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Microsoft gives on Gateway

Gateway offers its PC users more choice in Internet browsers, signaling another concession by Microsoft as it fights antitrust lawsuits.

Today's move by Gateway to give users of its PCs more choice in selecting Internet browsers signals another concession by Microsoft as it prepares to fight landmark antitrust lawsuits.

Netscape, whose Navigator browser competes with Microsoft's Internet Explorer, called Gateway's decision "a good first step." Other PC makers, including NEC, Hewlett-Packard, and IBM, also are examining ways to more actively promote Navigator, not just IE.

Court documents filed last week revealed that Gateway was a vocal critic of Microsoft's allegedly restrictive contracts with PC makers. As one Gateway representative put it: "On several occasions, Gateway asked [Microsoft] to remove the icon for IE from the desktop, but [Microsoft] representatives have refused each request, saying that the browser cannot be removed or sold separately."

Gateway executive Rick Brownrigg testified that See related story: 
Microsoft backs off the PC maker "would like the flexibility to give its customers a choice of Internet access providers as part of the PC boot-up sequence and in the process offer those users a choice of browsers when they register," according to the filing.

Not only Gateway, but also Compaq Computer, Micron Electronics, NEC, and Hewlett-Packard, testified about the lack of choice, given Microsoft's dominance in the operating system sector. These comments were cited as evidence in the Justice Department's lawsuit against Microsoft, which charges the software giant with antitrust violations. (See related coverage)

NEC has been deleting IE and offering Navigator for free to its large corporate customers on Windows 95 PCs, when requested. The Navigator option soon will be expanded to all notebook users, sources said. NEC also is examining ways to make it easier for its Windows 98 PC users to choose Navigator.

Hewlett-Packard, which previously has bundled Navigator, is considering doing it again. IBM now features the Netscape browser on select models. Dell charges extra to bundle Navigator on consumer PCs.

Today, Gateway said it had gained some flexibility in its negotiations with the Redmond, Washington-based company. Now, buyers of its Windows 98 PCs can more easily choose Navigator, not just IE, as the default browser for Net access. The choice is aimed at PC users who sign up for Gateway's own Internet service, gateway.net--a policy that annoyed some users.

The direct PC vendor declined to comment on whether the pressure of the lawsuits forced Microsoft's hand.

Some analysts also questioned whether it was such a gain in flexibility. "This is not earth-shattering," said Jim Balderston, an analyst with Zona Research, explaining that similar agreements exist with other ISPs.

"I applauded the announcement until I read the fine print," said one Netizen, Walter Tate. "It is not much of a choice if the choice is dependent on the customer signing up with Gateway's Internet service. Sounds like they have taken a page from Microsoft's playbook."

For its part, Microsoft has said that PC users always have been able to choose the Netscape browser for accessing the Net if they want. "OEM's always have been free to offer any software, including browsers, for our customers," a Microsoft spokesman said. He added, however, that the software giant had not seen Gateway's latest "implementation," which was demonstrated at a press conference in New York.

This is not the first time that the software giant has granted concessions as lawmakers and regulators turned up the heat. Microsoft denies, however, that it is reacting to any pressure, and cites "business decisions" as the reason for its actions.

Among other examples are the following:

•  This spring, Microsoft agreed to drop some requirements it imposed on U.S. Internet service providers in cross-promotional licensing deals. The changes liberalized terms for advertising and promoting browsers other than IE, including Navigator.

•  At the end of last year, the company let a deal with Paramount Digital Entertainment that pointed to popular Web content, such as Star Trek, expire. Some of the content only was available through IE.

•  In a pact reached with the Justice Department in January, Microsoft said it would provide PC makers with the most up-to-date version of Windows 95 without the desktop icon for IE.

A spokesman for the Software Publishers Association had no immediate comment on Gateway's announcement.