July 20, 1995 in Nation/World

Microsoft Faces Blistering Attack On-Line Leaders Say Software Giant Wants To Extend Its Dominance

Bloomberg Business News
 

Microsoft Corp.’s controversial plan to use Windows 95 as a launching pad into information services came under blistering attack Wednesday from top executives at the leading on-line services, who turned up pressure on the Justice Department to take action.

During their concerted assault on the software industry behemoth, the on-line executives said the government is gathering evidence for a possible lawsuit and may be within days of deciding whether to challenge the packaging of access software for the Microsoft Network on-line service as part of the new Windows 95 operating system.

The chief executives of America Online Inc., H&R; Block Inc.’s CompuServe, and the SearsIBM joint venture, Prodigy, released a joint letter to Microsoft Chairman Bill Gates, urging him to rethink the bundling of Microsoft Network software with the eagerly awaited new operating system.

The hastily arranged morning press conference represents a last-minute foray to block what on-line companies claim will be an unfair advantage for Microsoft if it makes access to the Microsoft Network an integral part of Windows 95. The longawaited operating system is expected to take the computer world by storm when it’s released on Aug. 24 as a successor to Microsoft’s dominant DOS and Windows programs.

CompuServe Chairman Robert Massey said Microsoft is “clearly attempting to use its dominance of the operating system … to put its muscle around the windpipe of the country’s commerce,” and held out the specter of “total domination by one company” in crucial high-tech industries.

Steve Case, chief executive of America Online, said the Microsoft Network plan represents a precedent-setting move by Microsoft to use its 85-percent share of the operating system market to promote other products in competitive markets for on-line services and applications programs that perform word processing and other functions.

Comparing Microsoft’s near-monopoly in computer operating software with AT&T; Corp.’s one-time dominance of telecommunications, the executives suggested that Microsoft might even face calls for government regulation.

“I am disappointed that Microsoft hasn’t recognized that having a monopoly in something as important as operating systems carries a responsibility,” Case said. “If Microsoft doesn’t choose the path of selfrestraint … one way or another something has to be done to ensure that consumers continue to have choices.”

“I think Microsoft needs to recognize that they’re very close to the edge of regulatory issues,” said Prodigy CEO Ed Bennett.

Microsoft could not immediately be reached for comment. A Justice Department spokeswoman would not comment beyond saying that the investigation of Windows 95 is continuing.

Case, Massey and Bennett also said they are contacting top Republican and Democratic leaders in Congress, fighting to deflect Capitol Hill criticism that the Justice Department has gone too far in its pursuit of the world’s dominant PC software firm.

All three said their firms have been providing information to the Justice Department during its investigation of Windows 95, and they said they expect a government decision soon.

“We believe a decision’s likely to be made in the not-too-distant future,” Case said. “We do believe the arguments (against Microsoft) are strong. There’s a good chance they will take action.”

Massey said he thinks a government decision could come “within the week.”

“We are all very hopeful that justice will in fact prevail and that we’ll have a decision very soon,” Massey said.

Case said Justice Department lawyers have been gathering formal affidavits about the impact of Windows 95 during recent days. That could signal that government trustbusters have gone beyond general information gathering and are beginning to collect evidence they would need to present in court.

The on-line executives said they don’t oppose competition from Microsoft for customers, but don’t think Microsoft should use its dominance in operating systems to unfair advantage.

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