January 13, 1998
In October, the Justice Department filed a complaint against Microsoft for violating a 1995 anti-trust agreement involving its Internet browser software. Following a background report, Paul Solman and guests discuss Microsoft's business practices and its anti-trust battle with the Department of Justice.
A RealAudio version of this segment is available.
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January 13, 1998
A discussion on the Microsoft anti-trust case.
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The Justice Department formally files its anti-trust complaint against Microsoft.
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Microsoft and Netscape
PAUL SOLMAN: The issue of the day is the way software giant Microsoft gets people onto the Internet through a Microsoft computer program known as Explorer. Microsoft has been giving away its Explorer program with its Windows software, which runs most computers you buy these days. That lures consumers into using Explorer and shuts innovative competitors out of the market, according to the Justice Department. So, in October, Janet Reno formally charged Microsoft with violating a 1995 antitrust agreement between the government and the company.
The Department of Justice accuses Microsoft of monopolistic practices.
JANET RENO, Attorney General: Microsoft is unlawfully taking advantage of its Windows monopoly to protect and extend that monopoly and to undermine consumer choice. The Department of Justice will not tolerate that kind of conduct.
PAUL SOLMAN: Windows is a program which controls a computer's basic functions. Since Microsoft CEO Bill Gates introduced Windows 95 two and a half years ago, it's become a necessity for the vast majority of computer users. But if you have to use Windows and Explorer is automatically bundled with it, does that give huge Microsoft, with 20,000 employees and a campus the size of a university, a monopoly advantage over much smaller rivals like Netscape, a 1994 start-up which employs about 2,000? Netscape's software, Navigator, had become the industry standard for navigating the Internet. But since Microsoft launched Explorer, it has converted a whopping 39 percent of those using the Internet to its program. Netscape's share has dropped from 73 percent to 58 percent in that time. David Yoffie has been studying high-tech and Microsoft for years. He explains the government's reason for going to court.
DAVID YOFFIE, Harvard Business School: The Justice Department is worried that Microsoft is exploiting its monopoly position and stifling innovation in the computer industry. The judge decided that Microsoft had to cease and desist from bundling Internet Explorer with Windows and ordered the two products de-coupled. In addition, the judge appointed a special master, a professor from Harvard University, to explore whether or not anti-trust law apply to these new technologies.
PAUL SOLMAN: Microsoft responded to the judge by claiming that Explorer is an integral feature of Windows 95, which supposedly won't work effectively without it. To comply with the court order Microsoft gave computer makers three choices: Install a two-year-old version of Windows without Explorer; remove Explorer from the current version of Windows, thus, supposedly crippling; leave things as is by installing Windows 95 with Explorer. The Justice Department thought these choices were insincere at best. Microsoft insisted it was preserving its right to innovate free of government intervention by offering the consumer more features without any increase in price. But when the judge's assistant was able to remove Explorer from his computer screen by putting it into the recycle bin about as quickly as we're doing it here, Microsoft seemed to be at odds with the court, as it's been at odds with a lot of people for quite a while.