US Report: DoJ could threaten Windows 98 launch

If the U.S. Department of Justice (DoJ) ends up filing another anti-competition case against Microsoft, it's anyone's guess what the agency's central argument will be.

DOJ officials would not comment on when or whether the agency might levy another antitrust case against Microsoft. If Windows 98 is to be included within the focus of such a case, industry experts said the DOJ will need to act before the end of this month, which is when Microsoft is aiming to send its Windows 98 code to manufacturing in preparation for commercial shipment on June 25.

Once the Win98 code is in hardware vendors' hands - expected to happen by mid-May -a move to block the product's shipment is likely to be dismissed as having a chilling effect on the market, said experts.

In the meantime, Microsoft is hardly standing still. The company's lawyers have "gone to the bargaining table" with the DOJ over Windows 98 licensing and marketing terms and conditions, said sources. The results of those negotiations have been thus far inconclusive, said sources close to the case.

The DOJ, for its part, is casting an ever-wider net in its ongoing information-collection campaign, according to sources close to the investigation.

A number of states are conducting simultaneously their own investigations and are issuing their own Civil Investigative Demands (CIDs), seeking information from various industry players.

Hardware, software and other industry sources said that among the prime areas the DOJ is investigating are:

The relationship between Microsoft's operating system and application software divisions and any sort of competitive advantage it gives Microsoft over its competition;

Microsoft's dealings with Internet content providers in both the areas of exclusivity (requiring developers to create sites that run best and/or only with Internet Explorer) and positioning (in terms of Active Channel bar placement of Microsoft and non-Microsoft content);

Microsoft's contracts with Internet service providers, in terms of the extent to which they limit the browser choices that ISPs can offer their customers;

Microsoft's Java licensing agreement with Sun Microsystems - the subject of a separate U.S. District Court suit - and the extent to which Microsoft's Java strategy is in violation of the Sherman Act; and

Various requirements included in Microsoft's latest market development agreement licenses between the company and its hardware partners. Microsoft's requirement that hardware makers maintain a predetermined number of Microsoft Certified Professionals on staff is raising some eyebrows, sources said.

The DOJ also is looking into whether or not Microsoft's NT operating system should be subject to the same requirements and restrictions as Windows 95, said sources. The antitrust case which the agency levied against Microsoft last autumn covers only Windows 95 and Internet Explorer 3.X/4.X and whether these are separate products.

"The DOJ also is struggling with the issue of remedies," said a source claiming familiarity with the case, who spoke on condition of anonymity.

While DOJ officials have declined to comment on specifics of the case, they have given some hints about the agency's latest thinking on the Microsoft matter. And creation of new antitrust laws is not among the DOJ's favoured options. "Some might believe that we need new antitrust laws to enforce pro-competitive behaviour in our high technology industries. I am confident, however, that the existing array of antitrust tools, including the Sherman Act and the Clayton Act, are adequate to the task," said Deputy Attorney General Daniel Rubinfeld, who spoke at the Software Publishers Association spring symposium in the US last month.

"The significant task at hand is to clarify the application of these laws to industries such as computer software and hardware in which technology is evolving rapidly and product prices and innovation (new products, improvements in product quality, etc.) are at issue."

Rubinfeld said that "antitrust interventions will, to the extent possible, be undertaken with a minimal degree of disruption and cost to the firms involved, and to the competitive process."

Microsoft officials refused to comment on specifics regarding any of the areas that the DOJ is said to be investigating.