A year ago, NetAction conducted a survey of the largest Internet Service Providers (ISPs) and found that Microsoft was using agreements by ISPs to distribute its Internet browser to rapidly expand its market share. One year later, despite the Department of Justice's antitrust lawsuit, the situation has gotten worse. Almost none of the largest ISPs even give consumers the option to order an alternative to Microsoft's Internet Explorer browser and many will not give technical support to consumers who install Netscape Navigator or an alternative browser on their system. The four largest retail Internet Service Providers, with a combined subscriber base of over 20 million customers, distribute only Internet Explorer to their customers. A number of services that offered Netscape Navigator as an alternative a year ago now or will soon offer only Internet Explorer. The bundling of Explorer with Windows 98 is already having the effect of encouraging ISPs to support only Microsoft.
In the year since NetAction's last survey of ISPs, there has been an increasing scrutiny of Microsoft's predatory business practices and, most recently, antitrust lawsuits from both the Department of Justice and the States Attorneys General. Much of this scrutiny has been focused on Microsoft's use of its Windows operating system monopoly to negotiate deals that forced both ISPs and computer resellers to distribute Internet Explorer. In the last few years, Microsoft had negotiated agreements with over forty ISPs which required those ISPs to promote Internet Explorer over rivals in exchange for listing their services in its Windows95 Internet Connection wizard.
The result has been a dramatic slide in Netscape's share of the browser market, from 63 percent in January 1997 to 54 percent in January 1998. Meanwhile, Microsoft Explorer's share rose to 39 percent from just 21 percent. Looked at a different way, the shift is even more dramatic. While the number of computers with Netscape installed grew by only 33 percent during 1997, the number using Explorer nearly tripled.
In March of this year, under pressure as a result of hearings before the Senate Commerce Committee, Microsoft abandoned the agreements forcing ISPs to promote Internet Explorer. But by then the damage had largely been done.
With plans to incorporate its browser into Windows 98, Microsoft now had a new strategy for pressuring ISPs to distribute Explorer over rivals like Netscape. The incorporation of Explorer into Windows threatens to completely eliminate competition in the browser market, as ISPs fear that consumers will not be able to use many functions of Windows with anything other than Explorer. For example, IBM was one of the few larger ISPs offering Netscape as their preferred browser, but the company recently announced that in September, they will begin distributing only Explorer. After looking over Windows 98, IBM strategy manager Adam Wong announced, "Windows Explorer and Internet Explorer are meshed." Explained Wong, "If you're in Windows Explorer [file manager] and you want to launch [a Web page in] Netscape, that ain't gonna happen." For this reason, IBM decided to no longer encourage use of Netscape
While Microsoft defenders note that consumers can download alternative browsers off the Internet, this is mostly a theoretical choice for computer novices, who tend to stick with the software provided by their ISP. A survey of 7,000 computer users released earlier this year by the Georgia Institute of Technology found users of the Internet tend to stick with the first browser they become familiar with. Forty-five percent of those surveyed who had begun using the Internet in the last year said the primary reason they used a particular browser was because it came bundled with their software, while 81 percent of novices said they had not switched browsers in the past year. Given the lack of ISP support for alternative browsers, and justified fears that some Windows functions will not work with non-Microsoft browsers, it is even more unlikely that computer users will stray too often from the Internet software initially provided by their ISPs. This makes the increasing dominance of Microsoft among ISPs all the more disturbing.
To determine how much choice consumers have in Web browsers through their ISPs, NetAction surveyed the largest Internet service providers. Given the multiplicity of roles such companies have, from running Internet backbones to serving groups of employees in enterprise operations to supplying services through third parties, there is no simple way to rank companies by size. Because of the rapid growth in subscribers, the policy of some companies not to divulge their subscriber base (or to use criterion that differs from other companies), ranking ISPs by retail subscriber size can only be a rough guide. Still, that is the best criterion available and this survey focuses on those ISPs serving such retail companies.
In compiling its list of top ISPs, NetAction started with the list of 23 ISPs that Inverse Technology studied in its May 1998 technical survey of ISP quality. We eliminated those companies that service only enterprise-level operations or provide only backbone service, leaving 17 ISPs with a combined total of more than 25 million individual subscribers. Each of these companies was surveyed to find out what browser they provide to their customers, whether customers can choose to have an alternative browser bundled with the rest of the ISP software, and whether the ISP provides technical support for alternative browsers.
