Microsoft, Justice Dept. reach accord

WASHINGTON (AP) — Seeking to avoid contempt of court charges, Microsoft Corp. agreed Thursday to let computer makers temporarily offer its latest version of Windows 95 without easy access to its Internet Explorer software.
By entering into the settlement with the Justice Department, Microsoft avoided the possibility of being hit with a $1 million-a-day fine by the court. The settlement represented only a temporary victory for the Justice Department, as the broader dispute in its antitrust case remains pending in court.
The government lawsuit, filed in October, seeks to prevent Microsoft from requiring computer makers to preinstall Internet Explorer as a condition of licensing Windows 95, the software that handles basic operations on personal computers and enjoys more than an 80 percent share of the market. The government contends Microsoft is using its near monopoly in Windows to muscle into the Internet browser market, thereby damaging rival Netscape Communications Corp. Browsers enable people to view and download information from the Internet.
Under the agreement, Microsoft agreed to let computer makers install Windows 95 but delete the Internet Explorer icons — the pictures that launch a program with a click of a computer mouse — from the computer’s desktop or opening screen.
That leaves the Internet Explorer program in the computer, but not visible to the average user. Internet Explorer files are integrated with Windows 95 to let other programs, such as Intuit’s Quicken personal financial software, access the Internet, Microsoft said.
Computer makers will be able to delete the Internet Explorer files via the “Add/Delete” program that comes with Windows 95.
The heart of the government contempt argument was that Microsoft didn’t offer computer makers an easy option to remove Internet Explorer using the “Add/Delete” function.
The agreement, approved by U.S. District Judge Thomas Penfield Jackson during a brief hearing, resolved only part of a larger antitrust suit in which the government accused Microsoft of violating a Dec. 11 court order. That order requires the company not to force computer makers to install Internet Explorer software as a condition of licensing the Windows 95 operating system.
Joel Klein, assistant attorney general in charge of Justice’s antitrust division, hailed the agreement.
“Microsoft has agreed to immediately make available the most up-to-date, fully functional version of Windows 95 without forcing computer manufacturers to take its browser as well,” he said.
The settlement provides “an opportunity for meaningful competition among browser companies for preinstallation of their software on new personal computers,” the Justice Department said.
An April 21 hearing has been set on Microsoft’s appeal of Jackson’s order to separate its Internet software from Windows 95.
“Microsoft will continue to defend the software industry’s right to updates and enhanced products without unnecessary government interference,” said William H. Neukom, Microsoft senior vice president.
At a press briefing, Microsoft officials said they doubted the settlement would have much effect on its business because computer makers are not required to remove the Internet Explorer icons.
Robert Herbold, Microsoft’s chief operating officer, anticipated the settlement would have “very, very little, if any at all” financial impact on the company.
Microsoft’s stock rose $1.62 to close at $138.62 in Nasdaq trading.
Some analysts said settlement doesn’t repair the damage caused to Netscape, which has been forced to lay off 13 percent of its workers and report an expected quarterly loss. In a related development, Netscape announced it was giving away its Netscape Communicator and Netscape Navigator products for free in a bid to increase its market share.
“In the real world, Microsoft has already succeeded in nailing Netscape,” said Gary Arlen, a technology analyst with Arlen Communications in Bethesda, Md. “The damage may have already been done. Microsoft may have already accomplished its goal in defeating its competitors.”