A NetAction survey of the top Internet service providers concludes that Microsoft's marketing strategy is preventing consumers from choosing the browser they use to access the World Wide Web, and integration of Internet Explorer into the Windows 98 operating system will further limit consumer choice. The survey found that the top three ISPs serving the U.S. consumer market -- America Online, Compuserve, and Internet MCI -- all bundle Microsoft's Internet Explorer into their start-up software, and all three have agreements with Microsoft that specify IE as the browser customers receive. Only one of the three top ISPs tells consumers they have the option of downloading Netscape Navigator as an alternative to IE.
The Microsoft Windows operating system is installed on an estimated 90% of personal computers on the market today, giving the Redmond-based corporation a near-monopoly in the market for PC operating systems. Microsoft is now positioning itself to dominate Internet commerce, a goal it intends to accomplish in part by controlling consumer access to the World Wide Web. As part of its strategy to control Web access, Microsoft plans to integrate its Internet Explorer (IE) Web browser into Windows 98, the next version of its operating system, which is scheduled to be released during the first quarter of 1998.
With IE built into the operating system, PC owners using Windows 98 will find it much more difficult to use Netscape Navigator or another alternative browser. Consequently, linking IE to the Windows 98 operating system may have a profound effect on consumer choice in Web browsers. Conceivably, consumers could be deprived of all choice along with the benefits to be derived from a competitive market.
But how much choice do consumers have now in the browser they use to access the Web? In order to find out, NetAction conducted a survey of the top Internet Service Providers to determine the extent to which consumers currently have a choice of Web browsers. The survey results indicate that consumers already have very little choice, primarily because of the marketing strategies employed by Microsoft. Moreover, consumer expectations about which browser they will be using in the coming year appear to be unrealistic in light of the survey's findings.
With competitive products on the market, the main factors effecting consumer choice in Web browsers are:
Since the versions of Windows that consumers are currently using do not preclude consumers from using a non-Microsoft browser, consumer choice at present is determined primarily by the choices made available to customers by their ISPs.
To determine how much choice consumers actually have in Web browsers, NetAction surveyed the top 20 Internet service providers, asking each ISP which Web browser consumers received with the service's start-up kit. The survey results are displayed in Table A below.
Rank Internet Service Provider Browser provided with start-up kit 1 America Online IE 3.1 2 Compuserve IE 3.1; NN 3.0 available as a download 3 Internet MCI IE 3.1 4 IBM NN 5 Microsoft IE 3.1 6 BIGLOBE N/A* 7 T-Online N/A* 8 Sprint IP Services Choice of IE 3.02 or NN 3.0 9 UUNET N/A* 10 PSINet Inc. (Mindspring) IE 3.02 for PC 11 BBN Planet N/A* 12 Nifty-serve N/A* 13 Prodigy Choice of IE and NN on start-up kit 14 AT&T IE 3.1; NN 3.0 available as a download 15 Netcom NN 16 ANS CO+RE N/A* 17 DFN Deutsches Forsch. N/A* 18 Telecom Finland N/A* 19 ATMLINK, Inc. IE 3.02 20 Earthlink NN 3.0
* Eight of the 20 largest ISPs either did not provide service directly to consumers or did not provide service to U.S. consumers, and consequently were excluded from the survey.
The survey was conducted by telephone during July, 1997. The survey questions are listed in Attachment A.
The results of NetAction's survey indicate that consumers have little actual choice in Web browsers because the most popular ISPs have agreements with Microsoft to bundle IE into their service.
The significant findings were as follows:
The top three ISPs serving the U.S. consumer market -- America Online, Compuserve, and Internet MCI -- all bundle IE into their start-up software. And all three have agreements with Microsoft that specify IE as the browser customers receive. Only one of the three top ISPs tells consumers they have the option of downloading Netscape Navigator as an alternative to IE.
Four of the five top ISPs serving the U.S. consumer market provide IE as the default browser. Only IBM, which as the fourth largest ISP ranks just ahead of Microsoft's own network, offers their customers Netscape Navigator as part of the start-up software.
Of the twelve largest ISPs serving the U.S. consumer market, seven provide IE as the default browser, and only three offer Netscape Navigator as part of the start-up software.
Only two of the top twelve ISPs actually give consumers a choice by offering both browsers as part of the start-up software.
While it's possible for consumers to download an alternative browser if they don't wish to use the one supplied by their ISP, as a practical matter many casual Internet users lack the technical knowledge to successfully download software from the Internet. This further limits consumer choice with regard to the browser used to access the Web.
NetAction's survey reveals that Microsoft's marketing strategies already limit the choice consumers have regarding which browser they use to access the Web. Microsoft's integration of IE into Windows 98 will further limit consumer choice, and may ultimately deprive consumers of choice entirely. Microsoft's marketing strategy for IE assumes that consumers prefer to have as many functions as possible built into the computer's operating system, eliminating the need to purchase individual software applications. If this assumption is correct, then Microsoft's strategy benefits consumers. But NetAction assumes that consumers prefer to have choices. Some consumers will want an operating system with numerous built-in applications, while others will prefer to select each application separately. If NetAction's assumption is correct, then Microsoft's browser marketing strategy is contrary to consumer interests.
