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 M$ Anti Trust Suit Legal Action Index
Legal
Microsoft Files Anti-Trust Countersuit
Dateline 0230 Hrs 29 July 1998

Microsoft filed a counterclaim suit yesterday against the US Department of Justice and 20 State Attorney Generals. In the papers filed they claimed that their suits are unconstitutional. The move would not necessarily dismiss the charges against Microsoft. It is difficult to gauge whether this is a move of despair or gamesmanship. If it is successful then it would restrict the field of the anti-trust suit.

The counterclaim contains little that is new. It does however claim tat the claims the state attorney generals are using as the basis of their suits are completely groundless.

Microsoft had claimed that the protection afforded to their products under Federal copyright law was being infringed since the state attorney generals were using anti-trust legislation.

Among other claims by Microsoft in the papers filed stated that they had planned to integrate Internet Explorer software before Netscape had even existed. Microsoft were, according a report on www.news.com, working on this in late 1993.

Never missing the opportunity to put the M$ line forward, they claimed that the reason that Internet Explorer was gaining market share was because it "offered superior technology". Naturally Netscape disputes this as would many users. Though recent elements in IE have improved usability, the overall interface is counterintuitive - IE has the stop button in the wrong position.

Background On The Microsoft Anti-Trust Suit
First Appeared In WebIreland Magazine

Empires rise and empires fall. To many, Microsoft represents the "evil empire" and the legal action against it is the beginning of the end. It is not. But to paraphrase Bill Gates, there will be winners and losers. It is not Microsoft or the US Department of Justice who will be the winners or losers - it is the consumers.

The US Department of Justice and Microsoft spent ten days trying to arrive at some form of agreement. They could not. Like squabbling children, both sides blamed each other. The US Department of Justice and twenty state attorney generals filed suits against Microsoft. According to these suits, Microsoft had used their Windows operating system to attempt to monopolize the internet browser market.

Microsoft had asked for seven months just to reply to the request for a preliminary injunction. The preliminary injunction would have forced Microsoft to remove Internet Explorer program from Windows 98 or alternatively include Netscape's browser. Either situation was unacceptable to Microsoft. According to Bill Gates it was like asking Ford to sell cars fitted with Chrysler engines. He later made an analogy using Coke and Pepsi with the Coke part being played by Microsoft and the part of Pepsi, the brand with the smaller market share being played by Netscape. It was inaccurate - Netscape is the brand leader in the browser market.

The judge, Judge Thomas Penfield Jackson denied Microsoft's request for a delay. He also set a trial date of September eighth. It was definitely not the outcome that Microsoft had expected. Since it was so unexpected, both sides claimed it as a victory of sorts in the same way that getting executed by a firing squad is a victory over getting hanged.

According to the US Justice Department, Microsoft had engaged in anticompetitive conduct that was intended to maintain a monopoly in the operating system market and to lock out competing internet software. Twenty states attorney generals filed similar suits at the same time. Microsoft applied to have the lawsuits consolidated since they were based on the same legal theory and they were fundamentally based on the same allegations. The judge permitted the consolidation.

With the launch of Windows 98 operating system on June 25th this was a serious matter. At worst the launch could have been delayed but that was an extreme outcome and nobody short of some anti- Microsoft diehards were hoping for that.

Bill Gates seriously misjudged the internet and the nature of online services. It was a disaster that only a company like Microsoft could have recovered from. Having quickly established the mistake, Microsoft did a U-turn that stunned the industry. But all of the time Microsoft spent going in the wrong direction, others like Netscape were going the right direction. Their browser had become and still is, according to most sources, the dominant browser. By shipping IE with new PCs, Microsoft had hoped to reduce Netscape's lead. Indeed allegedly in some of Microsoft's internal memos quoted in evidence, Microsoft understood that the only way that they could reduce Netscape's lead was by bundling IE with Windows.

On contacting TInet and IOL, the story was the same - Microsoft's Internet Explorer was the browser of choice. Most of the new computers sold have IE installed as the default browser. According to TInet, many of the less computer literate users don't even bother with another browser. This is exactly what Microsoft's opponents fear - a tactic that is almost Jesuitical in sophisticated simplicity.

Netscape's other area of expertise was in webservers, the programs that allow information to be served to the browsers. Microsoft shipped their webserver Internet Information Server with their Windows NT server. It was not as successful as Microsoft had hoped. The webserver market is dominated by the Apache Webserver program, a freeware product that runs on Unix, NT and Windows 95. Microsoft's IIS only runs on Windows NT and most webservers run on Unix operating systems. Why pay for an operating system like NT when a free Unix OS will do the same job for free? IIS may be free but Windows NT is not.

