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Justice Department, 20 States File Suits Against Microsoft

Governments move forward after settlement talks collapsed over the weekend.

By Margret Johnston and Mary Lisbeth D%squotAmico, IDG News Service   

The Justice Department%squots suit, filed in U.S. district court, accuses Microsoft of unfairly using the its advantage with the Windows operating system to gain a larger share of other software markets, including that of Internet browsers.

Assistant U.S. attorney general Joel Klein said at a press conference today that damage is already occurring in the marketplace; computer manufacturers are being denied options and %dquotproducts are being forced through the stream of commerce.%dquot

%dquotToday%squots action is intended to ensure that consumers and the computer manufacturers have the right to choose which software they want installed and not have that software chosen for them,%dquot said Janet Reno, U.S. attorney general.

The government suit does not seek to block the software giant from releasing Windows 98, but it would require Microsoft to include archrival Netscape Communications%squot Navigator browser with Microsoft%squots Internet Explorer in Windows 98, which was released today to PC makers and is due commercially in June. If Microsoft does not want to include Netscape, it must unbundle IE from Windows 98.

The Justice Department and state lawsuits overlapped on the following demands:

1. That Microsoft cease forcing Windows purchasers to take Microsoft%squots Internet browser. If Microsoft insists on including its browser in Windows 98, it should also include Netscape%squots browser. If Microsoft does not include Netscape%squots browser, it must unbundle its own browser.

2. That Microsoft give computer manufacturers the right to install their own screen at the conclusion of the initial bootup sequence.

3. That Microsoft give computer manufacturers additional options for installing browser software on new computers.

4. That Microsoft cease enforcing contractual provisions that require providers of Internet and online services as well as Internet content providers to limit their distribution and promotion of competing browsers.

The Justice Department and the states based their cases on internal documents from Microsoft and statements from company officials, according to department officials.

The attorneys general from New York, Iowa, and Connecticut participated in today%squots conference.

%dquotOur objective is not to protect any single competitor in the software or any other part of the industry,%dquot said Richard Blumenthal, the Connecticut state attorney general. %dquotIt is to provide a level playing field and choices for consumers unencumbered by the kinds of exclusionary tactics that Microsoft has exploited by virtue of its dominant position,%dquot said Blumenthal.

The moves come after negotiations between Microsoft and U.S. state and federal prosecutors collapsed over the weekend. Microsoft said yesterday that talks came to an impasse because the government wants Microsoft to %dquotabandon its principle of product innovation.%dquot The company particularly took umbrage with the option presented by government prosecutors that Microsoft offer rival software in its operating system bundle.

The lawsuits expand on an October 1997 complaint filed by the Department of Justice in federal court, which maintained that Microsoft was violating a 1995 consent decree by forcing PC makers to include the IE browser as a condition of licensing Windows 95.

A spokesperson for the European Community said this morning that the EC plans no separate action against Microsoft in light of the U.S. suits.

%dquotWe have left the floor to the American authorities not because we%squotre not interested, but because the U.S. has a greater ability to act,%dquot said Stefan Rating, spokesperson for European Competition Commissioner Karel Van Miert.

Elizabeth de Bony contributed to this report.