Government challenge to Microsoft's methods
makes the company look like a giant bully - Nov 4 1997

By now, you've probably heard how the U.S. Justice Department has taken Microsoft to court, requesting that the judge impose fines of $1.4 million a day against the software giant. As I write this, the government has made its case and garnered most of the publicity. Microsoft has 11 days to respond to the charges, and should have responded by the time you read this -- at least beyond Microsoft vice-president Steve Ballmer's comment, "To heck with Janet Reno."

The government claims that Microsoft violated a 1995 agreement to set limits on what the company could do in making its operating systems available to hardware manufacturers. At that time, the government asserted that Microsoft was taking advantage of its near-monopoly on operating systems to push sales of its applications such as Office. (You can read the original consent decree on the Web at /microjudge.html.)

At issue this time around is Microsoft's Internet Explorer Web browser. With this product, Microsoft has been forced to come from behind in a bid to win users over from Netscape's Navigator. The retail release of Windows 95 doesn't include any version of IE, but Microsoft has been including its browser in the versions of the operating system sold to the so-called OEM (Original Equipment Manufacturer) market, for pre-installation on new hardware.

Even though IE still isn't included in the retail Win 95 package, Microsoft asserts that it is part of the core operating system. Even early versions of IE worked by adding the bulk of its computer code to the core of Windows; as a result, several other software companies have built help and tutorial systems around the IE core. The newest version of Internet Explorer, IE 4, goes so far as to offer to replace standard operating system functions (such as double-clicking on icons) with more Web-like alternatives, in effect making the whole operating system act like a Web browser. This integration of browser and operating system is expected to be even more complete in next year's Windows 98.

While the competition, Netscape Navigator, acts more like a traditional application, Netscape too has discussed a future where operating systems play less and less of a role, where it won't matter whether users are working on a Windows PC, a Mac or a Unix workstation, because Netscape Navigator will be the main way they interact with their computer.

Browsers and operating systems may merge in the future, but that's not really the case right now. And while the justice department isn't questioning Microsoft's right to give its browser away while Netscape offers its own for sale, it is questioning the way IE is programmed to act as if it owns the "desktop." Like many other software products, IE puts an icon onscreen. Unlike most other icons, this one (which claims to be "The Internet") can't simply be dragged to the Recycle Bin. It can be removed, but not in any direct or obvious ways.

And despite the 1995 agreement, evidence from a number of OEMs suggests that Microsoft put pressure on them to ensure that they included Internet Explorer rather than Netscape Navigator with their hardware. Compaq, for example, testified that when they wanted to pre-install Navigator rather than IE, Microsoft threatened to cancel their licence to bundle Windows 95 with their computer systems.

By insisting that Internet Explorer is an operating system extension, Microsoft is able to claim it is not in violation of the 1995 pact. Microsoft legal vice-president William Neukom suggests that just as Win 95's Explorer lets users access files on their own hard drive or across a local area network, Internet Explorer simply extends that basic capability across the Internet.

"Microsoft has always included ways in its operating system to locate information from different sources," he said.

Despite Neukom's opinion, the government's allegations are probably correct ... at least in the short term. Most users think of Internet Explorer, like Netscape Navigator, as a product separate from the operating system, as a product that they need to download or purchase separately. As a result, the company's pressure tactics aimed at forcing hardware manufacturers to include IE (and to display its hard-to-remove icon on their products' desktops) would appear to be in violation of the 1995 pact.

But nevertheless, this legal action will result in few concrete changes. While its browser is not yet part of the key operating system, by the next generation of software, this will be the case. Whether required to or not, many OEMs will continue to bundle IE with their systems. The program is, after all, available to them for free. And despite all of Microsoft's efforts, Netscape Navigator still holds 70 per cent of the browser market. While Microsoft, and chip-maker Intel, have a near-monopoly in the PC industry, consumers are well-served with increased power and features at affordable prices.

Ironically, by playing hardball in this area, Microsoft has simply managed to play into the hands of the many who regard it as a corporate bully -- a customer perception that may cost it far more in the long run than the government's million-a-day fines. And while, coincidentally, Microsoft was able to announce record profits on the same day the government filed its charges, the effect of being perceived as the Evil Empire will inevitably show up on Microsoft's bottom line.*

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Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan