Computer software giant Microsoft Corp. drew heavy criticism at a Senate hearing Tuesday for aggressive business practices that critics alleged could violate antitrust laws.
At a Senate Judiciary Committee hearing, the company came under attack for trying to use the dominance of its Windows operating system, which runs most personal computers, to achieve a similar supremacy over the Internet.
“Microsoft has clearly set its sight on bigger challenges and new markets,” said Ed Black, president of the Computers and Communications Industry Association, a trade group in the nation’s capital that represents manufacturers.
“Of greatest concern probably is this attempt to gain control over the Internet and the World Wide Web, the fastest-growing and most exciting new markets,” Black said.
“There is no doubt that Microsoft has the kind of power that is of great concern.”
At the start of the hearing, Judiciary Committee Chairman Orrin Hatch (R-Utah), whose panel oversees the Justice Department and thus the government’s antitrust efforts, said that the session was not about the company headed by the Bill Gates, the nation’s richest individual.
“I would like to emphasize that this hearing is not a hearing on Microsoft,” Hatch said. “This committee may well hold such hearings down the road. Today’s hearing, however, is meant to explore a broad set of issues emerging in our new economy,” dealing with the Internet and its impact on competition, innovation and public policy.
The committee did hear some celebratory testimony about the Internet’s virtues. One witness, Kathie Sawyer of Vermont, provided a testimonial for the global computer network she said was essential for her successful home-based business.
But despite Hatch’s statement, much of the discussion was, in fact, aimed squarely at the software behemoth, with Hatch leading the attack.
For instance, Hatch said there was an atmosphere of intimidation in the computer industry fostered by Microsoft’s aggressiveness, size and the fear that it would retaliate against its perceived enemies.
“I had one technology (chief executive officer) refuse to testify,” Hatch said. “When we asked him why, he said `I’m afraid to.’ That shouldn’t be the case.”
Hatch also produced a Microsoft document, an agreement with an Internet service provider called Earthlink Network Inc., that appeared to demonstrate Microsoft’s aggressive business style.
The pact seemed designed to give Microsoft a competitive advantage over Netscape Communications Corp. Netscape currently dominates the market for Internet browsers, the software that allows computer users to surf the Internet’s World Wide Web.
Microsoft’s pact with Earthlink required the Internet service provider to “not express or imply that an alternate browser was available,” Hatch said, as well as not to advertise, promote or make it easy to use another browser. Earthlink would also have to “insure that a given percentage of all the browsers it distributes” are Microsoft’s.
“Do you believe such licensing terms could have exclusionary effects which raise serious antitrust concerns?” Hatch asked the witnesses.
“Senator, what you set forth appears to be a textbook example of an artificial entry barrier” to a market, said Kevin Arquit, a lawyer whose Washington law firm, Rogers & Wells, represents Sun Microsystems, a Microsoft competitor.
“When a dominant firm uses its power to create (such) barriers, that’s exactly where the antitrust laws should apply.”
Hatch later said he agreed with Arquit’s conclusion.
The hearing was just one of several fronts in Washington where Microsoft is coming under pressure.
The Justice Department has sued Microsoft in federal district court for allegedly violating a 1995 antitrust settlement. The settlement banned the company from linking the sale and use of its other products to its Windows operating system. Windows is found on 80 percent of all computers in use. The government has asked the court to impose fines of $1 million a day on Microsoft.
Later this month, consumer advocate Ralph Nader is hosting a two-day conference on Microsoft’s growing “monopoly in key sectors of the PC software industry.”
Microsoft did not testify at Tuesday’s hearing. Hatch said he would invite the software maker to appear in the future.
Following the hearing, Microsoft spokesman Jack Krumholtz, said: “We’re an industry leader, which makes us an easy, high-profile target. . . . This is a very competitive industry.”
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