Microsoft gives an inch?

Microsoft and the US Department of Justice were eyeball to eyeball last week, and Microsoft blinked. Or was that a wink? After talking defiantly about undue government intervention and the right to innovate and integrate in a capitalist economy, Microsoft reversed course last week and put what sources called 'major concessions' -- mainly changes in its contracts with OEMs and ISPs -- on the table in hopes of forestalling a historic antitrust action.

Microsoft and the US Department of Justice were eyeball to eyeball last week, and Microsoft blinked. Or was that a wink?

After talking defiantly about undue government intervention and the right to innovate and integrate in a capitalist economy, Microsoft reversed course last week and put what sources called "major concessions" -- mainly changes in its contracts with OEMs and ISPs -- on the table in hopes of forestalling a historic antitrust action.

"Microsoft doesn't gain anything by conceding too much too soon," said Dwight Davis, an analyst at Summit Strategies, in Kirkland, Washington. "If they had caved in earlier, that would have emboldened the [Justice Department] to go further, sooner."

The company delayed delivery, at least until today, of the Windows 98 "gold code" to manufacturers. Investigators agreed to postpone legal actions.

In the past, Microsoft has, on the eve of key events, reversed course on questionable business practices. The company opened the door for ISP partners to advertise and offer Netscape Navigator and other non-Microsoft browsers, and eased requirements that its Internet Explorer channel bar be displayed on the Windows desktop. Investigators have said those moves did not go far enough.

Investigative sources said the "major concessions" Microsoft proposed must be substantial, or the state attorneys general and the Justice Department will press ahead.

According to one state source, the states' plan was to ask a federal court to require Microsoft to offer a version of Windows 98 that does not include the Explorer browser. The states also will seek to force Microsoft to stop requiring that the company's logo be displayed first when a Windows PC is booted.

Also, the attorneys general contend that Microsoft's Office volume licensing practices are predatory and exclusionary, because the company offers computer companies discount rates if they license the desktop applications suite for several different lines of computers, sources said.

"We want them to relax the restrictions they place on OEMs that lead to the OEMs having to offer Microsoft road maps everywhere," one state source said.

Moreover, in the course of looking at Microsoft's operations, Windows NT will fall under some sort of scrutiny. Microsoft's presence in the enterprise is not as dominant as in the generic PC market, but NT is gaining momentum, and NT 5.0, expected in 1999, will offer many bundled features, including Internet Information Server. The Enterprise Edition of NT adds Transaction Server, Message Queue Server, and Cluster Server.

"Microsoft will, no doubt, agree to stop various practices they have engaged in the past. But they will negotiate hard on stopping things that they want to do in the future," said Hal Varian, the dean of the School of Information Management and Systems, at the University of California at Berkeley.

SIDEBAR: Sun Piles It On

By InfoWorld staff

Extending its current lawsuit filed against Microsoft last fourth quarter regarding Java, Sun Microsystems last week asked a federal court to prevent Microsoft from shipping an incompatible version of Java with Windows 98 and its Visual J++ development tool.

Sun asked the court to force Microsoft to include a compatible Java virtual machine (JVM) in the OS, include Sun's own JVM on the CD, or remove any incompatible versions from Windows 98 and Visual J++. Furthermore, Sun alleged that Microsoft has not only made changes to the compiler but has amended the Java language by adding "key words."

Microsoft officials dismissed Sun's suit as a politically motivated stunt.

For a roundup of our Microsoft vs. the Justice Department coverage, go to InfoWorld Electric at http://www.infoworld.com.

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