ST Report: 14-Nov-97 #1345
From: Bruce D. Nelson (aa789@cleveland.Freenet.Edu)
Date: 11/17/97-01:48:45 PM Z
From: aa789@cleveland.Freenet.Edu (Bruce D. Nelson)
Subject: ST Report: 14-Nov-97 #1345
Date: Mon Nov 17 13:48:45 1997
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November 14, 1997 No.1345
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There comes a time in every generation's passing when people must
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the Holocaust must never be allowed to even come close to happening again?
I'm convinced many were taught just the opposite. My dear readers, while
this topic may not be exclusively about computers. I must beg of each and
every one of you to take a long hard look at the hate that's going on in
your neighborhoods, states and countries. If only each one of us would
stand up and be heard expressing our contempt for the Jew-Baiters, Hate
Mongers, Racists and especially those who would say the Holocaust is false.
It would be wonderful if We would all be able to rest just a little
bit easier knowing full well that the current generation of youngsters,
worldwide, would not be mislead into believing the most horrible events
perpetrated by Nazi Germany were false. Those who would and do teach this
ghastly lie must be exposed for the Devils they are for it is they who will
lead this and future generations to untold horrors. They are losing the
benefit of learning from History. Must they be doomed to go through
history repeating itself? Elsewhere in this issue, we illustrate but a few
of the events that have rekindled my dismay over the rise of Neo-Nazis,
political liars and ignorant fools (truly the hemorrhoids of Society) who
insist upon poisoning the minds of youngsters. Please, if you and I mean
all of you have even the slightest twinge of emotion about what is going
on, then by all means stand up and be heard.
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LATE BREAKING INDUSTRY-WIDE NEWS
Weekly Happenings in the Computer World
Compiled by: Dana P. Jacobson
Sites for Au Pair Ruling Named
Court officials in Boston have listed 22 sites on the Internet's World Wide
Web that will carry the news when a Massachusetts judge issues his decision
on the fate of British au pair Louise Woodward, convicted of murdering a
baby. As reported earlier, Middlesex County Superior Court Judge Hiller B.
Zobel decided to use the Web to distribute his ruling, apparently worried
that making paper copies available to reporters would overwhelm court
clerks since interest in the case has been so high.
The Reuter News Service reports these site will initially carry the ruling:
z ABC News, http://www.abcnews.com
z AFP, http://www.afp.com
z American Lawyer, http://www.counselconnect.com
z Associated Press, http://wire.ap.org/woodward/
z BBC NewsOn-Line, http://news.bbc.co.uk
z Boston Globe, http://www.boston.com (keyword woodward)
z Boston Herald, http://www.bostonherald.com
z CBS News, http://www.cbs.com
z CNN, http://www.cnn.com
z CommunityNewspapers, http://www.townonline.com/woodwa rd
z CourtTV, http://www.courttv.com
z Fox News, http://www.foxnews.com
z Lawyers Weekly, http://www.lawyersweekly.com
z MSNBC, http://www.msnbc.com
z National Law Journal, http://www.ljx.com
z NBC (WHDH-TV), http://www.whdh.com
z New England Cable News, http://www.necnews.om
z N.Y. Post, http://www.nypostonline.com
z Press Association, http://www.pa.press.net
z Reuters, http://www.reuters.com
z WBZ, http://www.wbz.com
z WCVB, http://www.wcvb.com
A jury convicted Woodward of second-degree murder last week for the
February death of 8-month-old Matthew Eappen, a child she was looking after
at the time. Reuters says Zobel is expected to rule, possibly as early as
Monday, on whether the jury's verdict should stand, or be set aside, a new
trial ordered, or whether the charges should be reduced.
Net Drops Ball in Au Pair Case
Cyberspace was a no-show today in the planned ground-breaking release on
the Internet's World Wide Web of a Massachusetts judge's ruling reducing
the British au pair Louise Woodward's conviction to manslaughter. As
reported, the judge had planned to release his decision on the Net in order
to avoid what he feared would be chaos in the clerk's office as reporters
sought to make paper copies of the ruling in the high-interest case.
However, Middlesex County Superior Court Judge Hiller B. Zobel didn't count
on the Internet's ability to spin chaos on its own. A power failure at an
Internet service provider snarled the plans and required that the word get
out by more conventional means. Middlesex County Court clerk Whitney Brown
told the Reuter News Service, "The server had a power failure one minute
before we were to issue the decision. It just totally crashed the system."
Superior Court Judge Zobel had intended that his decision would be issued
only over the Internet at more than a score of sites. But plans were undone
by a power outage in nearby Brookline, Massachusetts, where the Internet
service provider, Software Tool & Die, is located. "The company was
helpless," says Reuters. "To the delight of naysayers who predicted the
system could not work, clerks quickly had to provide reporters at the
courthouse with paper versions so the news could get out the old-fashioned
way. The decision became available electronically 102 minutes later on the
Internet, reaching Web sites at 11:42 a.m. EST after having been expected
at 10 a.m. EST."
Woodward, 19, was convicted Oct. 30 of second-degree murder of 8-month-old
Matthew Eappen and was given a mandatory sentence of life in prison, but
that was changed by Zobel's ruling. As noted earlier, the ruling's posting
on the Internet was to have been a first in Massachusetts and possibly the
United States.
Net Hate Is Conference Topic
International experts have gathered in Geneva to debate if and how to
combat the spread of computerized hate messages and the general use of the
Internet as a forum for racism. "Binding global controls on the Internet
are unlikely," says Associated Press writer Clare Nullis, "since the
technology is changing faster than rules can be made, and because of free
speech protections in the United States."
The week-long meeting of human rights activists, government officials and
Internet service providers is sponsored by the United Nations as part of
efforts to ensure compliance with a treaty banning racial discrimination.
Agha Shahi of Pakistan, a member of the U.N. Committee on the Elimination
of Racial Discrimination, told the wire service, "There are 148 countries
who have accepted this convention and they are under obligation to enact
measures to implement it. Are we going to say the Internet should be exempt
from any kind of compliance with the rules of international behavior?"
While they agree the Net offers an open platform for racists, the experts
also acknowledge there have been no studies linking racist computer
dialogue to arise in racist incidents. Adds Nullis, "They say much of the
problem originates in the United States, where groups such as the Ku Klux
Klan, the Aryan Nations and skinheads base their Web sites. Under U.S. free
speech guarantees, groups are permitted to post their views on the
Internet."
AP notes Sweden and some other European countries have moved toward making
Internet service providers responsible for the content they supply, "but
participants said similar global restrictions wouldn't work without U.S.
compliance, which is unlikely." Representing the U.S., Philip Reitinger of
the Department of Justice told the gathering, "In our tradition, it is only
through the clash of views in vigorous debate, and not through government
censorship, that equality is well served. That principle -- one which
accords freedom of expression the highest respect -- applies with equal
force to the Internet."
Meanwhile, Eric Lee, of the Internet service provider Commercial Internet
eXchange, said that while the U.S. computer industry is voluntarily working
on ways to ensure that computer smut isn't accessible to minors, it is "not
feasible and not desirable" for Internet providers to act as censors. Lee
added, "There are so many ways to evade controls. Coming up with foolproof
controls is virtually impossible."
Texas Sues Microsoft
In Texas, Microsoft Corp. has been accused by the state attorney general of
undermining an investigation of possible antitrust violations. Reporting
from Austin, United Press International says Texas Attorney General Dan
Morales has filed a lawsuit alleging Microsoft requires all companies with
which it does business to sign a contract requiring them to inform
Microsoft before providing any information to state or federal antitrust
investigators.
Morales says such requirements interfere with the attorney general's
constitutional and statutory responsibilities to conduct unobstructed,
confidential investigations, adding, "Microsoft's overwhelming market
dominance intimidates computer makers whose very survival depends on having
access to Microsoft's operating system software, which runs more than 90
percent of all personal computers sold today."
The suit asks the court to order that:
z Companies doing business with Microsoft are not required to comply
with the provision of their licensing agreement that requires notification
to Microsoft before providing information to investigators.
z Microsoft be ordered to notify all of its licensees that they don't
have to comply with the notice agreement.
UPI says Morales already has asked Microsoft to voluntarily inform its
licensees that they do not have to comply with the prior notice provision,
but the company declined.
Sun Chief Urges Gates Be Spammed
The co-founder/CEO of Sun Microsystems has urged those attending a Berlin,
Germany, technology conference to send a torrent of unsolicited electronic
mail to rival Bill Gates, co-founder/CEO of Microsoft Corp. "Flood his
mailbox," said Sun chief Scott McNealy. "Say that you want 100 percent pure
Java." McNealy then even spelled his rival's email address at Microsoft,
according to reports in The New York Times.
The paper says McNealy also urges software designers to stop using
Microsoft development tools. "Microsoft is no longer a distributor of Java
platforms," McNealy proclaimed. "People are puzzled, they have the
impression there are two versions of Java. This isn't true, there is only
one: pure Java." The outbursts came as a legal battle heats up between Sun
and Microsoft over the terms of a Java technology licensing agreement.
McNealy told the German crowd his rival has a problem with developers.
"Microsoft has already lost more than half a million software developers to
Java. If it keeps going this way, they will no longer be able to justify
their market value."
He also urged the audience to use Netscape's Internet browser, Navigator in
place of Microsoft's Internet Explorer. Writing for the Newsbytes computer
news service, reporter Patrick McKenna quotes a Microsoft spokesman as
saying, "We have not heard his remarks, but we really have no comment on
anything McNealy might have said."
Ralph Nader Blasts Microsoft
Consumer advocate Ralph Nader has turned his wrath on Microsoft Corp.,
opening the two-day "Appraising Microsoft and Its Global Strategy"
conference in Washington today by critiquing the giant computer software
maker. Associated Press writer Scott Sonner predicts, "Speakers are
expected to make no bones about their view that Microsoft, with its Windows
operating software running 80 percent of personal computers, is getting too
big for its britches."
Sonner notes the conference features a panel session entitled "Level
Playing Field" and a speech by Scott McNealy, CEO for arch-rival Sun
Microsystems, called "No One Should Own the Alphabet." Microsoft itself
declined an invitation to be represented at the do, saying it appeared to
be a forum for competitors to manipulate public opinion against them.
As a sample of what Microsoft is in for at the gathering, Sonner quotes
James Love, director of the Consumer Project on Technology, one of the
Nader groups organizing the conference, as saying, "Microsoft has described
the criticism in the past as just their competitors complaining and
whining. But whenever a company is engaged in monopolistic practices, there
are always a lot of dead bodies left on the road. We think it will be
helpful to have Ralph and others talk about that and explain how consumers
benefit from competition."
Of course, this is just the latest wave of Microsoft bashing. As reported
earlier:
z The Justice Department has filed another suit, this time accusing
Microsoft of violating a 1995 consent decree barring the company from
anti-competitive practices. It seeks fines of $1 million a day and accuses
Microsoft of threatening PC makers with terminating their license for
Windows if they alter Microsoft's Internet Explorer software.
z And Senate Judiciary Chairman Orrin Hatch, R-Utah, turned up the heat
in Congress last week, saying, "I have not made any secret of the fact that
I have serious concerns about Microsoft's recent efforts to exercise its
monopoly power and that I plan to continue to examine the company's
practices."
z The Texas attorney general has accused Microsoft of interfering with a
state antitrust investigation, saying a provision in Microsoft's contracts
with computer makers requires those companies to inform Microsoft before
providing any information to state and federal investigators.
Microsoft Answers Justice Claims
Microsoft Corp. has filed arguments saying the U.S. Justice Department's
antitrust case should be thrown out of court because it simply is aimed at
stalling improvements to Windows software. Responding to the Justice
Department's latest suit, Microsoft says it "retains unfettered freedom" to
add new functions to Windows, and that its Internet software product is
simply another function, the paper said, quoting Microsoft's filing.
As reported earlier, the government contends Microsoft is illegally tying
the sale of its Internet Explorer software to its dominant Windows 95
program. Writing in The Wall Street Journal this morning, reporter John R.
