DOJ probes Microsoft-WebTV deal

The Justice Department requests more information from Microsoft and WebTV in an examination of antitrust issues in their merger.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
The Justice Department has requested additional information from Microsoft (MSFT) and WebTV in an examination of antitrust issues related to their merger.

"Their case is being reviewed and is continuing," Justice Department spokesman Bill Brooks said. "It's not uncommon to ask for additional information."

Still, the antitrust issue is a familiar and sensitive one to Microsoft, which was forced to drop plans in 1995 to acquire Intuit (INTU). The software giant stepped away from the deal after the department said it would sue over antitrust grounds if the transaction was pursued.

Microsoft executives say they remain optimistic that their $425 million WebTV acquisition will move forward. "We are confident that, once they review the information, they will approve the transaction in short order," company spokesman Mark Murray said of the federal regulators. "Microsoft has no WebTV-like product and, therefore, there's no reduction in competition."

The Justice Department and Federal Trade Commission review proposed mergers and acquisitions that involve companies with assets or sales of more than $10 million, under the Hart-Scott-Rodino Act. The regulators are looking for cases where competition will be diminished by a reduction in industry players.

"Our deal has created more competition. Oracle and Navio are merging; there's us and WebTV and other players that are providing Internet content through television," Murray said. "This is an area where competition is hot and heavy and competition is growing."

WebTV expressed similar confidence that the deal will move forward. "We would have been surprised if they had not asked for more information," said Steve Perlman, WebTV chief executive.

Department regulators requested information on the companies' competitors, the plans behind Microsoft's purchase of WebTV, details of the companies' planned operations if a merger were not to occur, and descriptions of the technology, Perlman said.

If the acquisition is blocked, Perlman said the company will continue to work closely with Microsoft and resume progress toward an initial public offering.

He added that the company expects the merger to close by the end of the summer or fall, but would have been able to shave 30 days off its timeline if the Justice Department had not made its request.

"We were told by our attorneys that it may take until the end of the year to close in the worst-case scenerio," Perlman said.