A MATTER OF ANTITRUST
May 18, 1998
The Justice Department and 20 states launched what could be one of the biggest antitrust actions in U.S. history. Microsoft stands accused of trying to extend its monopoly powers into the browser market. After this background report, Jim Lehrer talks to both sides of the debate. Then, join an online forum to discuss the Microsoft antitrust case.
PAUL SOLMAN: The government has been trying for several years to counter Microsoft's alleged software monopoly based on its Windows operating system, which runs some 90 percent of all desktop computers.
A RealAudio version of this segment is available.
Join an online forum on Microsoft's legal predicament.
May 18, 1998
Both sides discuss the Microsoft case.
May 18, 1998
The Microsoft case in historical perspective.
April 14, 1998
Is Microsoft using its power to stifle competition?
March 3, 1998
Leaders of the computer industry testified against Microsoft.
January 13, 1998
Microsoft's antitrust battle with the Department of Justice.
October 21, 1997
The Justice Department charges Microsoft with building an illegal monopoly.
December 14, 1995
A report on the joint Microsoft/NBC venture, MSNBC.
Browse the NewsHour's coverage of cyberspace and business.
The Department of Justice's report on the Microsoft injunction.
Bill Gates speaks out on the government's investigation of Microsoft.
In 1994, Justice sued to prevent Microsoft from using its monopoly power to knock out software competitors by tying or bundling separate Microsoft products into Windows and thus forcing computer makers to use them. Microsoft claimed that it was simply making Windows a better, more comprehensive product but entered into a consent decree, settling with Justice.
Last year, Justice sued again to prevent Microsoft from further leveraging its Windows' monopoly, this time to dominate the Internet by force computer makers to feature Microsoft's so-called Web browser, Internet Explorer. Microsoft thereby threatened the key company in that part of the software market, Netscape. Justice prevailed when a federal judge ruled that computer makers could remove Internet Explorer from the screen. In March, we were joined by Netscape attorney Christine Varney to illustrate Microsoft's control of the desktop through icons like Internet Explorer that automatically appear when Windows starts up a computer.
"The most precious real estate in America."
CHRISTINE VARNEY: The most precious real estate in America is right there, and Microsoft controls it completely. If you want a piece of that real estate, you play by their rules, and their rules include you do not carry competing products.
PAUL SOLMAN: Start up a new personal computer the past few months, and the very first screen that popped up was Internet Explorer 4.0. And notice that channel bar on the right? It provides instant links to sites in cyberspace, sites Microsoft chooses. The Justice Department wants Microsoft to allow computer makers to design their own first screen because the fear is that if Microsoft controls the desktop, it will direct traffic to Microsoft-owned sites, Microsoft online travel agency, Expedia, or Microsoft's on-line stock trading system, for example. The government claims that the heart of the matter is that Microsoft hurts consumers by hurting competition.
PAUL SOLMAN: Why would I buy this? Can't I get something like this from Microsoft?
SPOKESMAN: No, not now, not at this time.
Microsoft's business practices... hard to document.
PAUL SOLMAN: At a recent trade show just outside Palm Springs software entrepreneurs complained about Microsoft's business practices but mostly off-camera. Chris Shipley ran the event.
CHRIS SHIPLEY: Microsoft has a way of getting what Microsoft wants. And there are countless stories-none of them that you'll ever find anyone to confirm-that talk about wink, wink, nudge, nudge, if you don't do it our way, it's going to be tough for you.
PAUL SOLMAN: This May promised to be a key moment-the unveiling of Windows 98, a product, that among other things, would now fully include Microsoft's Internet Explorer. But that, according to competitors and the Justice Department, would further Microsoft's stranglehold on software. Earlier this month, Gates rallied industry executives for a preemptive strike, claiming that if Windows 98 weren't released as planned, it would damage the entire computer industry.
BILL GATES, Microsoft: Any attempt to block the release of Windows 98 would be a step backwards to the industry, for consumers, and for the country, because in America innovation is progress and progress is growth for America.
Talks break down and the assembly lines roll.
PAUL SOLMAN: But late last week Microsoft did agree to hold off shipping Windows 98 while Microsoft, Justice, and the states' attorneys general discussed ways to resolve their differences. Talks broke down, however, and today Microsoft started shipping Windows 98 to computer makers, while the Justice Department sued, as did 20 state attorneys general and the District of Columbia. Antitrust chief Joel Klein.
JOEL KLEIN, Asst. Attorney General, Antitrust: Let me be absolutely clear. Nothing we are doing here will or should prevent Microsoft from innovating or competing on the merits. What cannot be tolerated and what the antitrust laws forbid is the barrage of illegal anti-competitive practices that Microsoft uses to destroy its rivals and to avoid competition on the merits. That and that alone is what this lawsuit is all about.
BILL GATES: Give us a quick tour of what the first screen looks like on typical computers today.
PAUL SOLMAN: But this afternoon Bill Gates and company held their own press conference to try to demonstrate that choice is alive and well in the computer industry.
BILL GATES: The regulators complain about lack of choice. But they have the facts wrong. Huge numbers of users today easily choose whatever browser they want. Computer manufacturers choose to configure the first screen differently. They choose to add any browser. They choose to market whatever productivity software they want.
PAUL SOLMAN: The federal judge in charge of the case said he'll hold a hearing within 20 days.