Wilke says the suit "is aimed squarely at preventing Microsoft from
including improved features and functionality in upgraded versions of
Windows 95 provided to computer manufacturers." The government's formal
response to Microsoft's brief is due in 10 days, and as noted, a hearing is
set for Dec. 5. Wilke reports Microsoft also argues:
z The Justice Department is misreading the 1995 decree that settled
earlier antitrust charges.
z That in any case, the government knew of its plans to combine the two
products even before the two sides negotiated the decree. Yet Justice "did
not object to Microsoft's inclusion of Internet-related technologies in
Windows 95 until after Microsoft launched the fourth version of Internet
Explorer on Sept. 30, literally years after the DOJ was placed on notice of
what it now claims is a blatant violation of the consent decree," Microsoft
said.
z There is no validity to the government's charge that it tries to
muzzle companies through restrictive licensing agreements, which bar
customers from disclosing terms, conditions and other elements of their
license to use Microsoft software.
Wilke notes, "The government has said the restrictions hinder its
investigation and intimidate Microsoft's customers into silence. Despite
its objection to this charge, Microsoft disclosed last night that it has
'willingly complied' with the government's requests to disclaim 'any
interpretation of its nondisclosure agreements that might interfere with
its investigative efforts.'" Microsoft also says the government's
contention about the licenses' effect are off-base, adding, "The only
person in this country unaware that DOJ is fully receptive to complaints
about Microsoft is Rip Van Winkle."
Net Tax Fears Challenged
States and cities are being challenged to back up their claims that
Internet tax bills moving through Congress would cut off critical municipal
revenues, a White House official says. Speaking with the Reuter News
Service, Mickey Ibarra, the president's director of intergovernmental
affairs, said, "We are aware of no such disruptions, and we certainly are
very interested in hearing from (them) if we missed something here." As
reported earlier, a controversial bill to restrict states and localities
from imposing new taxes on Internet services has received overwhelmingly
approval from a key U.S. Senate committee.
Reuters reporter Vicky Stamas says Ibarra met yesterday with lobbyists from
the National Governors' Association, National League of Cities, National
Association of Counties (NACo), U.S. Conference of Mayors and others. A
NACo subpanel representing 75 of the nation's biggest urban counties also
met with Vice President Al Gore on that and other issues. Stamas reports
the groups are deeply concerned that their existing tax bases would go
untouched, as backers of the Net tax measure asserts. They also fear the
bill would put small local businesses, already facing mounting competition
from electronic commerce, at a further disadvantage.
Chairman Peter McLaughlin of NACo's large urban counties group, which
represents municipalities with a total population of 90 million, said,
"We're afraid that the bill being considered by Congress right now would
disrupt existing revenue streams, not just prevent our adding (new) taxes."
However, said Ibarra, "It's not our attempt to interrupt revenue streams at
this point," challenging the groups, which he described as "our partners in
government," to review the bill "line-by-line" and pinpoint any sections
that would interrupt current revenue streams.
If they find problems, then they should "suggest alternative language," he
said. Saying his office will discuss the groups' concerns with Treasury
Department officials that monitor the issue, Ibarra added, "We are
interested in sitting down with our officials at Treasury who have a lead
on this particular issue to ensure we are very clear about what remaining
concerns they have left."
Digital Signature Bill Offered
A bill introduced by two federal lawmakers would require federal agencies
to accept computerized personal identification marks known as "digital
signatures" as valid signatures on online forms. Aaron Pressman of the
Reuter News Service quotes the bill's sponsors, Rep. Anna Eshoo
(D-California) and Rep. Billy Tauzin (R-Louisiana), as saying the proposal
could generate millions of dollars in cost savings. In a statement, Eshoo
adds, "If fully implemented, the legislation could save taxpayers millions
of dollars in costs associated with copying, mailing, filing and storing
government documents."
Pressman says that under the bill:
z The Office of Management and Budget and the National
Telecommunications and Information Administration would have 12 months to
establish a way for all federal agencies to put all forms online. Agencies
would have two additional years to complete the task.
z Agencies would have to allow citizens to fill out and sign the forms
online and allow for electronic payment of any associated fees or other
charges.
z Digitally signed government forms would have to be compatible with
standards and technology for digital signatures used in the private sector.
Jobs to Announce Apple Changes
Watch next week for Steve Jobs to return to the same theater where he
unveiled the Macintosh PC more than a decade ago, this time to disclose
major changes to Apple Computer Inc.'s products and how it sells them. The
event "is important because it puts the focus back on Apple in a positive
light," President Tim Bajarin of Creative Strategies Research International
in San Jose, California, tells business writer Catalina Ortiz of The
Associated Press. Apple is being tight-lipped about what's on the agenda,
saying only that Jobs, co-founder and interim CEO of the Cupertino,
California, computer maker, will deliver some "milestone news" about its
product line and the way it does business.
Ortiz says industry insiders are speculating Apple may:
z Introduce new Macintosh computers based on the latest PowerPC
microprocessor, speedy chips comparable to the competition's. Running at
expected speeds of 266 megahertz to 350 MHz, they are comparable to the
newest, Pentium II processors from Intel Corp.
z Announce a Web site where customers can buy its products directly.
(The company, which currently sells its computers to consumers through
retailers, is imitating Dell, Gateway, Micron and other successful direct
sellers.)
Discuss plans for low- cost, stripped-down network computers with ally
Oracle Corp. Apple is reportedly developing these computers, which lack
hard-drives and are intended to make computing cheaper and more ubiquitous.
The Wall Street Journal quoted unidentified sources close to the company as
saying Apple may announce Oracle will provide the necessary database
software for what will be called the Macintosh NC. Bajarin, a longtime
Apple watcher, says next week's event, hosted at the Flint Center in
Cupertino, also highlights the importance of Jobs' role at Apple.
As reported, Jobs, who also runs Pixar Animation Studios, reportedly has
said he doesn't want the CEO job permanently. Still, rumors continue that
he will play a major role in the company's future. "The fact that Steve is
the one doing the conference," says Bajarin, "is significant. Right now,
he's the only guy who has the passion to save Apple."
Apple Rolls Out New Power Macs
As predicted over the weekend, Apple Computer Inc. today introduced a new
generation of Power Macintosh computers as part of dramatic changes in the
way it designs, builds and sells its computers. Reporting from Apple's
Cupertino, California, offices, the Reuter News Service says the new
systems are called the Power Macintosh G3, based on the fastest available
PowerPC processors with increased performance and at a lower cost, starting
at around $2,000.
Also today, Apple:
z Launched The Apple Store as part of its new distribution strategy,
using the Internet along with existing distributors to sell its products.
z Unveiled a new manufacturing strategy to make systems on a
build-to-order basis for The Apple Store customers.
z Introduced a new PowerBook laptop that also includes the more powerful
chips.
Apple told reporters its new G3 series has a simplified design to
streamline manufacturing so that its computers can be built just in time
to exact customer specifications. As reported, analysts are saying the
developments are important because they put the focus back on Apple in a
positive light.
Reuters notes Apple has been losing market share to other personal computer
makers, such as Dell Computer Corp. Apple co-founder Steve Jobs, the
firm's interim CEO, commented at today's event, "We're opening things up
and giving our customers what they've been asking for. Apple's listening.
We're making changes."
Apple Reports $500,000 in Orders
In just the first 12 hours of operation, Apple Computer Inc.'s new online
Apple Store reported more than 4.4 million "hits" and the booking of some
$500,000 worth of orders. Apple interim CEO Steve Jobs told the Reuter
News Service, "We're thrilled by this immediate customer response to our
Apple Store and new G3 computers. Apple is really 'thinking different'
about the way we do business," he added, referring to the company's "Think
Different" advertising campaign.
As reported earlier, Apple this week launched a new line of computers
called the Power Macintosh G3, and made some major changes in the way it
makes and sells its products, including the addition of an Internet-based
store. The Apple Store (http://www.apple.com) "is part of Apple's new
distribution strategy to give its customers a greater choice in how they
purchase Apple products," Reuters comments.
"The strategy also includes making systems to exact customer specifications
and using more common parts, lowering product inventories and manufacturing
costs." Analyst Lou Mazzucchelli of Gerard Klauer & Mattison told the wire
service, "It's an excellent start. Obviously, there is a lot of pent-up
demand from customers who wanted to buy from Apple this way... I think it's
a terrific number. The question is, can they sustain it?"
IBM Unveils Big, New Hard Drive
A hard disk drive with up to eight times more storage capacity than today's
units has been developed by IBM, which says the technology will enable PC
users to store the equivalent of 16 pickup trucks full of printed
information. The Associated Press says the IBM unit also "improves how
computers run software featuring video, picture and sound" and "could help
reduce PC prices by enabling computers to store the same amount of
information more cheaply."
Look for IBM this week to officially unveil the new drives, which have
storage capacity of up to 16.8 gigabytes. AP notes today's least expensive
PCs, $1,000 and under, now have about 2 gigabytes of space to store data,
while PCs above $2,000 hold 6 gigabytes or more. The wire service says IBM
managed this by designing a new type of magnetoresistive recording head,
which puts digital data onto hard drive discs and are the size of the head
of a pin. "The so-called 'Giant Magnetoresistive' heads will be built into
PCs starting next month but won't appear in most PCs until early next
year," AP adds.
New JTS Hard Drives Offer 6.4 GBytes
Powerful New Desktop Drives Feature Ultra-ATA Interface
SAN JOSE, Calif., Nov. 11 /PRNewswire/ -- JTS Corp. (Amex: JTS), a world
leader in the development of hard disk technology, today announced two new
additions to its Champion family of hard disk drives for desktop computers.
The new Ultra-ATA Champion packs 6.4 Gbytes of storage in a three-disk,
3.5-inch slimline form factor. The offering also includes a two-disk 4.3
Gbyte version.
Featuring a transfer rate of 33 Mbytes/second, rotational speed of 5,
400-rpm, increased cache of 512KB, and average seek time of 11 msec., these
new drives are well suited for today's sophisticated desktop PCs. By
utilizing MIG heads and Ultra-ATA technology, combined with a partial
response-maximum likelihood (PRML) read channel, these drives achieve an
excellent value-to-performance ratio.
"JTS continues to solve the challenge of finding innovative ways to bring
cost-effective, superior quality, competitive products to market in a
timely manner," said Tom Mitchell, president and chief executive officer of
JTS Corp. "By leveraging our expertise in MIG technology with today's
leading edge advancements like Ultra-ATA, JTS continues to provide the
reliable, high-capacity, high-performance, value-class products sought by
our customers."
Ultra-ATA drives are capable of transferring data at a rate of up to 33
Mbytes/second, double that of current hard drives. Ultra-ATA is
completely backward compatible with existing Fast ATA-2 systems, and
improves overall system performance. JTS' unique encapsulation technology
locks in quality and protects against handling and electrostatic discharge
(ESD) damage. Industry-wide statistics reveal one-third of all units
arriving DOA failed due to shock and mishandling.
With JTS technology, drive reliability is significantly improved and the
risk of damage during installation is minimized. In addition, the
encapsulation reduces ESD resulting in an industry-leading MTBF of 500,000
hours. All JTS hard drives feature a 3-year warranty. Evaluation units
and volume production units of the new Champion C6400-3AS and C4300-2AS
hard drives will be available in December, 1997. OEM evaluation units of
the 6.4 Gbyte and the 4.3 Gbyte are available for $249 and $199,
respectively.
New Printing Program Makes Debut
Mindscape Inc. has released PrintMaster Platinum, a high-end version of its
PrintMaster Gold Deluxe personal printing program. The Windows-based
product offers 92,000 graphics, 20,000 color photos, 4,000 document
templates, additional Internet features and new design tools. "This new
version reinforces our goal to transform traditional clip art into fine
art," says Beckie O'Brien, managing director of Mindscape's print
creativity products. "No other full-featured print creativity product can
equal the range, graphic quality and sheer number of art and photo pieces
available." PrintMaster Platinum is priced at $74.99. A $25 rebate is
available. Visit Mindscape on the Web at http://www.mindscape.com.
Multi-Capacity Tape Drives Ship
Iomega Corp. has started shipping its new Ditto Max family of multiple
capacity tape backup drives and cartridges. The entry-level Ditto Max
drive can back up as much as 7GB of data while the Ditto Max Professional
model can back up to a maximum of 10GB. An OmniTray universal cartridge
caddy allows the Ditto Max drives to support cartridges of multiple
capacities, including 3GB, 5GB, 7GB and 10GB. Also featured is Flash!File
storage that offers users 5-second average access of up to 125MB of
selected files stored in the cartridge's Flash!File space.