IE4 And Windows 98
One of the main allegations against Microsoft is that it is attempting to maintain a monopoly situation. The cornerstone of that strategy is the inclusion of IE4 with Windows 98. This is not a simple take it or leave it proposition - IE4 is deeply integrated.

The book "Introducing Microsoft Windows 98" by Russell Borland contains some very interesting insights. "With the Integrated Internet Shell included with Windows 98, Internet access becomes a seamless part of the user interface." The user can access internet, local intranet or internet files on a similar basis. Peter Bell of Microsoft UK had been using Windows 98 for a few days and was enthusiastic about this quality.

This seamless interface is a very valuable tool for someone who is working a lot on the internet or an intranet. While it is not exactly a Network File System approach, it is the nearest thing that Windows users will get to it for a while.

Microsoft IE3 was just like Netscape's Navigator - a browser. It was a program that was added to the system. IE4 is deeply embedded in the system and even Microsoft claimed recently that it would take many months to remove it from the OS. It was obvious that the US courts could not reasonably force the removal with Windows 98 being so close to launch.

The Case Against Microsoft
Stated in simple terms, Microsoft have allegedly exploited their dominance of the desktop computing market to stifle innovation and keep the market prices high. At a press conference in Washington announcing the suit, Janet Reno, the US Attorney General said that "In short, Microsoft had used its monopoly power to develop a chokehold on the browser software needed to access the internet." The Assistant AG, Joel Klein was more scathing: "What the evidence shows is that Microsoft from Bill Gates down, quickly realised that Netscape's internet browser posed a real threat to Microsoft's Windows monopoly."

Some of the evidence in the case seems to be based on internal Microsoft memos and e-mails. Among them are memos from Bill Gates. The rise of Netscape scared them. An alleged memo from Christian Wildfeuer contained "It will be more important to leverage the OS asset to make people use IE instead of Navigator." The memo was dated 24/02/97. Another memo, allegedly from Jim Allchin, a senior vice president, stated that "Memphis must be a simple upgrade, but most importantly it must be a killer on OEM shipments so that Netscape never gets a chance on these systems." Memphis was the codename for Windows 98.

The Empire Strikes Back
Microsoft and Bill Gates are very experienced with dealing with the media. An op-ed piece in the Wall Street Journal apparently by Bill Gates outlined Microsoft's dilemma. It was intended to gather support and many business people in the USA seem to take Microsoft's side, seeing the antitrust case as being an example of government interference. Gates portrayed the situation as defending their right to innovate. This had evidently been changed as in an earlier press conference reported by www.news.com, Gates had claimed that "This suit is all about our right to innovate on behalf of consumers."

Reaction To Case Is Mixed
In the US, reaction was swift. In Ireland things are more measured. Depending on who you talk to, Microsoft is the best thing since sliced bread or they are the army of the antichrist. The more technical minded tend towards the latter. But Microsoft's OS is the most widely used. It seems that the individual user is more concerned with whether the system works than any remote legal arguments.

Some vendors are not waiting for the outcome of the court case. IBM and Gateway have publically stated that they will offer Netscape's browser with Windows 98. NEC will offer both IE4 and Netscape Communicator on CD-ROM with their corporate laptop bundle.

The big name vendors are the visible part of the iceberg. The battle of the browsers will be fought out among the trenches of the small computer retailers and box shifters.

Windows 98 will shipped as planned on June 25th. The system was available on new PCs from June 15th. The cost of the Windows 98 upgrade for Windows 95 and Windows 3.1 is IR£99.99. The full operating system costs IR£189.99. The promotion in the media started with some of the World Cup promotional material containing adverts for Windows 98. Hopefully the campaign song for Windows 98 will be chosen with a bit more care. The lyrics on the Windows 95 launch song continued "you can make a grown man cry". The big question is who will be crying at the end of the court case?
 

Section: Legal Action

Microsoft To Be Broken Up [07 June 2000]
What The Ruling Means [08 June 2000]
UK Dealers Under Threat For D2-MAC Cards 28 July 1999
UK Dealers Under Threat For D2-MAC Cards 28 July 1999
UK Court Ruling May Ban D2-MAC Cards 16 July 1999
Eu Parliament Votes For Spam 10 May 1999
TInet Pulls RF Scanner Site 21 Jan 1999
Porn Channel Screws Subscribers 20 Jan 1999
Chris Carey Arrested In NZ 09 Jan 1999
EU Outlaws Piracy 07 Dec 1998
Maxking Raided 21 Nov 1998
EC Adopts Directive 13 Nov 1998
Carey Escapes 13 Aug 1998
M$ Files AntiTrust Suit 29 Jul 1998


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