DOJ, States reportedly investigating Microsoft, Intel relationship

The US Department of Justice and 20 states are investigating whether Microsoft pressured one of its closest industry allies, Intel, to abandon software development that could have potentially weakened Microsoft, according to a story in the New York Times. The story cites an August 1995 meeting between Intel's Andy Grove and Microsoft's Bill Gates, during which Gates made 'vague threats' to work more closely with Intel's competitors unless Intel shelved its plans to invest in Internet-related technologies and businesses.

The US Department of Justice and 20 state attorneys general are reportedly investigating whether Microsoft pressured one of its closest industry allies, Intel, to abandon software development that could have potentially weakened Microsoft, according to a story in the New York Times.

At the center of the latest allegations is an August 1995 meeting between Intel Chairman Andy Grove and Microsoft Chairman Bill Gates, during which Gates made "vague threats" to work more closely with Intel's competitors unless Intel shelved its plans to invest in Internet-related technologies and businesses, according to the newspaper report.

The alleged pressure could be used to bolster the government's antitrust case against Microsoft in which the government alleges a pattern of anti-competitive behavior by the software giant. That case goes to court on September 23.

Allegations that Microsoft would exert this kind of pressure on one of its closest partners -- the other half of the "Wintel" powerhouse -- could be particularly damaging to Microsoft's defense.

Intel documents detailing the conversations have been subpoenaed by government lawyers in the antitrust case, and Intel executives have given depositions on the matter, the New York Times reported.

The DOJ and states contend that Microsoft has demonstrated a pattern of illegal business practices by using its Windows operating system monopoly to squelch competition for Internet browsing software. Intel's account of the meeting could lend credence to the arguments that Microsoft bullied Netscape to divide the browser market to avoid competing.

For the New York Times story, a Microsoft spokesperson neither expressly denied nor confirmed the allegations. The DOJ didn't comment and neither did Intel, the paper reported.

It is unknown how closely Intel is cooperating with the government it its newest investigations into Microsoft's activities. The government is also pursuing claims against Intel for alleged antitrust violations.

During the August 1995 meeting between Gates and Grove, Gates reportedly called for Intel to stop development of native signal processing software for multimedia applications. Microsoft executives were concerned about Intel's interest in including Internet features, and in particular, support for Java, which can run on any operating system. That support was seen by Microsoft as a threat to the continued dominance of Wintel, and a boon to Sun Microsystems' Java.

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