"Iomega has once again raised the bar for tape backup with its new Ditto
Max family, combining powerful desktop storage and tape backup in a
cost-effective solution," says Fara Yale, director and principal analyst of
market research firm Dataquest Inc.'s computer storage service. "Whether
customers use their computer for work or at home, the Ditto Max family ...
can secure everything on the system's hard disk -- operating systems,
applications and files."
The base Ditto Max tape drive is available in external and internal models
with prices starting at $199. The Ditto Max Professional tape drive is also
available in external and internal versions with prices starting at $299.
The estimated street prices for Ditto Max cartridges are: $20 for the 3GB
cartridge; $26 for the 5GB cartridge; $30 for the 7GB cartridge; and $35
for the 10GB cartridge.
Visit Iomega on the Web at http://www.iomega.com.
Iomega Unveils Portable Drive
Iomega Corp. has unveiled a new disk drive technology aimed at users of
handheld PCs, digital cameras, smart phones and other mobile devices. The
company's portable clik! drive uses 40MB removable disks that are about
half the size of a credit card. The drive will sell for about $200 and the
disks will be priced under $10 each. Shipments are slated to begin in the
second half of 1998.
"The potential market impact of clik! drives is significant," says Crawford
Del Prete, vice president of IDC's storage research group. "Clik! drives
provide a missing piece of the puzzle, opening a whole new array of
applications for these products." Iomega has also signed licensing deals
with Matsushita Communications Industrial Co. Ltd and Citizen Watch Co.
Ltd. for the manufacturing and marketing of clik! drives. More details are
available on Iomega's Web site: http://www.iomega.com.
Zoom Offers Video Camera
Zoom Telephonics Inc. has begun shipping the Zoom/Video Cam, a color,
full-motion video camera for Windows 95 PCs. The Zoom/Video Cam is
designed for videomail, videophone, videoconferencing and still image
capture applications. The $129 unit plugs into a supplied ISA capture card
or directly into the video jack on a compatible Zoom modem.
The Zoom/Video Cam features an f1.9 multi-element, anti-reflection coated
lens. Focus is adjustable from 2 inches to infinity and the field of view
is 50 degrees, enabling users to photograph or show fine detail, an entire
room, or a landscape. The camera automatically adjusts for exposure, gain,
black level calibration and fluorescent light "flicker." The frame rate is
software-selectable for up to 15 frames per second.
The palm-sized Zoom/Video Cam measures 1-7/8 by 3-1/4 by 2-1/2 inches. A
weighted base provides stability; the device can also be used with a
standard camera tripod. "The Zoom/Video Cam provides the end-user with
hardware and software for a wide range of video applications on Windows 95
systems," says Terry Manning, Zoom's vice president of sales and marketing.
"Our camera makes an ideal gift. It will be widely available at major
retailers."
Infrared Data Association Pavilion Premieres
at COMDEX/Fall '97
Hewlett-Packard, IBM, Intel, Nokia Mobile Phones, Sharp Electronics, and
Texas Instruments to Showcase Latest IrDA Technology The IrDA Cordless
Connectivity Showcase Pavilion will premiere at COMDEX/Fall '97, November
17-21 in Las Vegas. The new pavilion will highlight a variety of devices
and applications offering "beamed" infrared (IR) data communications,
featuring major hardware, systems, software, peripherals, component and
communications manufacturers; cable and telephone companies; and service
providers. Attendees at COMDEX/Fall who visit the pavilion will have the
opportunity to see the future of connectivity as demonstrated by the
interoperation of infrared-enabled devices.
IrDA technology provides globally accepted and market-established cordless
data link standards that provide the foundation for cross-platform and
cross-brand performance. Today's more than 30 million IrDa-enabled
devices, including adapters, printers, handheld organizers and notebook
computers, will soon be complemented by millions of digital messaging
pagers and digital portable phones. Infrared (IR) communications is based
on technology which is similar to the remote control devices such as TV and
entertainment remote control devices used in most homes today.
IR offers a convenient, inexpensive and reliable way to connect computer
and peripheral devices without the use of cables. IrDA connectivity is
being incorporated into most notebook PCs to bring the most cost-effective
and easy to use support available for wireless technologies.
Internationally, IrDA is featured in product promotions for digital still
cameras, mobile phones, pager products, industrial PC's, set-top box
offerings, and several LAN access units. Industry leaders, such as IBM,
are consistently highlighting the infrared feature in newspaper advertising
spots. Pavilion participants, exhibiting the latest IrDA-enabled device,
software, solutions and components, include: Hewlett-Packard Company, IBM,
Intel, Microsoft Corporation, NEC Systems Laboratories, Niigata Canotec
Co., Nokia Mobile Phones, Phoenix Technologies, Puma Technology, Sharp
Electronics, SMSC-Standard Microsystems Corp., Temic Semiconductors, and
Texas Instruments.
Microsoft File Not for Everyone
While Microsoft Corp. posted its court filing on the Internet yesterday,
those using the Web browser of rival Netscape Communications Corp.
initially could not read the documents. Because of a coding problem, only
users of Microsoft's own Internet Explorer browser to read the 43-page
filing and supporting documents, the Reuter News Service reports. Later,
Microsoft spokesman Mark Murray told the wire service the problem was a
missing seven-character coding "tag" that inadvertently was dropped by a
staff member who worked late Monday to prepare it for posting early
yesterday. "It was completely inadvertent," Murray added. "We wanted
everyone in the world to see these documents immediately." Reuters says
once the problem was discovered and diagnosed, it was fixed in about two
hours. Murray told Reuters the staff member who made the coding error was
acting as "pinch hitter" for the employee who usually posts such documents
to the Internet but was stranded by weather in Montana. As reported,
Microsoft argues in the filing that the U.S. Justice Department's antitrust
case should be thrown out of court because it simply is aimed at stalling
improvements to Windows software. Interested in seeing the filing? Read it
elsewhere in this issue or, please visit the web site at
http://www.microsoft.com/corpinfo/11-10Filing.html.
Feds OK CompuServe-WorldCom Deal
Federal regulators appear to be satisfied with details of the proposed
purchase of CompuServe by WorldCom Inc. for some $1.2 billion in stock.
Reporting from Columbus, Ohio, The Associated Press quotes CompuServe and
parent company H&R Block Inc. as well as WorldCom as saying the U.S.
Department of Justice decided not to seek additional information about the
deal, clearing the way for the acquisition to be approved. As noted when
the acquisition was announced in September, the companies were required to
provide details to the department's Antitrust Division. "The division
routinely asks for additional information of companies involved in
acquisitions to determine whether deals violate federal antitrust laws," AP
says. "Foreign regulators and shareholders, however, still must approve the
deal, expected to be concluded early next year." As reported, WorldCom
intends to trade CompuServe's consumer online services division and cash to
America Online Inc. in exchange for AOL's Internet telecommunications unit.
AOL will gain subscribers from CompuServe's flagship online service along
with members of Sprynet, CompuServe's Internet-only service.
Net Provider Files Spam Suit
SimpleNet, a San Diego-based Internet presence provider, is suing several
local companies and individuals, including VNZ Information and
Entertainment Services, seeking an injunction barring unsolicited "spam"
e-mail advertisements. The suit, filed in the U.S. Southern District Court
in San Diego, is similar to federal civil complaints brought against other
alleged spamsters by America Online and CompuServe. But SimpleNet says it
will also request the San Diego County District Attorney's Office to
investigate the possibility of bringing criminal charges under the
California Data Access and Fraud Act.
"Criminal charges are being sought because the named defendants have
orchestrated an intricate and highly deceptive plan to defraud SimpleNet
and its customers," says Allen R. Cocumelli, SimpleNet's attorney. "In
other Spam cases, the accused defended their right to send these junk
e-mails. Our complaint seeks cessation of, and punishment for, acts that
were knowingly committed by a group who went to great lengths to avoid
prosecution."
In its suit, SimpleNet charges that for more than four months the
defendants illegally obtained mailing lists of SimpleNet customers' e-mail
addresses and sent thousands of messages -- as many as hundreds of messages
per hour -- promoting a book titled "Meet, Attract and Date Gorgeous
Women." SimpleNet also alleges that to mask the true origin of the
messages, and to evade SimpleNet's technical means of identifying and
blocking the incoming spam, the defendants utilized a variety of random
user names, domains and IP addresses. Other companies and individuals
named in the suit include Far East Mortgage Service, VNZ Services, Son T.
Nyuyen, Trouang Nyugen, An Van Nyugen, John Nyugen, Phoi Tran and Thanh
Phan. SimpleNet is a provider of Web site hosting, domain hosting and
e-mail services. The firm's Web site is located at
http://www.simplenet.com.
Study Finds Netizens Happy Bunch
A new study finds Internet users are more optimistic about the future, more
concerned about politics and feel more in control of their lives than
Americans overall. The findings fly in the face of other recent research
that pictures Net surfers as slackers, says the new study's backers, San
Francisco-based Wired Ventures and Merrill Lynch Forum. United Press
International reports the poll of 1,444 people across the United States
found:
z 2 percent of Americans are "superconnected," meaning they exchange
email at least three days a week and are regular users of laptop and home
computers, beepers or pagers and cellular phones.
z 7 percent are "connected" -- frequent email users who also make
regular use of at least some of the other technology the study focused on.
z 62 percent are less frequent users who are still "semiconnected,"
exchanging email at least once a week and regularly using one of the other
"target technologies."
z The remaining 29 percent are "unconnected," not using any of the
technologies at all.
The survey, to be released in the December issue of Wired magazine, also
learned that 70 percent of those who make active use of the Internet
believe they can control change in their lives, while only 52 percent of
the general population feels that way. In addition, the poll indicated
that "connected" Americans are more politically aware. For instance, says
UPI, "When asked to identify the Speaker of the House, 79 percent of the
connected correctly identified Newt Gingrich. Only 49 percent of the
'unconnected' came up with his name."
A T T E N T I O N-A T T E N T I O N-A T T E N T I O N
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A T T E N T I O N-A T T E N T I O N-A T T E N T I O N
Microsoft Response to DOJ...
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Petitioner, Supplemental to
Civil Action No. 94-1564
v.
MICROSOFT CORPORATION, Hon. Thomas Penfield Jackson
Respondent.
MEMORANDUM IN OPPOSITION TO PETITION OF THE
UNITED STATES FOR AN ORDER TO SHOW CAUSE
WHY RESPONDENT MICROSOFT CORPORATION
SHOULD NOT BE FOUND IN CIVIL CONTEMPT
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
(212) 558-4000
PRESTON GATES ELLIS &
ROUVELAS MEEDS
1735 New York Avenue, N.W.
Washington, D.C. 20006
(202) 628-1700
MICROSOFT CORPORATION
Law and Corporate Affairs
One Microsoft Way
Redmond, Washington 98052
(425) 936-8080
Counsel for Respondent
Microsoft Corporation
November 10, 1997
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Petitioner, Supplemental to
Civil Action No. 94-1564
v.
MICROSOFT CORPORATION, Hon. Thomas Penfield Jackson
Respondent.
MEMORANDUM IN OPPOSITION TO PETITION OF THE
UNITED STATES FOR AN ORDER TO SHOW CAUSE
WHY RESPONDENT MICROSOFT CORPORATION
SHOULD NOT BE FOUND IN CIVIL CONTEMPT
PRELIMINARY STATEMENT
This case involves the interpretation of a
straightforward Consent Decree entered into between Microsoft
and the Antitrust Division of the U.S. Department of Justice
("DOJ") on July 15, 1994. That Consent Decree, which is
narrowly focused on specific licensing practices, cannot
support the DOJ's current efforts to interfere with the design
of Microsoft's products.
The DOJ's petition does not address any of the
licensing practices that were addressed in the Consent Decree.
The petition is instead aimed squarely at preventing Microsoft
from including improved features and functionality in upgraded
versions of Windows 95 provided to computer manufacturers.
Denying consumers the benefit of technologies that have already
been developed and tested is perverse. As the DOJ knows, the
technologies in question have been a central thrust of
Microsoft's operating system development efforts for more than
three years. The DOJ should be encouraging Microsoft to dis
seminate such new technologies to consumers as quickly and as
broadly as possible.
