While the Justice Department served up some lively language in describing Microsoft's alleged over-the-line marketing tactics, the software giant came back with an understated suggestion that the government may not understand the law or the court order at the heart of the case.
The Justice Department said Microsoft violated a 1995 federal court consent decree when it required PC-makers to license and distribute its Internet Explorer browser as a condition of licensing the Windows 95 operating system. In doing so, the department said, Microsoft limited the choices of consumers and companies, strong-armed PC-makers into an anticompetitive game, and may have threatened nasty reprisals for anyone who squeaked a complaint.
Within hours after the government spoke, Microsoft marshaled a group of high-level lawyers and flacks to tell its side of the story. In Microsoft's version, the company is a misunderstood champion of innovation and competition. Far from foisting its browser onto PC-makers and their customers, Microsoft is adding an extension of its ubiquitous operating system that the government and the court approved years ago.
"Microsoft was free to do precisely what we have done in including in its Windows operating system the ability to locate information on another source, namely the Internet," said William Neukom, Microsoft's senior vice president for law and corporate affairs. "When we license that operating system to PC manufacturers, the license requires they include all of its functionalities, including the browsing functionality."
Neukom also said its licenses let partners use competing products and brushed aside the government's suggestion that companies were afraid to speak out against Microsoft's tactics.
Microsoft's defense rests on its reading of the consent decree that Microsoft and the Justice Department agreed on in 1994 and that a court ordered in 1995. A provision in the consent decree let Microsoft license to PC-makers its operating system and all of its existing "functionalities," or features. One such feature on Windows 95, then in development, "would include the ability to go to the Internet and collect information," Neukom said.
The copies of IE 4.0 bundled with recent PCs of more than 50 PC-makers are simply enhancements of a feature of its operating system - enhancements that are going up against Netscape's browser applications. In considering IE an application rather than a feature included in Microsoft's operating system, the Justice Department seems to have mistaken the terms of the consent decree, Microsoft said.
"I'm afraid the government may misunderstand the meaning of that provision of the consent decree," Neukom said. "They may not appreciate the way software publishers enhance and improve their products."
And how does Microsoft contend with the issue that - while IE is expected to be integrated with the Windows 98 operating system software - millions of users have downloaded IE 3.0 and 4.0 under the impression it's a separate application, rather than an extension of Windows 95?
Apparently, an operating system is whatever Microsoft wants it to be.
"We believed the government understood we have the right to continue to develop our operating system as we had 10 years prior to that," Neukom said. "The point of the consent-decree language was to let Microsoft define the functionality [of an operating system], not to have the government legislating what functionality should be in an operating system and what shouldn't be. That's a matter that should be left to the company."
