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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>From the Editor's Desk...

     There comes a time in every generation's passing when people must
stand up for what is right both morally and ethically.  The time for my
generation has come.  Lately, its been easier and easier to find hate and
terror on the `Net.  Anti Semitism seems to be at an all-time high.  What
is WRONG with this world??  Didn't we all either see or were taught that
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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                          STReport Headline 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,
z    AFP,
z    American Lawyer,
z    Associated Press,
z    BBC NewsOn-Line,
z    Boston Globe, (keyword woodward)
z    Boston Herald,
z    CBS News,
z    CNN,
z    CommunityNewspapers, rd
z    CourtTV,
z    Fox News,
z    Lawyers Weekly,
z    MSNBC,
z    National Law Journal,
z    NBC (WHDH-TV),
z    New England Cable News,
z    N.Y. Post,
z    Press Association,
z    Reuters,
z    WBZ,
z    WCVB,
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

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

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

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
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
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
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
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

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 ( "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,

                     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

                      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

                       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:

                         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

               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

                     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

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

                     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

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...

                       FOR THE DISTRICT OF COLUMBIA


               Petitioner,              Supplemental to
                                   Civil Action No. 94-1564

MICROSOFT CORPORATION,             Hon. Thomas Penfield Jackson



                                   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


               Petitioner,              Supplemental to
                                   Civil Action No. 94-1564

MICROSOFT CORPORATION,             Hon. Thomas Penfield Jackson


                     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
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
                      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
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,
          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
          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
          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.
          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
          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
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."
          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
          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
     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
     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,
           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
     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
          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
          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 are part of the package of software that
constitutes an operating system is a product design decision,
albeit one motivated by strategic considerations-most
importantly, the changing nature of customer demand. (Chase
Decl.  3, 25.) Consumers want Internet-related technologies
in their operating systems, and Microsoft is striving to meet
that demand. There is nothing special about the Internet
Explorer element of Windows 95 in this regard. Microsoft has
been including progressively more and more features in its oper
ating systems for the last sixteen years, as the DOJ
acknowledged during the Tunney Act proceeding. (See page 14,
          In arguing that it was somehow inappropriate for
Microsoft to include Internet-related technologies in Windows
95, the DOJ asks the Court to apply a static definition to an
inherently dynamic product. By making such a request, which
would be flatly contrary to the letter and spirit of the
proviso of Section IV(E)(i), the DOJ threatens to freeze the
development of Microsoft operating systems as of 1995. The
marketplace-not the DOJ-should determine how operating systems
are designed. If the DOJ had halted the evolutionary process of
operating system development ten years ago, consumers would
have been denied the benefits of all the innovative work that
Microsoft and its competitors have done in making computing
more accessible, efficient, robust and fun. The Consent Decree
was not intended to stand in the way of such technological
                          *    *    *
          Referring again to the DOJ's response to the public
comment from Micro System Options during the Tunney Act
proceeding, it is notable that the 3-D graphics tool at issue
in that response fails every one of the criteria proffered by
the DOJ for determining whether something constitutes a
"separate product." What this demonstrates is that those
criteria have no sensible connection to the question of whether
particular features and functionality constitute an element of
an "integrated product" under the proviso of Section IV(E)(i).
It is also notable that in responding to the Micro System
Options comment, the DOJ did not purport to apply any of those
criteria-or even advert to them.
     F.   The DOJ's Discussion of Microsoft's Intent Is
          and Reveals the Contradictions in the DOJ's Own

