Micro$oft Monitor

Published by NetAction Issue No. 25 March 19, 1998
Repost where appropriate. See copyright information at end of message.


Action Alert: Support Expansion of the Microsoft Antitrust Investigation
No News Is Good News On Cal State University Technology Deal
About Micro$oft Monitor


Contact the Justice Department:

Please contact the Justice Department by March 31, 1998.

NetAction Project Director Nathan Newman prepared this update and call for action on the Microsoft antitrust investigation. Email Nathan at:

"So how well did Bill Gates do on Capitol Hill? On balance, not great...The impression [Bill Gates] left is that Microsoft has enough market power in its industry to justify further investigation by federal trustbusters."

BUSINESS WEEK, March 16, 1998

What a difference a year makes!

A year ago, polls and puff-piece features were pumping Bill Gates and Microsoft as heroes of the computer age, even while the media ignored a growing chorus of consumers and competitors decrying Microsoft's abusive practices in the marketplace.

After concentrated efforts by a wide range of activists, including NetAction, public attention and the legal arms of state, federal and even foreign governments are now focused on the Microsoft abuses that were once confined to the back pages of computer magazines.

When the Senate Judiciary committee held hearings on Microsoft on March 3, 1998, it solidified a bipartisan sense in both the Congress and the nation that Microsoft's monopoly power has become a threat to innovation and open access to technology. Senators on both sides of the aisle, from Republican Mike DeWine of Ohio to Democrat Patrick Leahy of Vermont, grilled Bill Gates and his allies on a whole string of anti-competitive behavior, with a large focus on Microsoft's efforts to force Internet content providers, ISPs and computer resellers to use only Explorer Internet browsers.

At the end of the hearing, Senator Orrin Hatch, chairman of the Judiciary Committee, made the flat declaration of Microsoft, "They are now a monopoly. [Microsoft] will have to learn to live by the rules that govern monopolies."

Highlights of the hearings included Netscape's Jim Barksdale asking everyone in the audience to raise their hands if they owned a computer and then to keep them up if they had an operating system other than Microsoft's. As a sea of hands fell into peoples' laps, everyone watching had a visual reminder of how Microsoft's monopoly dominates the computer world. Senator DeWine also grilled Gates ally Michael Dell on why it was impossible to buy a Dell Computer with a non-Microsoft browser installed.

Asked by the Washington Post if the Justice Department should expand its probe, Chairman Orrin Hatch said simply, "It looks like they probably should."

This is the message NetAction urges consumers to give to the Justice Department:

Expand the Probe of Microsoft!
Break up its Monopoly and Create Open Standards and Competition!

Here's what's happening with the Justice Department probe, and what you can do about it:

The first round of investigations by the Department of Justice has forced Microsoft to back off from some of its most obvious abusive tactics. Microsoft has been forced to offer versions of Windows95 without including the Internet Explorer and, leading up to the March 3 hearings, Microsoft has dropped requirements on Internet Service Providers (ISPs) that limited how they could advertise and promote Microsoft competitors. Microsoft has also canceled a number of deals with Web content providers, such as Paramount's Star Trek site, that limited access for non-Microsoft browsers.

However, these will all be cosmetic changes if, as Microsoft still plans, Internet Explorer is folded into the Windows98 operating system.

The Justice Department must file suit to block this, and launch a far-reaching antitrust suit, what is known in legal terms as a Sherman Act case. Up to this point, the Justice Department has merely been seeking to enforce a consent decree Microsoft made with the courts in 1995, but expanding the probe to a full Sherman Act antitrust lawsuit is necessary to deal with the broad monopoly power Microsoft wields in the computing and telecommunications fields.

One piece of good legal news is that Judge Laurence Silberman of the D.C. Court of Appeals, which will ultimately have broad jurisdiction over any Microsoft probe, has recused himself from the 3-judge panel overseeing lower court rulings. Silberman has a history of ignoring the dangers of monopoly to consumers and was on the 3-judge panel in 1995 that threw out what would have been a much tougher consent decree by District Judge Stanley Sporkin. Sporkin's consent decree would have enforced much tougher antitrust restrictions against Microsoft over the past few years. Silberman is being replaced on the panel by Patricia Wald, a judge much more favorable towards consumers and antitrust investigations.

NetAction urges consumers to call or email the Justice Department and ask them to launch a full Sherman Act investigation of Microsoft.

For more background information on the Microsoft antitrust issue, see NetAction's comprehensive White Paper, "From Microsoft Word to Microsoft World," on NetAction's Web site, at: http://www.netaction.org/msoft/world/.

NetAction has called on the Justice Department to follow these principles in dealing with Microsoft:

  1. Divestiture: Microsoft's Windows operating system monopoly should be split off into a separate company from the application and Internet divisions. It may also prove necessary to separate Microsoft's application and Internet divisions.

  2. Restrain Predation: Stop Microsoft from giving away browser products. Since $0.00 is below any measure of cost, it meets the traditional test for predatory pricing.

  3. Licensing: Microsoft should be forced to discontinue any licensing practices (NT, database server, etc.) that restrict customer dealings with competitors or require customer use of MSFT products.

  4. Open Standards: The government should more vigorously support open standards processes and endeavor to defend open standards developed through industry standards processes from anticompetitive abuse by Microsoft.

  5. Consumer Involvement: The government must establish processes to ensure participation by Internet users in public policy decisions effecting consumer use of the Internet, including appropriate mechanisms for addressing complaints about product marketing and the quality and reliability of Internet services.


What is the news from the Microsoft-GTE-Fujitsu-Hughes consortium that was looking for a $3 billion, ten-year monopoly over technology development at the California State University system?

The good news is that there is no news, meaning that after having the California Education Technology Initiative (CETI) plan blasted by students, faculty, staff and legislators at a January 6, 1998, hearing in Sacramento, the consortium and the university still have not been able to agree on acceptable revisions to the plan.

On March 17, 1998, Assembly Higher Education committee chair Ted Lempert wrote a letter to California State University officials telling them that they were already two weeks late on promises to deliver the revisions to the plan. He warned them that if a new proposal was not available within two weeks, the plan would be essentially dead.

According to reports, the CETI consortium partners are balking at giving up the technology monopoly provisions in the original deal, arguing that without such a monopoly over student and faculty technology purchases, they cannot generate the revenue to pay off their initial investment.

This highlights the fact that, as NetAction and others charged, the whole original business plan was based on students and faculty paying for the deal through monopoly restrictions on their technology choices. The whole CETI project was never the "free lunch" being sold by the consortium and university officials.

For background on CETI, see:
Micro$oft Monitor, Issue No. 20, Dec. 9, 1997
"Action Alert: Stop CETI!"
Micro$oft Monitor, Issue No. 21, January 8, 1998
"Questions Delay Corporate Takeover of Cal State University Technology"

The next few weeks will decide whether the CETI deal is finally killed. NetAction urges California consumers to phone or fax Chairman Ted Lempert, thank him for his tough scrutiny of the deal, and urge him to kill this monopoly deal once and for all.

Assembly Higher Education Chairman Ted Lempert
Phone: 916-445-7632
Fax: 916-324-6974

About The Micro$oft Monitor

The Micro$oft Monitor is a free electronic newsletter, published as part of the Consumer Choice Campaign http://www.netaction.org/msoft/ccc.html. NetAction is a national, non-profit organization dedicated to educating the public, policy makers, and the media about technology-based social and political issues, and to teaching activists how to use the Internet for organizing, outreach, and advocacy.

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