Microsoft Loses Antitrust First Round Judge Orders Company To Quit Bundling Windows, Browser

A federal judge on Thursday ordered Microsoft Corp. to quit a controversial practice of requiring computer makers to distribute its Internet-browsing program.

U.S. District Court Judge Thomas Penfield Jackson, however, rejected a Justice Department request to fine the software giant $1 million a day for what the government claims were violations of a 1995 court order. Jackson issued the decision in response to a Justice Department lawsuit aimed at blocking what government antitrust officials said were anticompetitive practices by Microsoft.

Jackson referred the dispute to a court official, known as a special master, to rule on the legal issues raised in the case.

The judge ruled that part of the 1995 court order “does reach Microsoft’s controversial licensing practices in some respect” but said the ultimate question of whether Microsoft was violating the agreement “remains to be decided.”

“Without the benefit of further evidence in the record, an attempt to answer that question would be premature,” Jackson said.

In the interim, he said Microsoft “shall cease and desist … from the practice of licensing the use of any Microsoft personal computer operating software … on the condition, express or implied, that the licensee also license and pre-install any Microsoft Internet browser software ….”

Microsoft spokesman Greg Shaw said the company would not comment until lawyers have examined the order.

The department sued Microsoft in October, alleging it was trying to corner the market on browsers, which enable computer users to find and retrieve information on the Internet.

Justice officials argued that Microsoft forced computer makers that pre-install Windows 95 also to have the Internet Explorer prominently displayed on the computer’s opening screen.

The government sought to show that the Windows 95 operating system and the Internet Explorer were conceived as separate products. It argued Microsoft was unfairly leveraging its dominance in operating systems software to gain market share in the Internet browser market.

Jackson said forcing Microsoft not to bundle the Internet browser with the Windows 95 “will not cause a significant hardship” for the company since it already sells the product separately.