By its express terms, the Consent Decree imposes no
restriction on the design of Microsoft's products, including
its operating systems. Indeed, even a casual reading of the Con
sent Decree makes it abundantly clear that Microsoft retains
unfettered freedom to create integrated products like Windows
95 that incorporate a wide range of features and
functionality-including those used to access information on the
Internet. The history of the negotiations leading up to the Con
sent Decree and statements made by the DOJ during the Tunney
Act proceeding confirm that the Consent Decree cannot be
interpreted to limit Microsoft's ability to decide what is and
is not included in the package of software that comprises its
operating systems. As a result, the DOJ's position is without
merit, and its petition should be dismissed.
SUMMARY OF ARGUMENT
The DOJ's assertion that Microsoft should be held in
civil contempt for including the Internet Explorer element in
Windows 95 is baseless. Microsoft does not believe it is neces
sary for the Court to consider all of the subjects raised in
the DOJ's petition because the DOJ's reading of the Consent
Decree is implausible on its face. Nevertheless, Microsoft
discusses each of those subjects in some detail in this
memorandum to assist the Court in understanding why Microsoft
regards the DOJ's petition as so wide of the mark. Of course,
if the case proceeds to plenary consideration of the DOJ's
request to impose contempt sanctions on Microsoft, there are
additional facts and legal arguments that Microsoft could and
would marshal in its defense if given sufficient time to do so.
The principal points made in this memorandum are the
following:
z First, Windows 95 is a "Covered Product" under the Consent
Decree, and Internet-related technologies, including Web
browsing functionality, were part of the very first version of
Windows 95 made available to computer manufacturers in July
1995. As a result, there is no need to reach the question of
whether it can otherwise be intelligently said that the
Internet Explorer element of Windows 95 has been improperly
"tied" to the operating system. Windows 95, including its
Internet Explorer element, has always constituted a single
"Covered Product" for purposes of the Consent Decree.
z Second, the proviso of Section IV(E)(i) of the Consent
Decree expressly states that Microsoft is free to develop
"integrated products." Windows 95 is just such a product,
integrating functionality of MS-DOS 6 and Windows 3.1 together
with substantial new technology. Even if the DOJ were correct
that the Internet Explorer element of Windows 95 can be viewed
as a "separate product," the notion that a "separate product"
cannot also be part of an "integrated product" represents a
false dichotomy. For example, even after their functionality
was merged into Windows 95, MS-DOS 6 and Windows 3.1 continued
to be offered separately to computer manufacturers.
z Third, the word "integrated" has an unambiguous meaning,
i.e., combining separate things, that requires no inquiry into
whether those things thereby become inextricably intertwined as
a technical matter. In the case of the Internet Explorer
elements of Windows 95, there can be no doubt that they are
"integrated" with the remainder of the operating system.
Internet Explorer has been included in Windows 95 from the
outset. Moreover, it does precisely the sorts of things that an
operating system does, which is why it is a part of Windows 95.
z Fourth, the circumstances surrounding the formation of the
Consent Decree, including documents exchanged between Microsoft
and the DOJ and statements made by the DOJ during the Tunney
Act proceeding, confirm Microsoft's position that the word
"integrated" in the proviso does not have some specialized
meaning. Instead, extrinsic evidence confirms that Microsoft is
free under the Consent Decree to develop any integrated
products, even those that merge the functionality of products
also made available separately to computer manufacturers.
z Fifth, the DOJ's suggested criteria for determining
whether Internet Explorer is a "separate product" do not speak
to the question of whether Internet Explorer is, in the DOJ's
words, a "truly integrated" element of Windows 95. (See DOJ
Mem. at 19-28.) Even if the DOJ's criteria were not entirely
beside the point, they are a recent construction that finds no
support in the language of the Consent Decree, the negotiations
leading up to the Consent Decree or statements made by the DOJ
during the Tunney Act proceeding regarding the proper inter
pretation of the Consent Decree. Finally, the DOJ's inherently
subjective criteria are invalid because (i) their application
would render the proviso of Section IV(E)(i) meaningless, in
contravention of basic principles of contract construction, and
(ii) they fail to provide explicit guidance about what is and
is not proscribed by the Consent Decree, in contravention of
basic requirements for injunctive orders.
z Sixth, the DOJ is equitably estopped from objecting to
Microsoft's incorporation of Internet-related technologies,
including Web browsing functionality, in Windows 95. The DOJ
was first on notice of such efforts before the start of
negotiations leading up to the Consent Decree. The DOJ did not
object to Microsoft's inclusion of Internet-related tech
nologies in Windows 95 until after Microsoft launched the
fourth version of Internet Explorer on September 30, 1997,
literally years after the DOJ was placed on notice of what it
now claims is a blatant violation of the Consent Decree.
The DOJ also attacks Microsoft's efforts to preserve
the confidentiality of its proprietary information. The con
tractual provisions Microsoft uses in this regard are routine
in the software industry. More importantly, such non-disclosure
agreements are nowhere addressed in the Consent Decree, so they
are not a proper subject of a contempt proceeding. In any case,
Microsoft has willingly complied with the DOJ's requests to
disclaim any interpretation of its non-disclosure agreements
that might interfere with the DOJ's investigative efforts.
Microsoft urges the Court to dismiss the DOJ's
petition summarily. If the Court is not inclined to do so at
this time, it should put the DOJ to its proof. For the DOJ to
succeed, it must prove by "clear and convincing evidence" that
Microsoft violated a "clear and unambiguous" prohibition in the
Consent Decree. The necessary evidentiary hearing should be
preceded by appropriate discovery and motion practice. The DOJ
has been investigating Microsoft's inclusion of Internet-
related technologies in Windows 95 for more than a year, and
Microsoft is entitled under both the Federal Rules of Civil
Procedure and basic principles of fair play to full discovery
of the evidence that has been gathered by the DOJ. Following
such discovery, the parties should be given an opportunity to
file motions seeking to limit the issues that need to be
addressed at an evidentiary hearing.
Without such discovery and motion practice, Microsoft
will be at a serious disadvantage in defending itself against
the DOJ's charges. For example, it is entirely unclear what the
DOJ is talking about when it demands that Microsoft remove
"Internet Explorer" from versions of Windows 95 supplied to
computer manufacturers. At times, the DOJ seems to recognize
the undesirability of forcing Microsoft to degrade Windows 95
by removing Internet-related technologies that are relied on by
various third-party software developers. This may be why the
DOJ asks that Microsoft be required to provide registered users
of Windows 95 with instructions on how to remove the Internet
Explorer icon from the Windows 95 desktop (one way to access
Web browsing functionality) as opposed to removing all of the
constituent parts of Internet Explorer from the operating sys
tem. (See DOJ Pet. at 19.) At other times, however, the DOJ
challenges Microsoft's inclusion of any Internet-related
technologies in Windows 95. (See DOJ. Mem. at 2-3.)
Such fundamental uncertainty in a case in which the
DOJ seeks to impose severe contempt sanctions is inexcusable.
Microsoft is entitled to know precisely which of the more than
100 files that comprise the Internet Explorer element of
Windows 95 the DOJ wants Microsoft to remove from the operating
system.
STATEMENT OF FACTS
The DOJ's statement of facts is in many instances
highly selective and misleading. In other instances, the DOJ's
factual assertions are simply wrong. The extent to which the
DOJ misstates basic facts regarding the negotiations leading up
to the Consent Decree and the relationship of the Internet
Explorer element of Windows 95 to the remainder of the oper
ating system is remarkable given the stridency of the DOJ's
position. Regrettably, Microsoft was never asked to address
these important issues during the DOJ's extensive
investigation. If it had been, some of the misunderstandings
reflected in the DOJ's papers might have been averted. As it
is, the DOJ appears to be relying primarily on the uninformed
speculation of witnesses with no first-hand knowledge of the
facts.1
A. Inclusion of Internet-Related Technologies in Windows 95
From early on, Microsoft planned to include various
Internet-related technologies in Windows 95, which was code-
named "Chicago" during its development. (Declaration of Steven
Sinofsky, dated Nov. 8, 1997 ("Sinofsky Decl."), 2.) In fact,
Microsoft began work on some of the technologies eventually
included in Internet Explorer in 1993. (Sinofsky Decl. 2.)
This work began long before Netscape, the beneficiary of the
DOJ's petition, was founded in April 1994, and thus the work
could not have been motivated by any desire to injure Netscape.
(Sinofsky Decl. 11-12.)
The DOJ became aware of Microsoft's plans to include
Internet-related features in Windows 95 when it subpoenaed
large numbers of documents from Microsoft in late 1993 and
early 1994. (Declaration of Lynn Radliff, dated Nov. 8, 1997,
3.) These documents detailed Microsoft's plans to make
Internet-related technologies an integral part of Chicago
(Sinofsky Decl. 2, 4, 5, 7, 10)-undermining the DOJ's
contention that the inclusion of such technologies in Windows
95 is a recent effort by Microsoft to "label or package
Internet Explorer for strategic or legal advantage" (DOJ Mem.
at 19). In particular, the documents show that before Microsoft
even knew of Netscape's existence, it was planning to include
"Integrated Net Browsing" in Windows 95 in the form of an
"FTP/Gopher/Web unified client." (Sinofsky Decl. 10, 12.)
That is precisely the type of Web browsing functionality
included in the first version of Internet Explorer.
(Declaration of David Cole, dated Nov. 8, 1997 ("Cole Decl."),
39.) Even if the DOJ attempts to claim it did not know what
was contained in the documents it subpoenaed from Microsoft,
the DOJ cannot deny that Microsoft publicly discussed its plans
to include Internet-related technologies in Chicago beginning
in the spring of 1994. (Sinofsky Decl. 8,9.) One way or
another, the DOJ was on notice more than three years ago that
Microsoft intended to make Windows 95 itself a vehicle for
accessing information on the Internet.
On the heels of Microsoft's entry into the Consent
Decree in July 1994, the DOJ began a wide-ranging investigation
of Microsoft's proposed acquisition of Intuit, a leading
developer of personal finance software (the acquisition was
never completed). (Affidavit of Steven L. Holley, sworn to Nov.
9, 1997 ("Holley Aff."), 3.) In the course of that
investigation, the DOJ demanded extensive information about
virtually every aspect of Microsoft's business. (Holley Aff.
4 3.) As a result, the DOJ remained fully apprised through the
commercial release of Windows 95 in August 1995 that Microsoft
was developing an element of Chicago (then code-named "O'Hare")
that included numerous Internet-related technologies, including
basic Web browsing functionality. (Holley Aff. 3.)
Given the rapidly increasing popularity of the
Internet, Microsoft moved forward with O'Hare as quickly as
possible to finish it in time for the commercial release of
Windows 95. (Declaration of Brad Chase, dated Nov. 9, 1997
("Chase Decl.") 2, 12.) The group of technologies developed
under the O'Hare umbrella was ultimately given the name
Internet Explorer. (Sinofsky Decl. 16.) Internet Explorer was
an element of the first version of Windows 95 made available to
computer manufacturers. (Chase Decl. 17-19.)
Internet Explorer is one of several elements of
Windows 95 that had Chicago-related code names during the
development stage. Another example is Exchange, the universal
electronic mail client in Windows 95, which was code-named
"Capone." Despite what the DOJ says (see DOJ Mem. at 25-26),
other elements of Windows 95 also have names and are promoted
to some extent separately from the remainder of the operating
system (Chase Decl. 17-19).
Contrary to the DOJ's earnest (but inaccurate)
representations (see DOJ Mem. at 8), the two most recent
versions of Internet Explorer-IE3.0 and IE4.0-are not simply
applications that sit on top of Windows 95. They are instead
integral elements of the operating system that provide a
variety of important operating system services. (Cole Decl.
5, 46-48, 55.)
One of the most important functions of any operating
system is to provide access to information stores, whether
those information stores are local-such as hard disk drives,
floppy disk drives, tape backup drives or CD-ROM drives-or
remote-such as servers on local and wide area networks. (Cole
Decl. 3, 13-15.) Of course, the Internet is a very large
information store that resides on a global public network.
(Cole Decl. 14.) As a result, it makes perfect sense for an
operating system like Windows 95 to provide access to the
Internet so that the wealth of information on the Internet is
available to all applications running on top of the operating
system. (Cole Decl. 4-5, 38-39; Declaration of Tim
Krauskopf, dated Nov. 8, 1997 ("Krauskopf Decl."), 7-8;
Declaration of Mazin Ramadan, dated Nov. 9, 1997 ("Ramadan
Decl."), 5.) Providing such access is just the latest step in
the evolution of operating systems to keep pace with the
changing nature of personal computing, which explains why
virtually all modern operating systems include a variety of
Internet-related technologies. (Cole Decl. 15, 35-40.)
