Microsoft Threats Detailed in Court Papers
WASHINGTON — Compaq Computer Corp. supplied U.S. government lawyers with documents that reportedly show Microsoft Corp. threatened to withhold its Windows 95 operating system from PC makers if they did not include its Internet software on their computers.
The Justice Department documents, filed in support of its antitrust action against Microsoft, disclose that officials from Compaq, Gateway 2000 Inc. and Micron Electronics Inc. testified that Microsoft prevented them from offering browser software from Netscape Communications Corp. or other developers.
According to the documents, Houston-based Compaq, the world’s largest PC maker, tried to remove the Internet Explorer and Microsoft Network icons to give rival Netscape’s browser a spot on the desktop of Compaq’s Presario model PC.
“Well, when they found out about it, they sent a letter to us telling us . . . they would terminate our [Windows 95] agreement for doing so,” Stephen Decker, Compaq’s director of software procurement, testified.
The eye-opening comments from companies considered close partners of Microsoft break a long history of industry silence over allegations of bullying practices by the software giant.
“The utilization of Compaq and Micron by the Justice Department is very powerful and very credible since they have long been viewed as close to Microsoft,” said Rob Enderle, a senior analyst at Giga Information Group, a technology consulting firm based in Santa Clara, Calif.
The testimony, business contracts, e-mail messages and other documents filed by the Justice Department in U.S. District Court in Washington flesh out details of the complaint that Microsoft is violating the terms of a 1995 antitrust settlement.
The government claims the Redmond, Wash.-based firm is illegally requiring computer manufacturers to install its Internet browser as a condition of access to its popular Windows 95 operating system. More than 80% of the world’s computers run Windows and more than 100 million copies have been sold since the operating system was introduced in August 1995.
Microsoft officials say their marketing practices for Internet Explorer are legal because the browser is a Windows 95 “feature,” rather than a separate, free-standing program.
“We have always said that computer manufacturers are free to ship Netscape Navigator or any other competing browser. But they are not allowed to disable features of Windows, such as the Internet Explorer icon,” said Microsoft spokesman Mark Murray.
“Internet Explorer is an integrated feature of the Windows operating system,” he added, noting that several PC makers, including IBM Corp., Toshiba Corp. and Digital Corp. offer Netscape’s and Microsoft’s browsers on their computers.
Compaq “was put on notice” that its license would be terminated “unless they stopped disabling part of the operating system,” Murray said. “When a computer manufacturer goes in and disables part of our product, that violates our license.”
The government, however, says licensing restrictions that require computer makers to install Internet Explorer violate terms of the 1995 court order. The Justice Department is asking the court to hold Microsoft in contempt and fine it $1 million a day.
Compaq spokesman Jim Finlaw declined to comment on the testimony. But Finlaw, who noted that Compaq’s testimony came in response to a Justice Department subpoena, said there was no ill will between Compaq and Microsoft.
“We highly value our strategic relationship and alliance with Microsoft, and we believe the company has made invaluable contributions to American competitiveness,” he said.
A Micron spokeswoman said Micron company has no complaints about its relationship with Microsoft. “We have a great Microsoft partnership,” Micron spokeswoman Denise Smith said.
Micron was “very surprised” that its licensing talks with Microsoft had become an issue in the case, and said any questions about installation of Internet Explorer were raised by “low-level” employees and aren’t “even on the radar screen of our senior executives.”
Gateway officials could not be reached for comment.
Microsoft shares, which had risen when the Justice Department announced its lawsuit Monday, closed at $135.69, down $2.81 on Nasdaq.
