Hatch writes Gates on Windows 98

Senate Judiciary Committee chairman Orrin Hatch today sent a letter to Microsoft chief executive Bill Gates indicating that it would extend its ongoing investigation of alleged antitrust practices to include Windows 98.

This is the first time that the Senate committee has outlined the scope of its inquiry following a high-profile hearing in Washington earlier this month. (See related coverage)

"We are interested in Microsoft's relationship with major original equipment manufacturers; Internet/online service providers who participate in Windows referral programs or otherwise have prominent placement within the Windows boot-up sequence and/or environment; and Internet content providers who appear either on the Internet Explorer 4.0/Windows 98 'channel bar' or within one of the channels," the letter stated.

It mirrors investigations being conducted by the Justice Department and numerous states, which have indicated that the upcoming Windows 98 is a major focus of their probes. Microsoft denies any wrongdoing.

The Judiciary Committee also sent letters to Netscape chief executive Jim Barksdale and Sun Microsystems CEO Scott McNealy. These two CEOs, as well as Gates, were asked to let their licensees and customers release confidential information that will help the lawmakers' investigation into competition in the software business. Like many high-tech companies, all three require customers and licensees to sign nondisclosure agreements (NDAs) as part of their contracts. Investigators assert that the NDAs thwart their probes.

The letter addressed to Gates asks that Microsoft "provide the committee with a letter that would free Microsoft's licensees and other contractual partners to provide information to the committee without first notifying or obtaining the permission of Microsoft." Letters sent to McNealy and Barksdale included similar language. All three requests asked that the release letters be delivered to the committee no later than April 6.

Microsoft spokesman Jim Cullinan could not definitively say whether the company would agree to the request in writing, as the committee asked. "We are adamant about the need to protect our trade secrets and confidential information," he said. "We are confident we can address the needs of both sides."

Meanwhile, Netscape attorney Christine Varney said the company "absolutely" would comply with the request.

Varney, a former commissioner at the Federal Trade Commission who now practices at Hogan & Hartson, added that the letters are "a significant step" in the committee's ongoing investigation of the software giant.

"There was a lot of conflicting and evasive information given out at the hearing, and I think it reflects that the senators are not satisfied that they have all the answers," she said. The letter to Microsoft "basically says to me, 'If you won't do this, then start checking your mailbox for subpoenas.'"

During the March 3 hearing, Hatch and other Senate committee members spent considerable time scrutinizing deals Microsoft has struck with computer makers and Internet content providers.

At numerous points during the four-hour hearing, Gates repeatedly was asked if Web sites listed on Windows 95 menus were in any way prevented them from promoting other browsers. When pressed, Gates conceded there were certain restrictions on content partners who receive prominent placement--called "platinum" partners--but he offered few details.

The release the committee is seeking from Microsoft is similar to one the company provided to the Justice Department last September. In it, Microsoft made it clear that it "does not interpret its license agreements or nondisclosure agreements as requiring its licensees or NDA signatories to inform the company of any discussions or dealings with the Justice Department."

Under federal law, Justice is required to maintain the confidentiality of certain information it obtains through its civil subpoenas. The letter addressed to Gates promised to "minimize the extent to which such sensitive information is provided to the committee and, at the same time, provide adequate protection for any sensitive information the committee might receive."

Following the hearing, Hatch said he would continue his investigation of Microsoft but did not elaborate. Representatives from the Judiciary Committee were not immediately available.