Tech Industry

Microsoft antitrust file grows

Massachusetts is the latest to investigate Microsoft's competitive practices, examining Internet software and online commerce.

There is no rest for the weary in Microsoft's (MSFT) legal department.

The company its competitors love to hate shows up in half a dozen case files at federal and state agencies. The specific allegations differ but the basic charge is the same: Microsoft is a bully. The latest entity to get into the game of examining Microsoft's business practices is Massachusetts.

The Bay State is following Texas in launching an antitrust investigation of unspecified allegations about the company's practices in the area of Internet software and online commerce.

The Massachusetts attorney general's office won't comment on the case, but Compaq Computer (CPQ) confirms that it has been contacted in the past 60 days by the agency with a request for information about antitrust issues. Microsoft itself has not yet been contacted.

The software giant is also responding to inquiries this week from federal antitrust regulators about its planned $425 million acquisition of WebTV. The government is looking at whether such a merger will create unfair competition in the area of melding the Internet and television.

The government says such an investigation is routine in mergers of this size. But that's what it said, at first, about a previous planned merger between Microsoft and Intuit, a deal that was eventually killed under threat of a suit from the Justice Department.

Caldera, which acquired Novell's DR-DOS operating system in 1996, piggybacked off a Justice Department lawsuit against Microsoft over operating-systems licensing and marketing practices for its operating system, filing a lawsuit itself. The Caldera suit, filed in July 1996, alleges the software maker engages in anticompetitive tactics. The case is set to go to trial in May 1998, said Bryan Sparks, Caldera's president.

Microsoft is also still battling with Netscape Communications (NSCP) over charges that Microsoft took advantage of its operating system dominance to pressure computer makers into bundling its Internet Explorer browser. The Justice Department is playing referee on this one; it says the investigation is still pending, but it won't reveal any specifics about the information disclosed.

And, finally, Microsoft is still contending with a two-year-old antitrust case in Europe. A British computer equipment manufacturer is accusing Microsoft of using its licensing agreements to put small manufacturers at a disadvantage with larger OEMs.

Microsoft keeps a watchtower staffed with lawyers on these issues. The company has been under fire for a long time, and so far has only been burned once, on the failed Intuit merger.

Microsoft officials are cavalier about the frequency with which the company is investigated. The company appears to accept ongoing legal scrutiny as part of the price of success. Even when Texas launched the first state probe into antitrust issues and set the precedent for 49 other states, Microsoft didn't flinch.

"The Texas case is still ongoing. We had them request information and we provided it. We are confident that once they review the information, they'll see the competition is hot and heavy in Internet software," said Microsoft spokesman Mark Murray this week.

The case, opened in February, doesn't appear to be gathering much momentum. One source at Microsoft said the information requested from the Texas attorney general's office makes it hard to even gather a clear picture of what the state is investigating.

Ward Tisdale, a spokesman for the Texas attorney general's office, refused to comment on specifics or on the relation of its investigation to that of Massachusetts, although the commonwealth got interested only after being contacted by the Texas attorney general.

"We were the first state to take on [the antitrust issue with Microsoft]," Tisdale said. "If other states express an interest, then they can speak to that."

The state of Washington is the only other, so far, that has publicly expressed any interest in the antitrust case, and it has not actually opened an investigation.

Probes of Microsoft's business practices
1990 Federal Trade Commission begins investigating Microsoft's software marketing practices. Focuses on the possible anticompetitive nature of "tie-in" sales of applications and operating systems.
1993 Justice Department takes over the investigation.

1994 Microsoft and Justice Department reach a settlement that regulates Microsoft's marketing practices through the year 2000. Microsoft agrees that OS licenses must not contain conditions that apply to other MS software.

DOJ files suit to halt Microsoft's $2 billion acquisition of Intuit.

1995 Microsoft and Intuit cancel merger plans to avoid a legal fight.

U.S. District Judge Stanley Sporkin refuses to sign the '94 settlement, saying it does not go far enough.

U.S. Appeals Court overturns Sporkin's decision.

U.S. District Judge Thomas Jackson approves the settlement.

Justice Department says that it will continue its investigation of Microsoft. Looks at whether the MS plan to bundle Microsoft Network with Win 95 is anticompetitive.

1996 Netscape files a complaint with the Justice Department, alleging Microsoft used unfair and anticompetitive practices in promoting its Internet Explorer browser. Netscape charges that Microsoft offered computer makers a $3 discount on Windows 95 software if the vendor did not install Navigator. Microsoft denies the allegation.

Justice Department requests documents from Microsoft regarding its browser agreements with computer manufacturers and sellers.

Justice Department asks Netscape for documents for a formal investigation of Microsoft. The investigation is still pending.

1997 State of Texas launches a formal antitrust investigation of Microsoft's business practices on the Internet. It is the first state to conduct its own probe of the software giant.

Justice Department requests further information on Microsoft's plan to acquire WebTV. Says it is part of its regular review of mergers.

State of Massachusetts begins an antitrust investigation of Microsoft.