In addition, the Internet Explorer element of Windows
95 provides hundreds of application programming interfaces
("APIs") that are used by Microsoft and third-party software
developers. (See DOJ Mem. at 9 n.4; Cole Decl. 29; Chase
Decl. 7; Krauskopf Decl. 5-6, 9-10; Declaration of Mike
Devlin, dated Nov. 8, 1997 (Devlin Decl."), 3-6; Declaration
of J.J. Allaire, dated Nov. 7, 1997 ("Allaire Decl."), 6-8;
Declaration of Jesse Boudreau, dated Nov. 8, 1997 ("Boudreau
Decl."), 3-4, 6; Ramadan Decl. 3-5, 7.) Those APIs permit
applications to obtain various operating system services. (Cole
Decl. 47; Krauskopf Decl. 9; Devlin Decl. 3; Allaire
Decl. 6; Boudreau Decl. 3; Ramadan 4.) If the Internet
Explorer element is removed from Windows 95, other portions of
the operating system that depend on the functions it provides
will break. (Cole Decl. 7, 51, 62, 84, 92-93.) For example,
the software used by millions of Americans to gain access to
the Internet via America Online, CompuServe and MSN all relies
on Internet Explorer and thus will break if Internet Explorer
is removed from Windows 95. (Cole Decl. 51, 62, 65, 72, 77,
90.) The DOJ asks the Court selectively to ignore "certain
software files or APIs" that are part of IE3.0 and IE4.0 (see
DOJ Mem. at 19), but those software files and APIs comprise the
lion's share of Internet Explorer (Cole Decl. 29, 46-48,
57).
The DOJ's is just wrong when it asserts (without
factual foundation) that the Internet Explorer element of
Windows 95 could easily be removed without impairing the
remainder of the operating system. (See DOJ Mem. at 27.) If
Internet Explorer is removed, Windows 95 will not function as
intended. (Cole Decl. 7, 51, 55, 92-93.)
The DOJ complains that Microsoft requires computer
manufacturers to ship Windows 95 "as sent by Microsoft." (DOJ
Pet. 19.) That complaint is misguided. One reason for the
enormous success of Intel-based personal computers has been the
availability of an operating system that runs on machines from
a large number of computer manufacturers and that supports a
wide range of software products. (Chase Decl. 25; Cole Decl.
29-30.) Permitting the hundreds of computer manufacturers
around the world who license Windows 95 to decide for them
selves what parts of the operating system they will and will
not ship would destroy the benefits of that common platform.
(Chase Decl. 22.) If that happened, third-party software
developers could not know whether code that performs functions
associated with particular APIs in the operating system would
be present on any given computer. (Chase Decl. 22; Krauskopf
Decl. 5.) Microsoft avoids problems associated with such
balkanization by requiring computer manufacturers-who serve as
the principal distributors of Microsoft's technology-to ship
Windows 95 the way it was designed. (Chase Decl. 22; Cole
Decl. 30.) If Microsoft did not take such steps, its
reputation as a supplier of quality software would suffer, and
customer support costs would increase. (Chase Decl. 22.)
Microsoft imposes no constraint on the ability of
computer manufacturers to preinstall Netscape Navigator or any
other browser software on their machines. (Chase Decl. 29.)
Moreover, the fact that the Internet Explorer element of
Windows 95 includes web browsing functionality does not
diminish the willingness of computer manufacturers to include
web browsing software from Netscape or other vendors on their
machines. (Declaration of William Morris, dated Nov. 7, 1997
("Morris Decl."), 6; Declaration of Mel Ransom, dated Nov. 6,
1997 ("Ransom Decl."), 8; Declaration of John T. Rose, dated
Nov. 9, 1997 ("Rose Decl."), 8.)
Nor does Microsoft impose any constraint on end
users' ability to customize Windows 95 to suit their particular
preferences. End users can delete whatever portions of the
operating system they choose-although they obviously run the
risk of deleting something that will break either the operating
system itself or applications designed to run on top of the
operating system. (Cole Decl. 7, 51, 92-93.) In addition,
end users are free to use whatever software products they
choose with Windows 95, including Netscape Navigator or any
other browser software. Microsoft has done nothing to prevent
third-party software developers from creating such products.
(Chase Decl. 29-31.) To the contrary, Microsoft spends tens
of millions of dollars each year encouraging third-party
software developers to create products that are compatible with
Windows 95, including products that take advantage of operating
system services provided by the Internet Explorer element of
the operating system. (Chase Decl. 7.) In sum, Microsoft's
refusal to permit computer manufacturers to delete the Internet
Explorer element of Windows 95 does not prevent other software
vendors from distributing their products through computer
manufacturers or prevent end users from using such products.
B. Negotiations Leading up to the Consent Decree
The focus of the DOJ's investigation of Microsoft
that began in August 1993 was the contracts pursuant to which
Microsoft licensed its MS-DOS 6 and Windows 3.1 operating
systems to computer manufacturers. (Affidavit of Richard J.
Urowsky, sworn to Nov. 10, 1997 ("Urowsky Aff."), 2.) At a
late stage of the investigation, the DOJ also raised certain
non-disclosure agreements between Microsoft and third-party
software developers as an auxiliary issue. (Urowsky Aff. 5.)
During the Tunney Act proceeding, the DOJ candidly acknowledged
that Microsoft's licensing practices had at most a "minor,"
"immaterial" and "unquantifiable" effect on Microsoft's success
in licensing MS-DOS 6 and Windows 3.1 to computer manufacturers
before July 1994. (Affidavit of Andrew C. Hruska, sworn to Nov.
9, 1997 ("Hruska Aff."), Ex. A.) Instead, the DOJ professed to
be concerned about the future effect of such licensing
practices on competition. (Hruska Aff. Ex. A.) Given that
Microsoft never regarded the challenged practices as respon
sible for the popularity of its operating systems, it agreed to
abandon those practices to resolve the DOJ investigation and a
simultaneous investigation being conducted by Directorate-
General IV ("DG IV"), the competition authority of the European
Union in Brussels.
The only issue regarding product design that arose
during the DOJ investigation was Microsoft's inclusion of
various third-party utilities in MS-DOS 6. The DOJ raised that
issue early on but did not pursue it after Microsoft stated its
legal position on so-called "technological tying." (Holley Aff.
2.) What Microsoft told the DOJ is that the law permits
Microsoft to make whatever changes it deems appropriate to its
operating systems as long as those changes are not intended
solely to injure competitors by rendering their products incom
patible. (Holley Aff. 2.) This standard-which comes straight
out the decided cases on the subject (see page 17 n.6,
infra)-makes it extremely difficult to challenge a software
vendor's product design decisions under the antitrust laws.
The initial settlement proposal made by the DOJ on
June 21, 1994 was presented to Microsoft as being comprehen
sive. (Urowsky Aff. 3-5.) Notably, it made no mention of
tying claims, either based on alleged past conduct or as a
basis of future concern. (Urowsky Aff. 7.) That is consistent
with the fact that tying was never really an issue in the DOJ
investigation.
The practices challenged in the DOJ's complaint were
instead the duration of Microsoft's license agreements with
computer manufacturers (Compl. 23-24), the availability of a
per processor licensing option (Compl. 21-22) and the need
for computer manufacturers to make minimum commitments to
obtain volume discounts (Compl. 23). In addition, the DOJ
challenged certain non-disclosure agreements with third-party
software developers on the theory that those agreements might
inhibit the creation of software products compatible with non-
Microsoft operating systems. (Compl. 29-34.) There is no
reference in the DOJ's complaint to tying. As the DOJ stated
during the Tunney Act proceeding, there is no reference to
tying in the complaint because there was no evidentiary basis
for asserting such a claim. (Hruska Aff. Ex. B at 16).2 As the
Assistant Attorney General said at the time, she would gladly
have sued Microsoft on any potential theory, but the DOJ had no
factual support for claims other than those included in the
complaint.3
Windows 95, a replacement for both MS-DOS and Windows
that incorporates functionality previously provided by both
products, was well along in the development process when the
negotiations leading up to the Consent Decree began. (Urowsky
Aff. 22.) In fact, Windows 95 is a "Covered Product"
identified by its code name, Chicago, in the Consent Decree.
(Consent Decree II(1)(v).) The DOJ knew long before Windows
95 was commercially released-which did not happen until a full
year after Microsoft entered into the Consent Decree-that the
new operating system merged the functionality of MS-DOS 6 and
Windows 3.1. (Urowsky Aff. 22.) Yet, the DOJ never challenged
Windows 95 as a violation of Section IV(E)(i).
C. Genesis of Section IV(E)(i)
Whatever the DOJ may now say, the concern about tying
that led to the inclusion of Section IV(E)(i) in the Consent
Decree came from DG IV, not the DOJ. That is a reflection of
the fact that the Consent Decree was the product of unusual
three-way negotiations among Microsoft, the DOJ and DG IV, a
fact the DOJ neglects to mention.
In a complaint filed with DG IV in June 1993, one of
Microsoft's fiercest competitors, Novell, alleged that
Microsoft tied MS-DOS 6 and Windows 3.1 together in an effort
to foreclose competition from Novell's operating system called
DR DOS, a poor clone of MS-DOS. (Urowsky Aff. 8-9.) Although
Novell's allegation was unsupported by the facts, it was
parroted by DG IV in a draft Statement of Objections provided
to Microsoft on June 30, 1994. (Urowsky Aff. 17 & Ex. C.) As
is plain from that document, the concern was not that Microsoft
was incorporating new features and functionality into its
operating systems. Instead, the concern was that Microsoft had
"economically tied" two free-standing products, each of which
allegedly dominated a separate "product market" for antitrust
purposes. (Urowsky Aff. 17 & Ex. C at 18-28, 34.)
On July 3, 1994 in Brussels, the DOJ and DG IV
jointly provided Microsoft with various "points of concern."
(Urowsky Aff. 18 & Ex. D.) Among those points of concern was
the notion that Microsoft had conditioned its willingness to
license Windows 3.1 on a computer manufacturer's agreement to
license MS-DOS 6 as well. (Urowsky Aff. 19.) This was an
allegation that had been made by Novell in its complaint to
DG IV, although the allegation that Microsoft engaged in such
express conditioning was not contained in the draft Statement
of Objections supplied to Microsoft by DG IV. (Urowsky Aff.
9, 17.)
On July 4, 1994, Microsoft provided the DOJ and DG IV
with its initial response to the points of concern. (Urowsky
Aff. 20 & Ex. E.) In that response, Microsoft stated that it
would continue its existing policy of not licensing one product
on the condition that a computer manufacturer also agree to
license a separate stand-alone product. Microsoft, however,
specifically reserved its right to continue developing
integrated products like Chicago, i.e., a product that merged
the functionality of the very two products that DG IV had
accused Microsoft of tying together economically. (Urowsky Aff.
20.)
Throughout the balance of the three-way negotiations
leading up to the Consent Decree, Microsoft strictly adhered to
its opening position that it would accept no government inter
ference in the design of its operating systems. In other words,
the issue of product design was off the table from the outset
of the negotiations. Neither the DOJ nor DG IV ever challenged
this position.
D. Drafting History of the Proviso
The proviso was drafted by Microsoft's counsel on the
express instructions of their client. (Urowsky Aff. 28-30.)
It was imperative to Microsoft that it retain the unfettered
right to incorporate new features into its operating systems,
even if-as in the case of Chicago and other Microsoft operating
systems-some of those features are available as free-standing
products.
Microsoft first presented the proviso to the DOJ on
July 14, 1994 to make explicit what had been common ground from
the beginning of the negotiations, namely, that the prohibition
in Section IV(E)(i) on direct or indirect conditioning did not
prevent Microsoft from developing integrated products. (Urowsky
Aff. 31.) The meaning of the term "integrated" is illuminated
by Chicago itself, a new operating system that merged the
functionality of MS-DOS 6 and Windows 3.1, both of which had
been (and continued to be) made available separately to com
puter manufacturers.
The DOJ and DG IV requested an amendment to the
proviso to make it clear that although Section IV(E)(i) imposed
no limitations on Microsoft's product design decisions, it did
not authorize Microsoft to do things it otherwise would be
prohibited from doing under the Sherman Act or the Treaty of
Rome. (Urowsky Aff. 34, 36.) With that minor amendment, how
ever, the DOJ and DG IV both accepted the fundamental premise
of the proviso, namely, that Section IV(E)(i) itself poses no
obstacle to Microsoft's development of integrated products.
