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WorldNet now bundled with Windows 95

Not only is AT&T making Microsoft's Internet Explorer the default browser for its WorldNet service, but the Internet software is also being included in currently shipping versions of Windows 95.

AT&T (T) confirmed today that it will make Microsoft's (MSFT) Internet Explorer the Web browser of choice for its WorldNet Internet customers, as previously reported by CNET.

In addition, AT&T said that its WorldNet software is included in versions of Windows 95 now being shipped to computer makers. Most computers with Windows 95 delivered during the holiday season are expected to include AT&T WorldNet service.

AT&T won't be alone in preferring Explorer to its chief rival, Netscape Communications' Navigator. Microsoft yesterday announced that the U.S. Navy has signed a deal to distribute Internet Explorer 2.1 for Windows 3.1 to Navy personnel, a group that includes more than 600,000 potential users.

Prodigy and Sprint are also on the verge of agreements with Microsoft to offer the browser to their subscribers, sources said, putting the software giant's browser in front of even more users. The Prodigy deal is expected to be announced next week.

For the past several months, Microsoft has been cutting deals at a furious pace with Internet service providers in a bid to boost the market share of its browser.

So far, the company says it has signed up more than 4,000 ISPs to use Internet Explorer, many of which, including America Online and Netcom, have agreed to make Explorer the default browser for their services. Even though users could switch over to other browsers such as Navigator, the incentive to do so is much diminished when Explorer is actually bundled with the service.

Microsoft's distribution deals with ISPs, not surprisingly, have raised the ire of the company which stands to lose the most from preferential treatment of Internet Explorer: Netscape.

In August, Netscape attorney Gary Reback listed the ISP deals among a series of allegedly anticompetitive actions by Microsoft. Reback said that Microsoft was using its dominance of desktop operating systems to acquire preferential deals with ISPs.

However, Microsoft officials steadfastly deny that their relationships with ISPs are anticompetitive.

"We're quite proud of the partnerships we've built with people like AT&T, AOL, and CompuServe," Brad Chase, vice president of the Internet platform and tools division at Microsoft, said today. "It's kind of sad that our competitors are seeking government intervention in the competitive process."

The AT&T deal, which makes Internet Explorer the default browser for WorldNet customers, is bound to raise hackles from Netscape again. The deal represents an extension of an existing licensing agreement announced last July between the communications giant and Microsoft. At that time, AT&T officials said that they would simply offer Internet Explorer as an option for customers along side Navigator.

Under the new deal, subscribers will automatically receive Internet Explorer when they sign up for WorldNet service, though customers will still be able to receive Navigator if they request it, according to Tom Evslin, vice president of AT&T WorldNet Service. WorldNet currently has 425,000 users, although most of those use Navigator and today's deal will impact primarily new subscribers to the service.

Today, AT&T officials said that its new deal with Microsoft does not mean that its relationship with Netscape have soured.

"There's not a problem in our relationship with Netscape," said Evslin. "Our contract with Netscape continues unchanged. It never was an exclusive contract."

A recording on AT&T's WorldNet 800-line already seems to focus attention exclusively on Internet Explorer. The recording offers information about Internet Explorer with WorldNet at the beginning of the message, but avoids mentioning Netscape by name.

"You can continue to order AT&T WorldNet software with another industry leading browser," the recording says.