Microsoft forced hand of PC makers - DOJ papers

Details are emerging about how Microsoft Corp. forced OEMs to bundle its Internet Explorer browser with Windows 95.

Compaq Computer Corp., Gateway 2000 Inc. and Micron Electronics Inc. are among the PC makers that told the U.S. Department of Justice how Microsoft refused to let them remove IE or the IE icon from the Windows 95 operating system.

Details about the three OEMs, as well as numerous other documents, E-mails and contracts, were among the exhibits the DOJ included with its petition to the U.S. District Court in the District of Columbia. The DOJ claims that the software giant is in violation of its 1995 consent decree.

Stephen Decker, director of software procurement at Compaq, told DOJ investigators in a sworn deposition how Microsoft had threatened to terminate the Houston company's Windows 95 license after Compaq removed the IE icon from its line of Presario PCs.

In a June 6, 1996 E-mail, Microsoft's Don Hardwick, group manager of OEM sales division, told Celeste Dunn, Compaq's vice president of the computers software business unit, that "we would like to resolve the above mentioned Notice of Intent to Terminate letter in a quick and mutually agreeable manner as possible. To accomplish this Microsoft is requesting that Compaq replace the Microsoft Network and Internet Explorer icons on the Windows 95 desktop on all Compaq Presario machines."

The E-mail went on to say that if "you are willing to give Microsoft a clear written assurance that the above will be implemented on all Compaq Presario Machines within sixty days of the date of this letter Microsoft will withdraw its Notice of Intent to Terminate letter address to David Cabello dated May 30, 1996..."

In a subsequent E-mail, dated June 25, 1996, sent by Hardwick, Microsoft acknowledged receipt of a letter from Dunn and rescinded the Notice of Intent to Terminate letter.

In his deposition, Decker said Compaq currently has no plans to include another browser, adding that IE fills that need.

In a deposition taken from Gateway 2000 on Sept. 19, James Joseph Von Holle, director of software and the global products group, told the DOJ that Microsoft had not renewed Gateway's Windows 95 licensing agreement but had only given it an extension. The reason, according to Von Holle: Gateway was currently in negotiations with Microsoft for other products, and by not renewing the Windows 95 license Microsoft had some added leverage.

Von Holle told the DOJ how Gateway felt it would be of value to consumers to have a choice in how their PCs booted up by giving them an option of booting up to a Gateway-customized version of Netscape Communications Corp.'s Communicator instead of Windows 95, which Microsoft had told Gateway it could not alter in any way. He said Microsoft insists that Gateway machines boot to what Microsoft defines as a "pristine Windows environment."

In an "interrogatory" taken by the DOJ, Gateway officials also recounted how Microsoft had forbidden the company from removing the IE icon from Windows 95. Additionally, Gateway was told that it could not modify any of the Active Channels that will be part of Windows 98 or IE 4.0. According to the Gateway officials, Microsoft told them they could not add or delete any channels and could only add "sub-channels" that were hidden below the surface of the desktop.

Micron's Eric Browning, department manager for product enhancement, recounted for the DOJ instances where Micron officials had asked to remove the IE icon from the Windows 95 desktop, saying it was confusing for users since Micron already provided IE bundled on its machines via a partnership with SpryNet (in effect giving users two versions of IE on the desktop). Microsoft's response was no.

Greg Stephenson, president and chief operating officer at Micron, confirmed that Browning gave a declaration to the DOJ, but added that "issues were very low level. It never reached me."

When asked if the DOJ had a case against Microsoft, Stephenson said "No. Not on this specifically."

Another hardware company executive who requested anonymity concurred but added he is "sick of Microsoft whining about governmental persecution."

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