Until this case, neither the DOJ nor DG IV has ever challenged
that understanding.
E. Tunney Act Proceeding
As noted above, during the Tunney Act proceeding,
Micro System Options, the developer of a three-dimensional
graphics tool, complained about Microsoft's inclusion of a
similar tool in Windows NT 3.5. See Department of Justice,
Response of the United States to Public Comments Concerning the
Proposed Final Judgment, 59 Fed. Reg. 59,426, 59,428 (1994).
Microsoft had licensed the tool at issue from Silicon Graphics
several years previously. Silicon Graphics, however, continued
to make the tool available separately and to license it to
other operating system vendors, in competition with both
Microsoft and Micro System Options.
In responding to the public comment, the DOJ took a
position that is completely at odds with its position in this
case.
z First, the DOJ noted that its complaint did "not challenge
as violations of the antitrust laws Microsoft's inclusion of
new software features in its operating system products."
z Second, the DOJ stated that Microsoft's inclusion of new
features in its operating systems "reduces the demand for
software products sold by third parties as a complement to the
Microsoft product that performed similar functions."
z Third, the DOJ admitted that the proviso limits the
application of Section IV(E)(i) because the "evidence developed
by the government during its investigation would not, in its
view, support a broader injunction." Indeed, the DOJ declared
without qualification that a broad injunction against
Microsoft's inclusion of new features in its operating systems
"generally would not be consistent with the public interest."
ARGUMENT
For Microsoft to be held in civil contempt, the DOJ
must prove by "clear and convincing evidence" that Microsoft
violated a "clear and unambiguous" prohibition in the Consent
Decree. Armstrong v. Executive Office of the President, 1 F.3d
1274, 1289 (D.C. Cir. 1993) (internal quotation marks omitted).
Because the DOJ has no hope of making such a showing, this
Court should deny the DOJ's petition for an order to show
cause.
To the extent the Court determines that further
proceedings are necessary, the Court should adopt a schedule
that gives Microsoft the opportunity to conduct appropriate dis
covery in advance of a full evidentiary hearing on the merits
of the DOJ's claims. Contempt sanctions cannot be imposed based
on affidavits and deposition testimony that have never been
subjected to cross-examination.4 Nor are there exigent circum
stances that warrant a departure from established rules of
procedure. See Fed. R. Civ. P. 43(a). There are instead impor
tant reasons to refrain from taking precipitate action. The
forced removal of Internet-related technologies from Windows 95
will be detrimental to the interests of numerous third parties
who rely on those technologies. The DOJ has made no showing
sufficient to justify the infliction of such injury.
I. The DOJ's Insistence That Microsoft Is a Monopolist Is
Predicated
on Nothing More than the DOJ's Unproved Allegations.
In seeking to portray Microsoft as a monopolist, the
DOJ's papers proceed from the assumption that the DOJ has
already proved (i) the existence of a "product market"
restricted to operating systems for Intel-compatible personal
computers and (ii) that Microsoft exercises monopoly power in
such a "market." In fact, the DOJ has never established either
proposition. Microsoft denied all material allegations of the
DOJ's complaint, and there has never been a judicial finding to
the contrary. See United States v. Microsoft Corp., 56 F.3d
1448, 1460 (D.C. Cir. 1995).
The DOJ itself acknowledges that Microsoft operating
systems face stiff competition from products such as Netscape's
Web browsing software and Java virtual machines that run on a
variety of different microprocessors. (See DOJ Mem. at 31-33.)
There is thus no basis to limit the relevant "product market"
to operating systems that run on Intel-compatible
microprocessors. Furthermore, Microsoft does not behave like a
monopolist shielded from competition. Instead, Microsoft is
constantly improving the features and functionality of its
operating systems while continuing to offer them to consumers
at attractive prices. (Cole Decl. 31-33; Chase Decl. 3.)
Windows 95 is unquestionably popular with consumers,
but that does not establish that Microsoft wields monopoly
power. Moreover, the DOJ's evidence provides no support for the
assertion that Microsoft forces computer manufacturers to
license Windows 95. Rather, as demand driven enterprises,
computer manufacturers pre-install Windows 95 on their machines
because that is what their customers want-millions of them,
making individual purchase decisions. (Morris Decl. 2-3;
Ransom Decl. 2-3; Rose Decl. 3-4.)5 There is nothing
illegal about having an extremely successful product.
As a matter of legal analysis, monopoly power refers
to the unilateral ability to reduce output and increase prices.
See Eastman Kodak Co. v. Image Technical Svcs., Inc., 504 U.S.
451, 485 (1992). Microsoft has no such ability because it has
no control over scarce productive resources. Microsoft's assets
consist of intellectual property generated by smart people, and
there is no shortage of either in this country (or elsewhere
around the world). That is why Microsoft continually invests
large sums of money to improve its products to hold its own in
the fiercely competitive software industry.
The central fact to bear in mind is that Microsoft
does nothing to prevent other companies from developing
superior alternatives to Windows 95. As yet, nobody has suc
ceeded in displacing Windows 95 in the hearts and minds of
consumers, but that does not mean that large and powerful
companies like IBM, Netscape, Oracle and Sun Microsystems are
not trying to achieve exactly that result. The Consent Decree
imposes no restraint on Microsoft in responding to such com
petitive challenges. The DOJ should resist the temptation to
bring the blessings of regulation to the most successful
industry in America.
II. Microsoft Has Not Violated Section IV(E)(i)
of the Consent Decree.
The DOJ's petition and supporting memorandum are long
on rhetoric and short on analysis. To support its position that
Section IV(E)(i) of the Consent Decree prohibits Microsoft from
incorporating Internet-related technologies into Windows 95,
the DOJ seeks to relegate the proviso of Section IV(E)(i) to
the status of meaningless surplusage. In fact, the DOJ never
offers any indication of what it thinks the term "integrated
products" in the proviso means.
The DOJ's position is neither intellectually nor
legally defensible. As the DOJ itself observes, Windows 95 is a
"package of software that Microsoft chooses to include and ship
together labelled as `Windows 95.'" (DOJ Mem. at 15.) That
observation is absolutely correct. In insisting on the addition
of the proviso of Section IV(E)(i), Microsoft insured that it
would retain the unfettered freedom under the Consent Decree to
decide what is included in that "package of software."6 It is
as simple as that.
A. The Court Need Not Reach Section IV(E)(i) Because
Internet Explorer Has Been an Element of a "Covered
Product" under the Consent Decree from the Outset.
The Court should deny the DOJ's petition without ever
reaching Section IV(E)(i) of the Consent Decree. That is so
because Internet Explorer was an element of the very first
version of Windows 95 made available to computer manufacturers
in July 1995. As the DOJ admits in its petition, "Windows 95 is
the commercial implementation of the product formerly code-
named `Chicago,' a `Covered Product' as defined by Section
II(1) of the [Consent Decree]." (DOJ Pet. 18; accord DOJ Mem.
at 13 n.6.) As a result, Internet Explorer and the other
elements of Windows 95 constitute a "Covered Product" under the
Consent Decree, and there is no basis for the DOJ to maintain
that Section IV(E)(i)'s prohibition against the "tying" of
standalone products comes into play. The Consent Decree does
not prohibit Microsoft from licensing a single "Covered
Product" to computer manufacturers.
It can come as no surprise to the DOJ that Internet
Explorer is an element of a "Covered Product" under the Consent
Decree. The DOJ was on notice long before the negotiations
leading up to the Consent Decree began that Windows 95 (code-
named "Chicago") would include a range of Internet-related
technologies, including Web browsing functionality. (See
Sinofsky Decl. 2, 4, 5, 7-10.) The first version of Internet
Explorer was code-named "O'Hare," i.e., a point of embarkation
to other places and a critical aspect of Chicago. (Sinofsky
Decl. 14.) Prior to July 1994, Microsoft produced to the DOJ
a number of documents revealing Microsoft's intention to make
Internet-related technologies, including Web browsing
functionality, an integral part of Windows 95. (Sinofsky Decl.
2, 4, 5, 7, 10.) If those documents were insufficient to put
the DOJ on notice, Microsoft also publicly disclosed-months
before the Consent Decree was negotiated-its plans to include
Web browsing functionality in Chicago. (Sinofsky Decl. 8-9.)
Windows 95 as supplied to computer manufacturers has
always included Internet Explorer. (Chase Decl. 2.) It thus
is not open for the DOJ to argue that Internet Explorer was a
"separate product" originally made available separately to
computer manufacturers that is now being improperly "tied" to
Windows 95. The simple fact is that Microsoft never supplied
Windows 95 to computer manufacturers in the disintegrated or
stripped down form the DOJ now wants Microsoft to create.
(Chase Decl. 2, 12.)
B. There Is No Reason Why a "Separate Product"
Cannot Also Be an Element of an "Integrated
Product" under the Proviso of Section IV(E)(i).
If this Court deems it necessary to reach Section
IV(E)(i), the proviso of that section makes it evident that the
Consent Decree does not prohibit Microsoft from "developing
integrated products" such as Windows 95. If Microsoft did not
have that ability, then the proviso would be rendered meaning
less, effecting a substantial and unjustified modification of
the Consent Decree.
The "construction of a consent decree is essentially
a matter of contract law." Citizens for a Better Environment v.
Gorsuch, 718 F.2d 1117, 1125 (D.C. Cir. 1983), cert. denied,
467 U.S. 1219 (1984). Thus, as the DOJ admits, in interpreting
the Consent Decree, the Court must look first to its plain lan
guage. (See DOJ Mem. at 11.) As the Supreme Court has
explained:
Because the defendant has, by the decree, waived his
right to litigate the issues raised, a right
guaranteed to him by the Due Process Clause, the con
ditions upon which he has given that waiver must be
respected, and the instrument must be construed as it
is written, and not as it might have been written had
the plaintiff established his factual claims and
legal theories in litigation.
United States v. Armour & Co., 402 U.S. 673, 682 (1971)
(emphasis added). To the extent that terms used in the Consent
Decree are unambiguous, its scope "must be discerned within its
four corners." Id.
The DOJ attempts to avoid the clear import of the
proviso of Section IV(E)(i) by drawing an artificial
distinction between the terms "other product" and "integrated
products." According to the DOJ, "Internet Explorer is a
separate or `other' product from the Windows 95 operating
system, and not `integrated' with it, for purposes of Sec
tion IV(E)(i)." (DOJ Mem. at 19.) The distinction the DOJ seeks
to draw is specious. The reference to "other product" in
Section IV(E)(i) does not stand in contrast to "integrated
products." Instead, it is meant to encompass products other
than a "Covered Product" or an "Operating System Software"
product, both of which are defined terms in the Consent Decree.
This does not mean, however, that a "Covered Product,"
"Operating System Software" product or "other product" cannot
also be elements of an "integrated product" under the proviso.
In fact, Windows 95 represented exactly such a merger of the
functionality of two "Covered Products," i.e., MS-DOS 6 and
Windows 3.1, and was never conceived by Microsoft as a
"separate product" devoid of Internet-related technologies.
At bottom, the DOJ maintains that if a particular
feature has ever had what might be characterized as a separate
existence, it cannot be an element of an "integrated product"
under Section IV(E)(i). (See DOJ Mem. at 21-22.) The Consent
Decree, however, must be interpreted to give effect to all of
its provisions. See United States v. Western Elec. Co., 12 F.3d
225, 232-33 (D.C. Cir. 1993) (rejecting interpretation of one
provision of consent decree that would have "render[ed]
inoperative" a related provision). If the DOJ's crabbed reading
of Section IV(E)(i) were correct, the proviso would be rendered
meaningless. As the DOJ knew at the time it entered into the
Consent Decree, virtually every new feature that has been incor
porated into Microsoft's operating systems over the last 16
years was at one time available separately, either from
Microsoft or from another software vendor. (Chase Decl. 21.)
And in many cases, third-party software developers continue to
develop and market products that perform functions similar to
those performed by elements of Windows 95. (Chase Decl. 21.)
Disk compression and defragmentation utilities are just two
examples of such products.
