Washington, 19 May 1998 (RFE/RL) -- The U.S. Government is accusing computer industry behemoth Microsoft Corporation of using unfair trade practices to drive competitors out of a very lucrative segment of the home and business computer trade -- access to the worldwide computer link known as the Internet.
Specifically, Attorney General Janet Reno announced on Monday that the Justice Department has charged Microsoft with engaging in anti-competitive and exclusionary practices. These practices, she said, are designed to maintain Microsoft's monopoly in personal computer operating systems. Reno also charged that Microsoft is trying to extend its monopoly to the Internet.
Thousands of millions of dollars are at stake, not only in the United States, but practically everywhere in the world where home computers or small business computer systems are sold. President Bill Clinton said Monday the legal action "is something that will have a significant impact on our economy."
Federal law prohibits monopolistic practices in interstate commerce. The purpose of the law is to ensure fair business competition and provide consumers with the widest array of choices possible.
However, the Justice Department will have to prove its accusations in the U.S. District Court in Washington, D.C. The Court could order the firm to change its business practices and pay out damages. Microsoft could appeal any decision it finds unfavorable.
Microsoft manufactures the components of computers that make them useful and attractive to an individual. The company produces what are called the operating systems that enable computer users to perform literally dozens of tasks such as writing, editing, making graphs and charts, or putting photographs and other graphics into documents with great ease. It's a system that enables a person to manage a small business or pursue leisure time activities.
It is also a system that offers a computer user the ability to tap into the vast resources of the Internet with what is called a browser. Microsoft and its operating system called "Windows" are found on more than 90 percent of the world's personal computers. Microsoft wants the companies that make computers with its components built in to include in the package Microsoft's Internet browser, called "Explorer."
The Justice Department charges that Microsoft wants to use this advantage to seize control of the market for browsers to access the Internet. "Browsing," means to skim over or look through something casually. On the Internet, a browser finds and sorts information according to type and retrieves the information when commanded to do so by the user.
The Internet is in some ways like a library. The browser is like the system that organizes the library's contents, but it goes a step further and puts those contents in front of the computer user on a television-size screen -- all in a matter of minutes.
Microsoft's main rival for dominance of the browser market is another U.S. company called Netscape, which came out with its product a few years ahead of Microsoft and has a large and loyal base of consumers.
Other companies offer Internet access, but Netscape and Microsoft control the market.
Reno charged that, "Microsoft's actions have stifled competition in the operating system and browser markets." She said, "it has restricted the choices available for consumers in America and around the world." The Justice Department and the attorneys general of 20 of the 50 states filed a lawsuit in the U.S. District Court in Washington, D.C. asking the court to stop Microsoft from requiring computer makers to include the Explorer program in its newest version of the Windows system, called Windows 98.
The Justice Department says that if Microsoft insists on requiring the Explorer in the operating system, it must also offer the Netscape browser.
Microsoft says that demand is unacceptable. The company tried to negotiate a compromise with the Justice Department to avoid the lawsuit, but those talks broke down over the weekend.
On Monday, Microsoft chairman Bill Gates held his own news conference to denounce the Justice Department action. He said the lawsuit is without merit and he said the company will fight in court. He said his company has every right to offer its Internet program in its computer operating system. He rebutted the accusation that Microsoft is restricting choice, saying that consumers will still have a variety of choices in front of them.
Microsoft has been battling with the Justice Department for several years and experts said the new case could rank with the 1982 breakup of the American Telephone and Telegraph Company (AT&T) and the dismantling of the Standard Oil Company in 1911 as one of the most dramatic fights against monopolistic practices in history.
The government failed in its other major foray into computers, dropping a case against International Business Machines Corp. (IBM) in 1982 after a 13-year fight.