The Facts of the Microsoft/DoJ Case
November 7, 1999
Response to Intel: Intel Architecture Labs (IAL), Intel's software arm, by early 1995 was "in the advanced stages of developing software that would enable Intel 80x86 microprocessors to carry out tasks usually performed by separate chips known as 'digital signal processors.'" This would have enhanced Intel processors' native ability to handle video and graphics, and would have provided non-Microsoft APIs and Device Driver Interfaces (DDIs) to software developers. Further, Intel was developing these APIs and DDIs for non-Microsoft operating systems, which Microsoft perceived as having "the potential to weaken the barrier protecting Microsoft's monopoly power." Microsoft embarked on a campaign to stop this development, including pressuring OEMs not to install Intel's software. In July 1995, Intel agreed to stop promoting this software when it realized that it had no choice but to allow Microsoft to determine the pace of software innovation.
In spite of Intel's capitulation, Microsoft went even further. On "August 2, 1995, Gates told Grove that he had a fundamental problem with Intel using revenues from its microprocessor business to fund the development and distribution of free platform-level software. In fact, Gates said, Intel could not count on Microsoft to support Intel's next generation of microprocessors as long as Intel was developing platform-level software that competed with Windows."
Response to Apple:
Because QuickTime, Apple's API for creating, editing, publishing, and playing multimedia, was developed to run on both the Mac and Windows operating systems, it was perceived as a threat by Microsoft. In an attempt to stop Apple, Microsoft threatened to use several tactics to limit QuickTime's distribution on Windows platforms. Finally, in a meeting on June 15, 1998 between Steve Jobs, Apple's CEO, and Bill Gates, an offer requiring Apple's abandonment of the QuickTime media player was made by Microsoft. Jobs refused the offer. Had he accepted, Apple would have become completely reliant on Microsoft's goodwill in Windows platform software development.
Response to RealNetworks: The leader in streaming audio and visual media, RealNetworks' software provides APIs that compete with Microsoft's DirectX. Microsoft dealt with RealNetworks with a show of force. It signed a letter of intent to acquire a streaming media company called VXtreme. "Microsoft's intentions toward RealNetworks in 1997, and its dealings with the company that summer, show that decision-makers at Microsoft were willing to invest a large amount of cash and other resources into securing the agreement of other companies to halt software development that exhibited discernible potential to weaken the applications barrier."
Response to IBM: OS/2, an operating system produced by IBM, is a direct competitor to Windows and SmartSuite competes directly with Microsoft's Office Suite. IBM refused to limit promoting these products, so Microsoft retaliated by charging IBM higher prices for Windows, late licensing IBM's use of Windows, and withholding technical and marketing support. The details of the interactions between IBM and Microsoft are too many and complex to iterate here; however, they center around Microsoft's strong-arm tactics and charging IBM more than it did other major competitors, like Compaq.
Internet Explorer Tactics: Microsoft has invested about $100 million per year since 1995 on development of its browser, Internet Explorer. Judge Jackson states that the investment and degree to which Microsoft has tried to stifle browser competitors is particularly significant, in that the only possible explanation for such predatory practices is an attempt to make its API the only one available to software developers. Thus, Jackson devotes a large portion of his Findings to the subject, including a discussion of tying Internet Explorer directly into Windows, in an attempt to make the browser an integral part of the operating system and excluding competitors. His conclusion states that "the preferences of consumers and the responsive behavior of software firms demonstrate that Web browsers and operating systems are separate products." Further, by commingling browser and operating system routines, he states that "Microsoft has unjustifiably jeopardized the stability and security of the operating system."
Pressuring OEMs Not to Install Netscape: Microsoft went to great lengths to stop OEMs from installing Netscape. When Compaq announced that it would work with Netscape for its own internal Internet requirements and on server initiatives, Microsoft indicated its displeasure by initiating ventures with Hewlett Packard and DEC. Compaq capitulated when it decided that losing its special relationship with Microsoft was too costly, and went even further in support of Internet Explorer (IE) by agreeing to use two or more HTML extensions specific to IE on every Internet homepage, which means that they would not display properly in Netscape browsers. Microsoft has rewarded Compaq by guaranteeing that its cost for Windows will continue to be significantly lower than it charges other OEMs. Similar stories are documented for Gateway and IBM.
Referral Server Agreements: In the late summer of 1996, Microsoft added the "Internet Connection Wizard" to Windows, which refers users to specific ISPs. Obviously, to be one of those ISPs is a boon to the ISP's business. Although a nominal amount is charged for such placement, the primary thing that such ISPs have to do is promote IE over Netscape and try to convert Netscape users to IE. Microsoft was willing to lose money in its agreements with ISPs, and "readily made this sacrifice in order to induce the important IAPs to take actions that aided Microsoft's effort to exclude Navigator from the IAP channel." (IAP is an acronym for Internet Access Provider.) The Findings go on to document method after method that Microsoft used to pressure ISPs and IAPs not to disseminate Netscape.
