement that it had done nothing wrong and would “vigorously” defend its actions.
The action is the latest salvo the government’s antitrust lawyers have aimed at Microsoft, which some see as the Computer Age version of turn of the century trusts like U.S. Steel and Standard Oil.
The 1995 court order resulted from a long struggle between the Justice Department and Microsoft. That year, the department blocked Microsoft’s attempt to buy Intuit Inc., owner of Quicken, the popular personal-finance program.
On Monday, Joel Klein, who heads the department’s antitrust division, stressed that his staff is continuing to investigate Redmond, Wash.-based Microsoft, including the company’s recent infusion of capital into struggling Apple Computer Inc.
Many antitrust specialists applauded Monday’s action.
“The message it’s trying to send is, there are limits beyond which the Justice Department is not going to turn a blind eye,” said New York attorney Kevin Arquit. “Microsoft has tried a variety of different practices to get around this consent decree, and the government has said the decree has meaning to it and they’re going to enforce it.”
But many who favor less government intervention were not so laudatory. Charles Rule, who headed the antitrust division during the Reagan administration, said the Justice Department is merely responding to criticism that the 1995 order was too weak.
“The department reacted, maybe overreacted, to what was perceived as a threat to their institutional manhood,” Rule said. “As a result of that, they had to make it appear they were going to be real tough on old Microsoft. They are the self-designated Microsoft regulators, I guess.”
The action stands out in part because the antitrust division under Klein has been relatively sedate after an active period in which it brought major actions against Archer Daniels Midland Co. and General Electric Co., among others. He declined, for example, to challenge a telecommunications merger between two Baby Bells–Bell Atlantic and Nynex–despite the objections of some of his staffers.
But many, inside and outside government, see Microsoft’s increasing power as a threat in an industry that seems to be growing in importance. Monday’s action reflected that sense.
Justice Department lawyers portrayed Microsoft’s hard sell of Explorer as an attempt to maintain Windows’ ubiquitous presence in the nation’s desktop computers.
Many predict that computer users soon will be able to use the Internet to access such tools as word processors and spreadsheets, and will therefore have less need for their own copies of Windows software. By seeking to control the Web browsers that are the chief gateway to the Internet, the thinking goes, Microsoft hopes to sidestep this threat.
“Browsers take computing beyond the desktop, where Microsoft rules, and into the world of the Internet, where no one is dominant,” Klein said. “So it’s not surprising that Microsoft understood and perceived this threat immediately.”
But Microsoft leaders described their packaging of Internet Explorer with the Windows system as merely another upgrade in a constantly improving product.
The major beneficiary of the government’s action is likely to be Netscape Communications Corp., whose Navigator is a highly popular Internet browser. Netscape representatives applauded Klein’s decision.
“The Justice Department took a strong step today,” said Netscape attorney Susan Creighton. “It was exactly in keeping with the consent decree they entered in 1995. The purpose was to ensure that companies that were offering a challenge to Microsoft’s dominance on the desktop would have a chance to compete on a level playing field.”
Indeed, a challenge for the government in the coming court battle will be to demonstrate that Explorer is not merely an upgrade, but is a completely separate product.
But the task of the Justice Department lawyers is made somewhat easier because they are not seeking to demonstrate that Microsoft ran afoul of antitrust law, which can be inordinately complex. They merely need to show that the company violated the terms of a specific court order.
The department also asked the federal judge in Washington overseeing the case to strike down what it called unprecedented secrecy provisions that Microsoft includes in contracts with various companies. Those provisions, the department says, are discouraging people from talking to the Justice Department and hindering its broader investigation of Microsoft.
“Anyone should feel free to come talk to the department without Microsoft’s knowledge and without any fear of reprisal whatsoever,” Reno said. “We will not let Microsoft or anyone else infringe on that fundamental right.”