NetAction believes that consumers benefit most when they have competitive choices. When consumers have alternatives, competitors are motivated to continually improve and refine their product offerings. In the absence of competition, the quality of the only available product may stagnate or decline. Consequently, consumers risk losing twice if competition disappears-- once by being denied a meaningful choice, and again if the quality of the remaining product declines because of the lack of market competition.
Furthermore, consumer expectations about which Web browser they will be using in the next year appear unrealistic. With a 71% share of all browsers in use, Navigator is the dominant Web browser on the market today. IE, with a 14% share, is second. Moreover, a recent survey of Internet users found that 81.13% of U.S. and European Internet users expect to use a Netscape browser in the next 12 months, compared to 12.13% who expected to use IE within the next year.
Since the top ISPs serving consumers are now including IE in the start-up software, it seems unlikely that these expectations will be realized. Some industry analysts predict a sharp decline in the use of Navigator. Jupiter Communications estimates Netscape's share of the browser market will drop from 59% to 38% by the end of the year because of Microsoft's integration of IE into the Windows operating system. Moreover, the ISP market is expected to consolidate, with only the larger, more popular ISPs remaining.
Consumer choice in Web browsers is already limited, and it's likely to be reduced even more when Microsoft introduces Windows 98. Consequently, action is needed now to ensure that consumers have competitive choices in the future. Here are some steps consumers can take to ensure choice in Web browsers:
If your ISP doesn't offer a choice of Web browsers, ask that customers be offered a choice.
If your ISP is not responsive to requests to offer a choice of browsers, switch to an ISP that does offer a choice.
Contact the Justice Department at and indicate your support for an investigation into Microsoft's anti-competitive practices in the Web browser market.
Write or phone your representatives in Congress and tell them you support a Justice Department investigation of Microsoft.
Write a letter about this issue to your local newspaper.
Share this report with friends and colleagues by forwarding the URL in an E-mail message.
Provide a link to this report from your Web page.
Research assistance for this report was provided by Mitch Stoltz, a student at Pomona College majoring in computer science and public policy analysis.
The report was written by Audrie Krause, NetAction Executive Director. Feedback about the report is welcome and should be sent to: .
Copyright 1997 by NetAction.
See "Microsoft's Fast Lane to The Internet," by Jonathan Marshall and Jon Swartz. The San Francisco Chronicle, Saturday, July 12, 1997.
Microsoft's main competitor in the Web browser market, Mountain View-based Netscape, has complained to California Senator Barbara Boxer that Microsoft's integration of IE into Windows is anti-competitive. See "Netscape Airs Complaints About Microsoft's Net Software," by David Bank. The Wall Street Journal, July 14, 1997.
Although most new personal computers sold on the consumer market have Windows 95 pre-installed, many consumers still use older computers operating on Windows 3.x.
As identified by Dataquest.
AOL Alliance Announced," http://www.internetnews.com/textonly/96Mar/0313-alliance.html,
(NOTE: This URL is no longer valid as of 05/23/2001.) Netday News, March 13, 1996.
Also see "Rivals Microsoft, Compuserve Weave Web Deal," by Jube Shiver Jr. Los Angeles Times, June 5, 1996.
Also see "MCI/Microsoft Join Forces," http://www.internetnews.com/textonly/96Jan/0129-ms-mci.html. (NOTE: This URL is no longer valid as of 05/23/2001.) NetDay News, January 29, 1996.
Computer Intelligence, 1997 Consumer Technology Index press release, http://www.ci.zd.com/news/inetuseb.html (NOTE: This URL is no longer valid as of 05/23/2001.).
The Graphic, Visualization, & Usability Center's (GVU) 7th WWW User Survey.
Jupiter Communications press release of February 10, 1997, "Jupiter Estimates Netscape's Current Market Share at 59% - To Drop To 38% by End of 1997," http://www.jup.com/jupiter/release/feb97/netscape.shtml (NOTE: This URL is no longer valid as of 05/23/2001.)
NUA Internet Surveys summary report of "The Internet Service Provider Marketplace, 1996-2000: A Dual Telecommunications Opportunity," International Data Corporation, May 29, 1997.
Does the ISP provide a Web browser with its service to consumers?
(Yes or no)
If so, which Web browser?
(Netscape or IE)
If the ISP offers more than one browser, which is the default provided
to customers who do not specify which browser they prefer?
(Netscape or IE)
If the ISP provides IE, is NN available if a customer requests it?
(Yes or no)
If the ISP with IE as the default provides NN upon request, is there an
(Yes or no)
If the ISP provides IE as the default, can a customer use NN if it is
already installed on the customer's computer.
(Yes or no)