The Micro$oft Monitor

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In This Issue:
Other Lawsuits Haunting Microsoft
About the Micro$oft Monitor

Other Lawsuits Haunting Microsoft:
Ghosts of Monopolies Past, Present, and Future

Attorneys general in 13 states plan to file a joint antitrust suit in federal court this coming week, both to prevent the integration of Microsoft's Internet Explorer into the soon-to-be-released Windows 98, and to challenge Microsoft's overall use of its operating system to promote the sale of its software products. While details are not yet public, this is a significant breakthrough since most of the attorneys general were elected by their states' voters and represent the strongest institutional voices for consumers within in their states.

This article was prepared by Nathan Newman, NetAction's Project Director for the Consumer Choice Campaign. Contact Nathan with questions or comments. Email: nathan@netaction.org

NetAction urges Micro$oft Monitor readers to call the offices of the 13 attorneys general involved in the joint lawsuit, and urge them to make their investigations, and lawsuits, as broad as possible. If your state is not on this list, call your state's attorney general and urge her or him to join in the antitrust lawsuit against Microsoft. (Fax numbers and email addresses are listed where available.)

State           Attorney General        Phone             Fax
California      Dan Lungren             800-952-5225

Connecticut     Richard Blumenthal      860-808-5318      860 808-5387
                                        Attorney.General@po.state.ct.us

Florida         Bob Butterworth         850-487-1963      850-487-2564

Illinois        Jim Ryan                800-252-2518
                                        attorney_general@state.il.us

Iowa            Tom Miller              515-281-5164      515-281-4209

Massachusetts   Scott Harshbarger       617-727-2200

Minnesota       Hubert Humphrey III     800-657-3787
                                        attorney.general@state.mn.us

New York        Dennis Vacco            518-474-7330

Ohio            Betty Montgomery        614-466-4320
                                        Constituent_Services@ag.ohio.gov

South Carolina  Charles Condon          803-734-4399      803-734-4323
                                        info@scattorneygeneral.org

Texas           Dan Morales             512-463-2100
                                        dan.morales@oag.state.tx.us

West Virginia   Darrell McGraw          304-558-2021

Wisconsin       Jim Doyle               608-266-1221
                                        wisag@doj.state.wi.us

Many of these states have been conducting individual investigations for months (and over a year in the case of Texas). In March, 27 states filed a joint brief in support of the federal Justice Department's antitrust case against Microsoft.

In that brief, the state attorneys general argued, "Microsoft is exercising its monopoly power in the operating systems market to leverage such monopoly power to the Internet browser market sector in order to unfairly increase its share of the browser market by forcing OEMs to license its Internet Explorer as a condition of licensing Microsoft's Windows operating system."

While the March filing concentrated on the browser issue, the attorneys general have made clear that the suit to be filed this week targets a wider array of concerns. In an earlier public statement, the attorneys general had argued, "The competitive health of computer markets may be threatened by the practices of a dominant firm, such as Microsoft, which could prevent competing and potentially competing products from getting a fair market test."

Publicly expressed concerns about Microsoft from individual attorneys general have included the anti-competitive implications of Microsoft e-commerce ventures, its exclusive agreements with Internet service and content providers, the proposed inclusion of Microsoft's WebTV software as part of Windows 98, and Microsoft's licensing agreements with manufacturers that specify that Windows automatically "boot up" on every machine - thereby excluding competing operating system approaches.

While the Justice Department's role will most likely continue to be key to dealing with Microsoft's anti-competitive practices, the combined suit by the state attorneys general will add legal and political support to the emerging public consensus to rein in Microsoft's power. The Microsoft action is part of a growing trend of states banding together in joint actions. Similar efforts have focused on telemarketing fraud and tobacco sales. The success of such joint efforts in the courts has begun to have a major impact on the legal realm, especially since a successful joint lawsuit can open the legal and political space for more comprehensive action by the federal government.

Ghosts of Monopolies Past and Future

The joint attorneys general challenge to Microsoft's release of Windows 98 haunts the company's present. But two other private lawsuits -- one dealing with Microsoft's past and the other with its future -- will set the legal context for any broader action against Microsoft by the Justice Department.

In July 1996, Caldera, which owns DR-DOS, filed a private antitrust lawsuit against Microsoft. DR-DOS was the most serious competitor to Microsoft's underlying DOS operating system. In the late 1980s, DR-DOS was considered far superior to the versions of MS-DOS then being sold, and was threatening to undercut Microsoft's desktop monopoly. In response, Microsoft promised the imminent release of a new version of MS-DOS with all of DR-DOS's features and more.

