Internet

Microsoft foes cite Intuit case

A report by consumer group NetAction claims that government opposition to the proposed 1995 Microsoft-Intuit merger prevented a chokehold.

The Justice Department prevented Microsoft from gaining a chokehold on electronic commerce three years ago by opposing a proposed merger with Intuit, according to a new consumer group report that Microsoft called "fiction."

The white paper, drafted by longtime Microsoft critics at NetAction, attempts to trace the effect of government opposition in 1994 and 1995 to Microsoft's proposed $1.5 billion acquisition of Intuit, maker of the financial software Quicken. Microsoft eventually dropped its bid, citing the costs of protracted litigation.

The report, released today, supports the importance of regulatory actions by the Justice Department, saying that the agency continues to play a crucial role in reining in the software giant. The department is deciding whether to bolster an ongoing antitrust action against Microsoft with a broader lawsuit.

According to the report, "the Justice Department helped assure three years of open competition in the online financial services marketplace" by opposing the Microsoft-Intuit merger. "In those three years, the Internet moved from being largely a toy of academics and hobbyists to being a core part of the global economy."

But the report warns that "there are still serious dangers from Microsoft's anticompetitive strategies." Chief among the concerns listed is Microsoft's alleged attempts to dominate software used to navigate the Web and conduct transactions on the Net.

"The very fact that Microsoft is willing to spend hundreds of millions of dollars developing its Internet Explorer, and then give it away for free, tells you that the browser is only a shadow of the real fight involved," the report says.

Microsoft spokesman Tom Pilla dismissed the report by calling into question the partiality of its authors, who in reports by the Seattle Post Intelligencer are alleged to have received support from Microsoft competitors.

"A librarian would file this report under fiction," Pilla said. "This is clearly a biased report from a group that, according to press accounts, has received funding and legal assistance from Sun Microsystems and other Microsoft competitors."

Representatives from NetAction were not immediately available for comment, but in past interviews the organization has insisted that it does not receive any type of financial assistance from Microsoft rivals. The group, which says its mission is to "educate the public, policy makers, and the media about technology-based social and political issues," has long criticized Microsoft for engaging in allegedly anticompetitive conduct.