The ISPs can be divided into five categories:
The results of NetAction's survey, conducted in June 1998, yielded the following results, which are presented along with estimated subscriber numbers provided by each company and special notes:
|Internet Service Provider (ISP)||Browser provided to customers||Number of Subscribers||Notes|
|America Online(1)||Microsoft Only||11,000,000||#1|
|Internet MCI(1)||Microsoft Only||3,800,000|
|Microsoft Network(1)||Microsoft Only||3,000,000|
|AT&T WorldNet (2)||Microsoft default||1,100,000||#3|
|ICG Netcom(3)||Customer choice||1,000,000|
|Prodigy Internet; Prodigy Classic(1)||Microsoft Only||830,000||#4|
|Erol's Internet(3)||Customer choice||415,000|
|Pacific Bell Internet(5)||Netscape Only||300,000|
|Bell South.net(4)||Netscape default||219,000|
|IBM Global Network(5)||Netscape Only||Does not disclose||#5|
|Bell Atlantic.net(5)||Netscape Only||200,000|
|Concentric Network(2)||Microsoft default||Multiple services||#6|
|Ameritech(5)||Netscape Only||Does not disclose?|
1. Microsoft Explorer is built into America Online's own software. If you uninstall Explorer, a user is unable to use Internet features of the AOL software.
2. Compuserve is now owned by AOL. If a customer wants to use Netscape, they have to download a special version of Netscape's browser at Compuserve's web site.
3. Not only does AT&T provide Microsoft Explorer as the default choice, our experience was that customer service agents discourage customers from choosing Netscape if they request it.
4. Prodigy provides two alternative services: a plain Internet connection and Prodigy Classic, which has its own proprietary software. For Prodigy Classic, not only does the company distribute only Explorer, but if you download the Prodigy software, you must have Explorer installed on your computer in order to register with the service. Only after you register can you change browsers by following a series of configuration instructions.
5. Currently, IBM does not distribute or provide technical support for Microsoft Explorer, but in September 1998, the company will switch and only distribute Explorer.
6. Concentric Network provides third party Internet services for a number of other companies, including Microsoft's Web TV customers.
The disturbing reality is that the four largest retail Internet Service Providers, with a combined subscriber base of over 20 million customers, distribute only Internet Explorer to their customers.
Compared to NetAction's survey a year ago, Microsoft's dominance has only grown. Compuserve no longer distributes Netscape browsers as an alternative to Microsoft. AT&T emphasizes Microsoft's Explorer browser to customers.
It is notable that the few Internet service providers which a year ago offered only Netscape Navigator (such as Netcom and Earthlink), now let customers choose Microsoft Explorer as well, further promoting the shift towards Microsoft. NetAction wishes that such consumer choice was the norm, but with the largest ISPs distributing only Microsoft software and the impending integration of Explorer into Windows98, such "choice" seems only a step along the way to supporting only Microsoft. IBM's plans to begin distributing only Internet Explorer in September is just part of this larger trend. The only countertrend to this Microsoft dominance is the tendency of the Baby Bell Internet services to support Netscape.
NetAction commends ICG Netcom, Sprint/Earthlink, and Erol's Internet for their policy of leaving the choice of Internet browser solely up to their customers. Their policies should be emulated by the whole industry.
NetAction's survey reveals that Microsoft continues to expand its anticompetitive advantages in the marketplace and continues to erode consumer choice. Computer novices are unlikely to second-guess the browser choices made by their Internet Service Provider, so Microsoft has an overwhelming advantage in expanding its browser market share. Combined with Microsoft's existing Windows dominance, including the integration of Explorer into Windows 98, and Microsoft's deals with computer resellers to include Internet Explorer on computers when they are first sold, Microsoft is tightening its control of the browser marketplace.
As NetAction has detailed in other reports (see From Microsoft Word to Microsoft World at http://www.netaction.org/msoft/world/), erosion of consumer choice in browsers does not hurt consumers just by limiting choice in one piece of software. If Microsoft is allowed to control how consumers access the Internet, the company will substantially control Internet standards. If Microsoft controls browsers, it will be able to decide what kinds of software and what Web site designs can be "read" by any Internet consumer. If Internet Explorer is designed not to "read" certain kinds of information -- graphics formats, software effects, etc., then web page designers will avoid using those kinds of technologies in favor of the technologies approved of by Microsoft. And if you are a software company like Microsoft selling web servers, web design software and involved in an array of Internet commerce, you have an overriding advantage in controlling those Web standards.
NetAction strongly supports the investigations by the Justice Department and the States Attorneys General and urges investigators to expand their efforts to fully rein in Microsoft's monopoly power. (See our recommendations on dealing with Microsoft at http://www.netaction.org/msoft/world/recommend.html in that context).
Beyond that, we urge consumers to take the following actions to support consumer choice in Internet browsers:
This report was written by Nathan Newman, NetAction Project Director. Feedback about the report is welcome and should be sent to: .
Copyright 1998 by NetAction.