Chase: "We didn't strong-arm..."

The following is an interview with Brad Chase, vice president of Microsoft's application and Internet client group, regarding the Justice Department's charges against the software giant. Key questions involved the integration of Internet Explorer 4.0 with Windows and PC makers' pressure to include the browser in their products.

NEWS.COM: The DOJ hasn't addressed the issue about Windows 98, where the browser is totally integrated, as Microsoft puts it. Justice is calling it a work in progress. How do you see it?

Chase: Well, I don't know how to comment on what the DOJ is doing, so I won't do that. I will point out that the integration you get with IE 4.0 and Windows 95 is the integration you also get with Windows 98.

Now, Windows 98 gives you a lot of other great stuff as well, but that integration you get now with IE 4.0 in Windows 95.

So what is the backup plan if Justice prevails? You mentioned that the integration is going to be so tight there's going to be a lot of code-sharing. But if it is so tightly integrated, what does that do in terms of disabling or unbundling [IE]?

Well, we certainly haven't figured that out. We think we are going to prevail, but we haven't figured all that out for sure. There is no build of Windows 95 for PC manufacturers that doesn't have IE in it. They all have IE in it, so it would be a lot of work. We would have to go retest everything, figure out what apps break, etc., etc. It's not something we have drilled down into yet.

So as far you are concerned, it's business as usual as regards to Windows 98? It is in some beta tester's hands, right?

Definitely on Windows, definitely overall business as usual. This case doesn't impact anyone's use of IE; it doesn't impact anyone's use of Windows. The case isn't even about Windows 98. The case is, as you indicated, very specifically about Windows 95.

When you say IE is fully integrated because of code-sharing, can you clarify this? Is it akin to Word for Mac and Word for Windows, where there's 80 percent common code?

I have mentioned many times that Internet Explorer is integrated to Windows. Internet Explorer is Windows in many ways, or at least a part of it. There are all sorts of elements that the products share.

For example, in IE 4.0 there's one Explorer, right? There's one unified Explorer; there's one shell. Internet Explorer 4.0 and then again Windows 98 upgrades things like OLE. It upgrades multimedia stuff like DirectX. It has a whole bunch of platform-level features that provide services to application vendors.

So, for example, Lotus uses Internet Explorer to integrate IE into Lotus Notes, as does Merrill Lynch, as does AOL. People take advantage of features like Internet shortcuts. So the list goes on and on and on of the platform elements of Internet Explorer and how it provides these services for Windows customers.

Is that going to be at the heart of the debate with Justice, what is the definition of integration, what is considered part of an OS, and what is not part of an OS?

Yes, I think the debate is about the integration of Internet Explorer into Windows and our ability to innovate and improve Windows.

Can you give me another example where this kind of integration, where there's common code-sharing? Is that basically how you are going to forth your case that, "There is commonality of code-sharing here; that's why we call it integrated?"

I could give you multitudes of examples. It's not just a technical issue either; it's not just a code-sharing issue, although that's certainly a very compelling way to explain the case. It's the benefits we need to provide to grow the success of Windows and customer satisfaction with Windows and be competitive, even at that broad level.

For example, MS-DOS and Windows themselves used to be separate products, and we integrated them with Windows 95 to provide a benefit for customers. So I mean, that is one great example in and of itself of how we took operating system technologies and integrated them, even when they were also marketed separately, to provide a benefit for customers.

But can you give me another example currently with Windows where besides the file management and all that, what other application-like stuff is tightly integrated from a code-sharing base?

Well, look at something like Mail, where the new version uses the HTML engine that's in Internet Explorer and Windows, right? There's just another yet example of that kind of integration.

It's funny if you think back about operating systems over time. In some sense that probably even gives you a better view of this. The original version of MS-DOS, you know, gave people access to information and files on a floppy disk. Then this thing called the hard disk came around, and so we improved MS-DOS so it could give you access to files and information on a hard disk as well as a floppy disk.

Then this thing called the local area network came along, and we improved MS-DOS and Windows so we could give you access to information and files on the floppy disk, the hard disk, and the LAN. And then this thing called the Internet came along, and we have done all these things to integrate with that. So now you have one Explorer to give you a view of all your information.

So the consent decree allows you to pretty much integrate anything you want to that extent? Say you wanted to integrate Office into Windows. Does the decree allow you to do that?

Whether it allows it is...I mean, yes, I guess it would allow it, but we would never do that because we have a $5 billion business to look out for, so that would be a silly thing for us to do. You know, we would never want to do that.

I've heard that explanation before. So the decree does not preclude you from going to nth level...basically to provide the end user the kitchen sink with Windows?

Again, you are getting into sort of a lawyer's interpretation. My interpretation is that I could improve Windows for my customers to be competitive and integrate what I need to do that. This case is really about IE. It's not about Office; it's not about anything else.

Have you broken down how many copies of IE were sent out on CDs? You were offering it for $4.95, I believe?

No, we haven't made that number public. We did say at launch that we had over 200,000 that had already been ordered at launch.

Then the other part of this whole equation is Windows NT. The consent decree precludes all these stipulations being applied to Windows NT, am I correct?

Yes. The consent decree very specifically says it's not about Windows NT; it's only about Windows 95 and its successors.