As noted above, Windows 95 itself proves that the
DOJ's interpretation of Section IV(E)(i) cannot possibly be
correct. Windows 95 integrated the functionality of both MS-DOS
6 and Windows 3.1 in an innovative new operating system. Before
Microsoft developed Windows 95, Microsoft made MS-DOS 6 and
Windows 3.1 separately available to computer manufacturers, and
continued to do so even after Windows 95 was commercially
released. Despite the separate availability of MS-DOS 6 and
Windows 3.1-which cannot be disputed-the DOJ never contended
that Section IV(E)(i) of the Consent Decree (or the general law
of tying for that matter) prohibited Microsoft from including
the functionality of the two products in Windows 95. As the
Court of Appeals has recognized, "ex post constructions" such
as the one offered by the DOJ "are not probative of the meaning
of a consent decree." United States v. Western Elec. Co., 894
F.2d 1387, 1393 (D.C. Cir. 1990).
C. The DOJ's Position Is Flatly Inconsistent with
the Ordinary Meaning of the Word "Integrated."
The proviso of Section IV(E)(i) expressly states that
nothing in that section shall "be construed to prohibit
Microsoft from developing integrated products." Because the
DOJ's entire case is predicated on the logical fallacy that the
concepts of "separate product" and "integrated product" are
mutually exclusive, the DOJ never addresses the meaning of the
word "integrated" in the proviso. As a result, the DOJ makes no
showing that the word "integrated" means something other than
its common dictionary definition.
In everyday English, the word "integrated" means
"combined," "united" or "incorporated into." Webster's Third
New International Dictionary 1174 (1965). Accordingly, an
"integrated product" is one like Windows 95 that consists of a
wide range of features and functions that-although they may
also be available separately-have been "combined" or "united"
together. There is thus no requirement that elements of an
"integrated product" be inextricably intertwined. It is
therefore true that the freedom reserved to Microsoft under the
proviso of Section IV(E)(i) to design its products however it
sees fit gives Microsoft complete latitude in incorporating new
features and functionality into its operating systems, but that
is in the nature of a proviso.
In improving the Internet-related technologies in
Windows 95, Microsoft could have decided to isolate Web
browsing functionality in a self-contained application, similar
to the approach Netscape has taken. That is not the course
Microsoft chose. Rather, Microsoft engineered IE3.0 and IE4.0
as a set of core operating system services. (Cole Decl. 45-
46.) In other words, IE3.0 and IE4.0 replace and extend
existing elements of Windows 95. (Cole Decl. 5.) In
Microsoft's view, that is the most promising approach to
providing users with seamless access to information stored on
the Internet, thereby advancing Microsoft's vision of
"Information at Your Fingertips." (Cole Decl. 34.)
Operating system services provided by Internet
Explorer extend far beyond merely allowing users to look at
content stored on the Internet. That is rudimentary functional
ity provided by Web browsing software from Netscape and a
number of other software vendors. Instead, IE3.0 and IE4.0
provide a wide range of functionality that does not necessarily
relate in any way to the narrow concept of Web browsing. (Cole
Decl. 47; Declaration of Joe Belfiore, dated Nov. 9, 1997,
6-16.) For example, the latest version of Intuit's personal
finance software product, Quicken, displays locally-stored
financial tables in a special document format called Hypertext
Markup Language ("HTML") using operating system services pro
vided by Internet Explorer. (Cole Decl. 67.) In addition,
other portions of Windows 95 itself call upon operating system
services provided by IE3.0 and IE4.0, and Windows 95 will not
function properly without those elements. (Cole Decl. 55, 84,
93.)
Unlike Netscape's Web browsing software, the updated
Internet Explorer element of Windows 95 is "componentized."
(Krauskopf Decl. 9-10.) In plain English, this means that
third-party software developers can essentially incorporate
components of Internet Explorer into their products, thereby
eliminating the need to write additional code that performs
functions already performed by the operating system. (Cole
Decl. 49.) For example, Symantec, the leading developer of
utilities for Windows 95, uses a component of IE3.0 and IE4.0
in its Norton Utilities product to enable users to obtain
updates via online connections. (Cole Decl. 60.) Such
functionality is important for products like anti-virus
utilities that must be constantly upgraded to keep pace with
the boundless imaginations of computer hackers. Although the
DOJ chooses to ignore the point, a large (and growing) number
of third-party software products depend upon components of
Internet Explorer. (Allaire Decl. 6-8; Devlin Decl. 5-6;
Boudreau Decl. 3-4, 6; Ramadan Decl. 3-5, 7.)
Microsoft continues to believe that questions
regarding the technical merit of its product design decisions
are not justiciable. Nevertheless, as is plain from the
foregoing discussion, and as explained in great detail in
declarations accompanying this memorandum, Internet Explorer is
very tightly integrated with the remainder of the operating
system. That is so even if-contrary to the plain meaning of the
word "integrated" and the parties' intentions as disclosed in
negotiating history of the Consent Decree (discussed below)-the
concept of integration in the proviso of Section IV(E)(i)
requires something more than the simple combination of separate
things.
D. The Circumstances Surrounding Formation of the
Consent Decree Confirm That the Language of the
Proviso Should Be Given Its Everyday Meaning.
If the Court determines that it must look beyond the
plain language of Section IV(E)(i), the history of the
negotiations leading up to the Consent Decree confirm that the
proviso should be interpreted in accordance with its normal
everyday meaning. What is more, to the extent that any
ambiguities remain after considering such extrinsic evidence,
the Court must resolve those ambiguities in favor of Microsoft,
the party charged with contempt. See Common Cause v. Nuclear
Regulatory Comm'n, 674 F.2d 921, 927-28 (D.C. Cir. 1982); see
also Harris v. City of Philadelphia, 47 F.3d 1342, 1350 (3d
Cir. 1995); NBA Properties, Inc. v. Gold, 895 F.2d 30, 32 (1st
Cir. 1990); Ford v. Kammerer, 450 F.2d 279, 280 (3d Cir. 1971).
The DOJ acknowledges that the Court "may also read
decree terms by reference to the circumstances and purpose
surrounding the formation of the decree and by any technical
meaning words used may have had to the parties." (DOJ Mem. at
11-12.) At the October 27, 1997 scheduling conference, however,
the DOJ suggested that the Court's consideration of such
extrinsic evidence should be limited to documents included in
the public record as part of the Tunney Act proceeding such as
the DOJ's Competitive Impact Statement7 and its responses to
public comments. (See 10/27/97 Tr. at 4-6.) That is wrong, but
even the record of the Tunney Act proceeding is sufficient to
refute the DOJ's position in this case.
1. The DOJ's Response to Public Comments. As an
initial matter, the only document from the Tunney Act
proceeding that has any bearing on the meaning of the proviso
of Section IV(E)(i) is the DOJ's response to a public comment
from a company called Micro System Options complaining about
Microsoft's incorporation of a three-dimensional graphics tool
acquired from Silicon Graphics into Windows NT 3.5. See
Department of Justice, Response of the United States to Public
Comments Concerning the Proposed Final Judgment, 59 Fed. Reg.
59,426 (1994). In that situation, Microsoft's development of an
"integrated product" consisted of incorporating a tool
developed by another company into a Microsoft operating system.
The tool was still available separately from Silicon Graphics
and continued to be licensed by Silicon Graphics to other
operating system vendors.
In responding to the Micro System Options comment,
the DOJ expressly stated that its "Complaint does not challenge
as violations of the antitrust laws Microsoft's inclusion of
new software features in its operating system products." 59
Fed. Reg. at 59,428. The DOJ explained:
Over the past fourteen years, Microsoft has developed
and sold numerous successive versions of its
operating system products, each more advanced and con
taining more features than the previous one. Whenever
Microsoft adds an attractive feature to its operating
system products, it reduces the demand for software
products sold by third parties as a complement to the
Microsoft product that performed similar functions.
Id. (emphasis added).
In fact, the DOJ expressly relied on the proviso of
Section IV(E)(i) in explaining why Microsoft's incorporation of
new features into its operating systems does not violate the
Consent Decree. The DOJ noted that the proviso "explicitly
states that `this provision in and of itself shall not be
construed to prohibit Microsoft from developing integrated pro
ducts.'" Id. As the DOJ candidly conceded, the evidence
developed during its investigation of Microsoft "would not, in
its view, support a broader injunction." Id. Moreover, the DOJ
stated without qualification that such a broad injunction
"generally would not be consistent with the public interest."
Instead, the DOJ took the position that "[a]ctivity of this
sort requires case by case analysis." Id. "Case-by-case
analysis" could not have been a reference to the Consent
Decree-which must provide clear guidance as to what is and is
not prohibited-but was instead a reference to whatever Sherman
Act standards may govern "technological tying" claims.
The DOJ's response to the public comment from Micro
System Options refutes the DOJ's current interpretation of the
proviso of Section IV(E)(i). The DOJ cannot take a position
here that is diametrically opposite to the position it took
before this Court during the Tunney Act proceeding. See Western
Elec. Co., 12 F.3d at 230-31 (interpreting consent decree based
on the DOJ's response to public comments). In fact, the DOJ's
response to the Micro System Options comment constitutes a
binding judicial admission by the DOJ that ought to end this
case.8
2. The Negotiating History the Consent Decree. The
DOJ is simply wrong about the types of extrinsic evidence the
Court may examine in determining the meaning of Section
IV(E)(i). As the Supreme Court has held, because a consent
decree "is to be construed for enforcement purposes basically
as a contract," it is perfectly proper for the Court to rely
upon traditional aids to contract construction, such as "the
circumstances surrounding the formation of the consent order."
United States v. ITT Continental Baking Co., 420 U.S. 223, 238
(1975). Such reliance on extrinsic evidence "does not in any
way depart from the `four corners' rule of Armour." Id.
In examining the circumstances surrounding formation
of the Consent Decree, the Court is free to consider extrinsic
evidence regarding the negotiations leading up to the Consent
Decree, including drafts and other documents exchanged between
the parties that illuminate the meaning of disputed provisions.
See, e.g., United States v. CBS, Inc., 1981-2 Trade Cas. (CCH)
4 64,227, at 73,881 (C.D. Cal. Aug. 7, 1981) (relying on
"documents sent by network counsel to the government during the
settlement negotiations"); United States v. Olin Ski Co., 503
F. Supp. 141, 144 (S.D.N.Y. 1980) (looking to "successive
drafts" of relevant provision of consent decree); United States
v. Bestline Prods. Corp., 412 F. Supp. 754, 769 (N.D. Cal.
1976) (relying on letter sent by defendant's counsel to DOJ
during negotiation of consent decree); see also Dr.
Pepper/Seven-Up Cos. v. FTC, 151 F.R.D. 483, 489 (D.D.C. 1993)
(relying on "extrinsic evidence from the [consent decree's]
negotiating history"). As one court put it, by considering such
extrinsic evidence, courts can determine the "reasonable
expectations of the parties at the time they entered into the
[consent decree]." United States v. Motor Vehicle Mfrs. Ass'n,
643 F.2d 644, 651 (9th Cir. 1981).
In this case, the negotiations leading up to the
Consent Decree demonstrate beyond peradventure that Microsoft's
interpretation of Section IV(E)(i) is correct. Notwithstanding
its current posture, the DOJ expressed no concern during those
negotiations about Microsoft's inclusion of new features and
functions in its operating systems. As a result, that topic was
not mentioned in either the DOJ's initial settlement proposal
to Microsoft or its complaint. (Urowsky Aff. 7.) Moreover,
from the start of the trilateral negotiations among Microsoft,
the DOJ and DG IV, Microsoft steadfastly opposed any
governmental effort to dictate the design of Microsoft's
software products. (Urowsky Aff. 20, 24.) In fact,
Microsoft's counsel drafted the proviso and insisted that it be
included in Section IV(E)(i) to prevent precisely the sort of
interference with product design decisions that the DOJ is now
attempting. (Urowsky Aff. 28-31.) Microsoft made it clear
throughout the negotiations that its unfettered liberty to
design its software products free from meddling by the DOJ and
DG IV was crucial, and Microsoft would never have entered into
the Consent Decree unless that liberty was clearly preserved.
(Urowsky Aff. 20, 24, 28-31, 34.) In filing its petition,
the DOJ is dishonoring the agreement it reached with Microsoft
more than three years ago.
In sum, just because Windows 95 includes features and
functions that may also be available separately in the
marketplace does not mean it is not an "integrated product" for
purposes of Section IV(E)(i). If the DOJ had intended to impose
a limitation on the normal meaning of "integrated," then it
should have insisted on a specialized definition of the term in
the Consent Decree. It did not, and Microsoft would have
rejected any such limitation in any event.