In reality, Microsoft had no product to sell. The company used its "vaporware" promises to get customers to delay purchasing DR-DOS and, in the meantime, began implementing deals with manufacturers requiring that an MS-DOS license fee be paid to Microsoft on every machine sold - whether MS-DOS was installed or not. Since the hardware sellers had to pay for MS-DOS in any case, they were unlikely to pay extra to install DR-DOS, even if it was considered superior software. Early versions of Windows were designed to issue false error messages that made DR-DOS appear incompatible with Windows. This just added to Microsoft's monopolistic assault on the competition.

These practices led to the initial Justice Department investigation in 1994, and the consent decree Microsoft signed the following year. Whether Microsoft has been violating that consent decree by using similar tactics in browser competition is at the heart of Justice's initial courtroom charges up to this point.

Caldera's lawsuit might seem like old news, but in February, Caldera was granted permission by the courts to expand its lawsuit to include charges that Microsoft was illegally tying MS-DOS to Windows 95. Caldera notes that while most consumers think that Windows and MS-DOS are a single product in Windows 95, the fact is that this integration is unnecessary. Windows 95 could be run easily on top of alternatives like DR-DOS, if MS-DOS was not being bundled illegally with Windows. These arguments in the Caldera case strongly parallel the charges by the Justice Department that Microsoft is creating an artificial integration between Windows and its browser software. A Caldera win that split DOS from Windows could prove extremely useful legally to the Justice Department in its broader investigations.

Caldera's goals are partly to sell enhanced versions of its DR-DOS operating system in smart appliances and older machines (Caldera is developing a DOS Web browser useful for low-power computers). With network computers and other new kinds of computing devices, a more competitive environment for operating systems could give DR-DOS new life as an alternative to Microsoft.

At the broader level, Caldera hopes that a legal win will allow it to market its version of the Linux operating system in a head-to-head challenge to Microsoft's Windows monopoly. (WIRED magazine explains why Linux may be the most serious operating system alternative to the Microsoft monopoly, in http://www.wired.com/wired/5.08/linux.html.

Selling Linux in that case would depend on developing enough software which works with the operating system, which brings us to the second key private lawsuit against Microsoft, Sun Microsystems' lawsuit over the Java language. If DOS is literally the ghost of Microsoft's monopoly past, Java is the ghost of a future where Microsoft's monopoly no longer exists.

The Java language, developed by Sun, is designed to be "write once-run anywhere," meaning that a Java program once written should be able to run on a Windows, Apple, UNIX or Linux machine in exactly the same way. With Java in place, any computer could share software and information with any other computer without incompatibility.

Sun has worked hard to assure that everyone licensing the Java language meets this standard and, internationally, Sun has been recognized by the International Standards Organization (ISO) as the sanctioned arbiter of Java standards.

Microsoft licensed Java from Sun in 1996, but in 1997 began adding features to the language that made programs created under the Microsoft variant compatible only with the Windows operating machine or with its own Internet Explorer browser.

In October 1997, Sun filed a lawsuit charging Microsoft with willfully violating the terms of its licensing contract and falsely promoting its own proprietary version as Java compatible. On March 24, U.S. District Judge Ronald Whyte issued a preliminary ruling barring Microsoft from claiming its version is Java compatible or using the Java "steaming cup" logo on its products. Judge Whyte was clear in his ruling that Microsoft's goal was to undercut the very computer-to-computer compatibility that is at the heart of Java's promise, arguing, "Microsoft's reading of the [contract] would essentially allow Microsoft to destroy the cross-platform compatibility of the Java programming environment."

In all these lawsuits, from Microsoft's past undermining of DOS competitors to the present proposed bundling of its browser with Windows 98, to its attempt to undermine a platform-independent Java future, there is a clear pattern of Microsoft's monopoly strategies. While it will no doubt take a full-scale antitrust action by the Justice Department to finally break Microsoft's monopoly, the Caldera and Sun lawsuits put pressure on the DoJ to take that step, and each lawsuit gives Justice more of the legal ammunition it needs to ensure a competitive computer market with open computing standards.

Copyright 1998 by NetAction/The Tides Center. All rights reserved. Material may be reposted or reproduced for non-commercial use provided NetAction is cited as the source. NetAction is a project of The Tides Center, a 501(c)(3) non-profit organization.