DOJ vs. Microsoft: Ruling doesn't deter PC vendors

Computer manufacturers say that they will continue to offer Internet Explorer as part of basic software packages even though a federal judge has ruled that Microsoft cannot require PC makers to preinstall the Web browser in order to license the Windows 95 operating system. US District Judge Thomas Jackson's ruling last week seems to favour the US Department of Justice (DOJ) in its antitrust case against Microsoft, but representatives of Dell, Micron and Compaq said those companies have no plans to change the software offered to consumers. The three vendors were among those called to give depositions in the antitrust case.

Computer manufacturers say that they will continue to offer Internet Explorer as part of basic software packages even though a federal judge has ruled that Microsoft cannot require PC makers to preinstall the Web browser in order to license the Windows 95 operating system.

US District Judge Thomas Jackson's ruling last week seems to favor the US Department of Justice (DOJ) in its antitrust case against Microsoft, but representatives of Dell, Micron and Compaq said those companies have no plans to change the software offered to consumers. The three vendors were among those called to give depositions in the antitrust case.

"For us, this is not a Microsoft issue, this is a customer issue," says T.R. Reid, Dell's manager of corporate public relations. "We said before yesterday that our customers want a browser. We will provide them with one."

Because Dell computers, which can be made to order, generally come with Windows operating systems, Dell will still load machines with IE unless a customer specifically asks for the rival browser from Netscape.

The antitrust case is not yet over. Jackson appointed Harvard University law professor Lawrence Lessig as "special master" to continue to look into DOJ claims that Microsoft violated a 1995 consent decree by forcing vendors to bundle IE as part of Windows 95 licensing agreements. Lessig is to report his findings to Jackson by the end of May.

But even if Microsoft eventually is ordered to stop bundling IE, manufacturers are likely to continue doing so on their own. Compaq, for instance, had production problems when it tried to install a customised version of IE on PCs. Micron will keep providing IE "because of its superior technology," says spokeswoman Denise Smith.

While Jackson's ruling boosts the DOJ's case, the federal judge did not hold Microsoft in contempt of court, nor did he order the company to pay fines that would have been an unprecedented US$1 million a day. A Microsoft spokesman called the ruling a "balanced decision."

In a company statement, Netscape called the judge's decision "a victory for consumers because it helps to ensure customer choice."

As Lessig continues to gather information, the European Commission also is investigating Microsoft's practices. A commission official declined to comment on Jackson's ruling and would not provide the status of the European investigation.

At least six US state attorneys general also are pursuing investigations into Microsoft's business practices. A hearing in a lawsuit brought by the Texas attorney general against Microsoft was postponed recently at the behest of Microsoft and has not yet been rescheduled.

Jackson's ruling yesterday could bolster state cases against the software giant, says Bob Schneider, head of the intellectual property department at Chapman & Cutler, a Chicago law firm. "Some of the individual states might ratchet up their investigations," he says.

The original consent decree also underscores the need for legislators and others in government to ratchet up their knowledge of technology, Schneider suggests. The DOJ case hinges on how "integration" of software applications is defined, but the consent decree, which was the result of an earlier antitrust investigation of Microsoft, did not provide a definition.

"The original consent decree wasn't really hammered out as well as it should have been, and that's why we've got this problem now," Schneider says. "Microsoft had the upper hand [when the decree was written] because they knew everything they were going to do."

DOJ officials are not able to match the technological understanding brought to the issue by Microsoft, a company "that has so much control and in essence defines what's going on," Schneider says. A word like "integrated," he says, "could mean different things to different people."

Microsoft contends that its Web browser is an integrated part of Windows 95 and not a separate product.

Eventually, the DOJ case is likely to lead to a revised consent decree which more carefully spells out definitions. Microsoft will be involved in discussions regarding any revisions. Again, the software maker will know its future plans and undoubtedly attempt to protect its planned release of Windows 98, due out in April.

Windows 98 is supposed to incorporate IE even more fully. The Windows 98 interface has been expected to actually be the browser and enable users to search hard disks in much the same manner that they search for Web sites.

"This really throws a wrench into their plans," Schneider said of the ruling's likely effect on the release of Windows 98. "They might want to start calling it Windows 99."

(Elizabeth de Bony in Brussels contributed to this report.)

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