E. The DOJ's Criteria for Determining Whether
Products Are Separate Are Entirely Beside the Point
and Have No Place in a Contempt Proceeding.
The DOJ enumerates a number of criteria that it
contends the Court should consider in deciding whether
Microsoft should be prohibited from including Internet-related
technologies in Windows 95. All of these criteria are
supposedly useful in determining whether the Internet Explorer
element of Windows 95 is, in reality, a "separate product."
(See DOJ Mem. at 19-28.) For the reasons explained previously,
the entire thrust of the DOJ's argument is beside the point
because there is no reason why a "separate product" cannot also
be part of an "integrated product" under the proviso of Section
IV(E)(i). Otherwise, the right reserved to Microsoft to create
integrated products would be an empty one.
The DOJ's assertion that its newly-formulated indicia
of "separateness" preclude a finding that Internet Explorer is
an integral element of Windows 95 suffers from additional
flaws. For one thing, none of the criteria now put forward by
the DOJ was even mentioned during the negotiations leading up
to the Consent Decree. That is because nobody ever contemplated
that the DOJ would later challenge Microsoft's inclusion of
particular features and functions in its operating systems as a
violation of Section IV(E)(i). Simply stated, the DOJ's
criteria are a recent invention with no basis in the Consent
Decree.
Moreover, the DOJ's criteria, taken together, do not
constitute the sort of objective, verifiable standards that a
consent decree must contain if it is to be enforceable.
Instead, the DOJ's criteria require the balancing of multiple
subjective factors, such as the "perceptions" of competitors
and customers, in reaching a conclusion about whether Windows
95 and Internet Explorer are "separate products." Because
injunctive orders like the Consent Decree impose the threat of
contempt sanctions, the party enjoined must "receive explicit
notice of precisely what conduct is outlawed." Schmidt v.
Lessard, 414 U.S. 473, 476 (1974).9 The procedure proposed by
the DOJ, which depends on a wholly indeterminate weighing of a
number of subjective factors, is inconsistent with the
requirement that injunctive orders specify with reasonable
clarity the conduct that they proscribe. See International
Longshoremen's Ass'n v. Philadelphia Marine Trade Ass'n, 389
U.S. 64, 76 (1967); Paralyzed Veterans of Am., Inc. v.
Washington Metro. Area Transit Auth., 894 F.2d 458, 460 (D.C.
Cir. 1990); Common Cause, 674 F.2d at 927.
Even if it were appropriate to consider the criteria
enumerated by the DOJ, close examination reveals that they fail
to support the DOJ's claim that Windows 95 and its Internet
Explorer element are "separate products"-which is not
dispositive of the issue before the Court in any event. The
following examination of those criteria reveals numerous flaws
in the DOJ's logic and the DOJ's profound misunderstanding of
the facts.
1. Existence of Separate Consumer Demand. The DOJ
contends that "[t]here is separate demand for Internet browser
products . . ., on the one hand, and Windows 95, on the other."
(DOJ Mem. at 20.) The existence of separate consumer demand for
particular features and functions of an operating system,
however, does not mean that those features and functions cannot
be elements of a single "integrated product" for purposes of
the proviso of Section IV(E)(i). Granted, Netscape sometimes
markets its browser software apart from operating
systems-although Netscape's browser software is also included
as part of a large number of operating systems-but that has no
bearing on whether Internet Explorer is an integral element of
Windows 95. For example, auto parts stores sell batteries
separate from automobiles, yet no one would suggest that a
battery is not an integral element of a new car.
2. Distribution of Updated Versions of Internet
Explorer to the Installed Base of Windows 95 Users. The DOJ
notes that Microsoft separately distributes the Internet
Explorer element of Windows 95 to users via the Internet and
the retail channel. (See DOJ Mem. at 21.) Microsoft undertakes
such efforts to make updated elements of its operating system
broadly available to existing users of Windows 95. (Chase Decl.
3, 6, 8, 20; Ransom Decl. 9; Rose Decl. 9.) Microsoft's
willingness to provide the installed base of Windows 95 users
with progressively improved versions of Internet Explorer does
not establish that Internet Explorer is something other than an
integral element of Windows 95. The DOJ's position is no dif
ferent from saying that updated pages to a loose-leaf treatise
must be regarded as a separate "product" because they were not
included with the treatise ab initio. This makes no sense.
The DOJ's suggestion that Microsoft's distribution of
updated elements of Windows 95 to the installed base of users
prevents Microsoft from simultaneously providing such updated
elements to computer manufacturers for shipment with their new
machines would lead to absurd results that injure consumers.
There is no sensible reason why consumers should have to wait
until Microsoft's next major release of Windows 95, i.e.,
Windows 98, to obtain IE3.0 and IE4.0. Such technology has been
fully developed and tested by Microsoft, and it should not sit
on the shelf for months or years simply to avoid the risk that
the DOJ might argue that dissemination of the technology in
advance of a new major release of the operating system
constitutes the creation of a "separate product." Microsoft's
willingness to provide its customers with free upgrades of
Internet Explorer between major releases of Windows 95 is
unambiguously good for consumers.
The DOJ places great emphasis on the fact that IE4.0
"is currently distributed to OEMs on a separate CD-ROM" (DOJ
Mem. at 22 (emphasis in original))-as if that were probative of
anything. The fact that an element of Windows 95 can be shipped
on a physical medium separate from the rest of the operating
system is meaningless. The retail upgrade version of Windows 95
comes on more than twelve floppy diskettes for users who do not
have a CD-ROM drive, but that does not mean that Windows 95 is
twelve separate products.
The DOJ's insistence that IE4.0 is a "stand-alone
product" is apparently premised on the misconceived notion that
installing this updated element of the operating system entails
nothing more than layering additional code on top of an
existing copy of Windows 95. That assumption is mistaken as a
technical matter-when installed, IE4.0 pervades the operating
system. The installation program for IE4.0 rips out substantial
portions of Windows 95 and replaces them with new code needed
to support IE4.0's new features and functions. (Cole Decl.
5, 46.)
Recognizing the extent to which Internet Explorer is
integrated into Windows 95, both Netscape, the intended
beneficiary of the DOJ's petition, and numerous commentators
have observed that IE4.0 is actually an upgrade to the
operating system. (Chase Decl. 15-16.) Indeed, in
contrasting its browser software with IE4.0, Netscape
characterized IE4.0 as "virtually an operating system upgrade."
(Chase Decl. 16 & Ex. D.) Microsoft could easily have called
IE4.0 something like "Windows 95 Upgrade." The name Microsoft
has chosen for this element of Windows 95 is irrelevant to whe
ther Internet Explorer is part of an "integrated product" under
Section IV(E)(i).
3. Development of Internet Explorer Versions for
Other Operating Systems. The DOJ attributes great significance
to the fact that Microsoft has developed versions of IE3.0 "for
a non-Microsoft operating system, Apple Computer's Macintosh,"
and that Microsoft has stated its intention to offer versions
of IE4.0 "for Macintosh and Sun's Solaris operating system."
(DOJ Mem. at 22 (emphasis in original).) Microsoft's creation
of Internet Explorer versions for operating systems other than
Windows 95 does not mean that Internet Explorer is not an
integral part of Windows 95. Although they share the same name,
Internet Explorer versions for operating systems other than
Windows 95 have been customized for use with those other
operating systems and, as such, are quite different-in fact,
they are built on different code bases. (Chase Decl. 26.)
4. Occasional References to Internet Explorer as a
"Product." The DOJ points out that the End User License
Agreements for the retail version of IE3.0 and for the version
of IE4.0 available for downloading from the Internet refer to
Internet Explorer as a "product." Of course, when Microsoft
distributes updated elements of Windows 95 between releases of
the operating system, it is not going to do so without imposing
normal restrictions on end user licensees, such as prohibiting
the disassembly of Microsoft's code. The fact that such
standard form agreements refer to Internet Explorer as a
"product" for want of a better word has no legal significance.
5. "Commercial Norm" in Distributing Internet-
Related Technologies. The DOJ suggests that the commercial norm
is to "offer Internet browsers and operating system products
separately." (DOJ Mem. at 26.) In fact, it is equally common to
distribute Internet-related technologies as elements of
operating systems, and that has been true since before Netscape
was founded. (Chase Decl. 12, 21; Krauskopf Decl. 7.)
Microsoft is not alone in including Internet-related
technologies in its operating systems. As the DOJ well knows,
every other major operating system vendor also includes such
technologies in its products because that is what consumers are
perceived to want. (Cole Decl. 15.)
It may well be, as the DOJ suggests (see DOJ Mem. at
8-9 & n.3), that Netscape's browser software-which is
purportedly used by more than 70% of persons who access
information on the Internet-can properly be viewed as an
application as opposed to an element of an operating system
because Netscape says it has designed its browser software to
run unmodified on a wide variety of operating systems. (Allaire
Decl. 7; Ramadan Decl. 6.) The fact that one competitor
claims to have adopted a cross-platform strategy, however, does
not mean than Microsoft cannot incorporate Internet-related
technologies directly into Windows 95 to insure the best
possible user experience.
In arguing that the "commercial norm" is defined by
Netscape's approach, the DOJ seems to be relying on the notion
that there is an objectively ascertainable and widely
understood definition of what is and is not contained in an
operating system like Windows 95. Nothing could be further from
the truth. An operating system consists of a rapidly evolving
set of features and functionality. What goes into the operating
system is a design decision determined by what consumers are
perceived to want. (Cole Decl. 8.) Consumers clearly want
operating systems that include Internet-related technologies
(Morris Decl 4; Ransom Decl. 3; Rose Decl. 4), and
Microsoft has designed Windows 95 to meet that demand.
6. "Commercial Feasibility" and "Physical
Possibility" of Distributing Internet Explorer Separate from
the Remainder of Windows 95. The DOJ contends that it is "com
mercially feasible not to require OEMs or PC users" to license
Internet Explorer as part of Windows 95 and that it is "physi
cally possible to keep IE4.0 and Windows 95 separate." (DOJ
Mem. at 26-27.) Neither observation, however, is relevant to
what constitutes an "integrated product" under the proviso of
Section IV(E)(i) of the Consent Decree.
It would not be "commercially feasible" for Microsoft
to remove large portions of Windows 95 and distribute those
elements separately. For example, it might be possible for
Microsoft to stop supplying the color schemes, background
patterns and screen savers included with Windows 95 and require
consumers to license such features separately. Microsoft has
determined that consumers want full-featured operating systems
that perform a very broad range of functions without the need
to purchase supplemental products of uncertain compatibility.
(Cole Decl. 33.) It would be senseless for Microsoft to
degrade its operating systems to the point where they provide
only the most rudimentary functionality, distributing sepa
rately all of the various features that consumers have come to
expect. Such a strategy of disintegration would make computers
more expensive and difficult to use, thereby reducing overall
demand-the exact opposite of what Microsoft is trying to accom
plish with the design of its operating systems. (Cole Decl.
8, 93; Chase Decl. 25.)
It would be "physically possible" for Microsoft to
separate any element of Windows 95 from the remainder of the
operating system, but that is an unremarkable observation.
After all, Windows 95 is a piece of software comprising
millions of lines of code, not some physical product that is
welded or glued together. Of course, removing elements of
Windows 95 will cause the operating system to perform fewer
functions and may cause the operating system not to work at
all, depending on which elements are removed. (Cole Decl. 7,
92, 93.) Thus, the DOJ's unsupported assertion that removing
the Internet Explorer element of Windows will have no effect on
the ability of the operating system "to perform fully and effec
tively all of its functions" is misguided at best. (DOJ Pet.
26.) The DOJ assumes the argument away by defining the func
tionality of Windows 95 to exclude the features and
functionality provided by Internet Explorer. (See DOJ Mem. at 9-
10.) This is pure sophistry. As explained above (see page 8,
supra), the Internet Explorer element of Windows 95 provides a
range of operating system services utilized by other portions
of the operating system as well as by other software products.
If Internet Explorer is removed, the performance of Windows 95
will be degraded. (Cole Decl. 47, 55.)
7. "Strategic Marketing and Distribution
Decisions." The DOJ portrays Microsoft's inclusion of Internet-
related technologies in Windows 95 as nothing more than "a
strategic marketing and distribution decision." (DOJ Pet.
27.) On the contrary, Microsoft's decisions about what
features and functions ar