Legal manoeuvres help hype Windows 98

This week will be a busy one for Microsoft's lawyers. With Windows 98's future hanging in the balance and May 15 set as the day the OS is to be shipped to manufacturing, Microsoft is bracing for more legal action by the US Department of Justice which is reportedly mulling a new antitrust case that could take a broader look at Microsoft's business practices. CEO Bill Gates met with Assistant US Attorney Joel Klein and other Justice Department representatives in Washington last week.

This week will be a busy one for Microsoft's lawyers.

With Windows 98's future hanging in the balance and May 15 set as the day the OS is to be shipped to manufacturing, Microsoft is bracing for the possibility of more legal action by the US Department of Justice. And a group of state attorneys general are still plotting their own cases against the software giant.

Along with Microsoft's top lawyer, William Neukom, and other company officials, Chairman Bill Gates met with Assistant US Attorney Joel Klein and other Justice Department representatives in Washington last week.

The Justice Department reportedly is mulling a broader antitrust case than the one it filed last fourth quarter. A new case could take a broader look at Microsoft's business practices, which investigators say are unfair, have perpetuated an OS monopoly, and have allowed the company to attempt to build monopolies in other areas.

When faced with court action earlier this year, Microsoft made licensing changes that have been viewed as concessions to investigators. For example, Microsoft eased a requirement that its Internet Explorer Channel bar, which features favored partners, be displayed on the desktop and allow Internet service providers to advertise Netscape Navigator and other browsers.

Meanwhile, the 13 states considering filing an antitrust suit against the software giant did not take action this week, as they had planned, but hope to file next week. Attorneys general in those states want to file broader actions before Windows 98 is released to manufacturing. Although some states have vowed to go forward even if the Justice Department does not, they are counting on the federal government to expand its case, as well.

Pointing to Gates' meeting with the Justice Department, a source with one of the states said, "The attorneys general are open to hearing from Gates before they file."

Hours before his meeting with Klein, Gates hosted a cadre of industry executives who urged the federal government and the states to keep their hands off Windows 98.

Several dozen IT vendors lined up with Gates, including Compaq President and CEO Eckhard Pfeiffer, Harvard professor Gregory Mankiw, Visio Chief Technology Officer and Vice President Ted Johnson, CompUSA president and CEO James Halpin, and peripheral maker Storm Technology President and CEO Bill Krause.

The meeting's theme was that blocking the release of Windows 98 would hurt the high-tech industry economy; Harvard's Mankiw went so far as to say that a Windows 98 delay "would throw sand into the gears of human progress."

Others were skeptical of such lofty claims.

"The only one really threatened by this is Microsoft and their cash flow," said an IT director at one multinational corporation. "We would not buy fewer PCs if Windows 98 were delayed. We would not buy less software. We would not buy fewer peripherals."

In the end, Microsoft's rally raised as many questions as it answered.

One of Microsoft's chief arguments against the charges that it holds an operating system monopoly is that it does not dominate the software industry, and that Windows is one of many available OSes on the market. Yet speakers continually claimed that the industry's economy -- as well as the nation's -- would be severely harmed by a Windows 98 delay.

Also, some observers called the event a shameless pep rally, while others -- pointing to the smooth demo of Windows 98 -- saw it as a marketing ploy by Microsoft. Compared with the high-profile release of Windows 95 three years ago, the company has not devoted as much resources to selling Windows 98.

"What a great marketing event this was for Windows 98," said Dwight Davis, an analyst at Summit Strategies, in Kirkland, Wash. "You have had this product lackadaisically moving toward launch, and at this forum all these important people are singing the praises of Windows 98. I can actually see that one event driving more end-users toward it than any advertising."

In light of the May 15 release-to-manufacturing target date for Windows 98, Microsoft last week asked the appeals court panel hearing its case to expedite its decision on whether an injunction prohibiting it from bundling Explorer with Windows 98 should stand.

Microsoft Corp., in Redmond, Washington, is at http://www.microsoft.com. The U.S. Department of Justice, in Washington, is at http://www.usdoj.gov. State attorneys general can be reached at http://www.echotech.com/ag.htm.

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