          The DOJ devotes a large portion of its memorandum to
arguing that Microsoft's intent in including Internet-related
technologies in Windows 95 is to prevent a "challenge to
Microsoft's monopoly in the PC operating system software
market." (DOJ Mem. at 31.) Putting aside for the moment the
unsupported major premise of that argument, Microsoft's intent
is not relevant to this contempt proceeding, as the DOJ
begrudgingly admits. (See DOJ Mem. at 11.) As a matter of
contract interpretation, Microsoft's incorporation of Internet-
related technologies into Windows 95 is beyond the scope of the
Consent Decree, regardless of Microsoft's business rationale
for doing so.
          Even if Microsoft's intent were a proper subject of
inquiry, there is no basis for the DOJ's suggestion that
Microsoft is pursuing an improper objective in including
Internet-related technologies in Windows 95. Microsoft is, as
it should be, enhancing its products in response to perceived
consumer demand.
          In discussing Microsoft's intent, the DOJ apparently
fails to appreciate the inherent contradictions in its own
arguments. If a "browser" is limited to software used to view
HTML content on the Internet, as the DOJ suggests at one point
in its memorandum (see DOJ Mem. at 8), then such software can
pose no threat to a full-featured operating system like Windows
95. If, on the other hand, a "browser" encompasses the range of
traditional operating system services that Netscape claims will
be included in future versions of its products, as the DOJ
suggests at another point (cf. DOJ Mem. at 31-33), then it is
plain that the sharp distinction the DOJ seeks to draw between
"browsers" and "operating systems" is entirely artificial. To
the extent that Microsoft's competitors are developing
alternatives to Windows 95, which they are certainly entitled
to do, the Consent Decree allows Microsoft to enhance its
products in response to such competitive offerings.
          As the DOJ notes (see, e.g., DOJ Mem. at 32), strong
and well-financed competitors of Microsoft such as Sun
Microsystems and Netscape are seeking to render Windows 95 and
other Microsoft operating systems obsolete by creating so-
called "middleware" layers that obscure the underlying oper
ating system. Apparently in the DOJ's view, Microsoft should be
forced to sit on its hands while competitors attempt to take
away one of the most important aspects of Microsoft's business.
The antitrust laws require no such thing. See Olympia Equip.
Leasing Co. v. Western Union Tel. Co., 797 F.2d 370, 375 (7th
Cir. 1986) (even a firm with a large market share need not pull
its "competitive punches"), cert. denied, 480 U.S. 934 (1987).
Microsoft is free to do whatever it can to maintain the
popularity of its operating systems, so long as it does not
engage in predatory conduct. Adding new features and
functionality to operating systems to keep them competitive is
not predatory; it is standard business practice that benefits
          The antitrust laws exist to insure that companies
compete with all of the tools at their disposal-even if such
competition results in casualties because competitors do not or
cannot keep up. See Northeastern Tel. Co. v. AT&T, 651 F.2d 76,
93 (2d Cir. 1981), cert. denied, 455 U.S. 943 (1982). The
Consent Decree does not give the DOJ authority to regulate the
design of Microsoft's products merely because the DOJ is
concerned that Microsoft will be too successful. As the Supreme
Court observed in Spectrum Sports, Inc. v. McQuillan, 506 U.S.
447 (1993), precisely because it is "sometimes difficult to dis
tinguish robust competition from conduct with long-term anti
competitive effects," id. at 458-59, use of the antitrust laws
to moderate contests like the one currently raging among
Microsoft, Netscape and others-a contest that has provided
consumers with a steady stream of innovative technologies at
extremely attractive prices-should be avoided for fear that
such intervention will "chill competition rather than foster
it," id. at 458.
III. The DOJ Is Barred by the Doctrine of Equitable
     Estoppel From Challenging Microsoft's Incorporation
     of Internet-Related Technologies into Windows 95.

          Although the United States is not subject to the
defense of laches, see United States v. Summerlin, 310 U.S.
414, 416 (1940), the "principle of equitable estoppel applies
to government agencies, as well as private parties." Investors
Research Corp. v. SEC, 628 F.2d 168, 174 n.34 (D.C. Cir. 1980),
cert. denied, 449 U.S. 919 (1980). Under the doctrine of
equitable estoppel, a government agency is barred from bringing
an action if, despite knowledge of the defendant's conduct, it
delayed in commencing the action and the defendant reasonably
relied to its detriment on the agency's failure to act earlier.
See United States v. Georgia-Pacific Co., 421 F.2d 92, 97-98
(9th Cir. 1970); cf. United States v. Atlantic Refining Co.,
360 U.S. 19, 22-23 (1959) (government's acquiescence in
defendant's conduct precludes later attempt to interpret con
sent decree as prohibiting such conduct).
          The DOJ has known about Microsoft's inclusion of
Internet-related technologies in Windows 95 for more than three
years. At least by July 1994, when the DOJ and Microsoft were
negotiating the Consent Decree, the DOJ knew of Microsoft's
plans in this regard. (See Sinofsky Decl.  2, 4, 5, 7-10.)
The DOJ also knew that Windows 95 would include Internet-
related technologies during the fourteen months that the Tunney
Act proceeding was pending. (See Holley Aff.  3.) When the
Consent Decree was entered in August 1995, the DOJ knew that
Microsoft had already supplied a version of Windows 95 to compu
ter manufacturers that included an Internet Explorer element.
(See Sinofsky Decl.  16; Holley Aff.  3-5.) Finally, the DOJ
knew that Windows 95 included Internet-related technologies
under the rubric of Internet Explorer throughout the thirteen-
month investigation that resulted in the filing of the DOJ's
petition. (See Holley Aff.  6.)
          Despite this knowledge, the DOJ did not raise
Microsoft's incorporation of Internet-related technologies into
Windows 95 issue during the negotiations leading up to the
Consent Decree, abjured its present position during the Tunney
Act proceeding and failed to take any action challenging that
action until October 1997, i.e., until after Microsoft launched
IE4.0 on September 30, 1997. Meanwhile, Microsoft has expended
large sums of money developing successive versions of Internet
Explorer as an integral element of Windows 95 in reliance upon
its clear right to do so under the Consent Decree. In fact,
achieving the seamless integration of Internet-related
technologies into Windows 95 has been a principal focus of
Microsoft's operating system development efforts over the last
two years. (Cole Decl.  6.) Having delayed commencement of
these proceedings for so long, the DOJ should be barred from
now contending that the presence of Internet Explorer in
Windows 95 violates Section IV(E)(i) of the Consent Decree.
IV.  The DOJ's Challenge to Non-Disclosure Agreements
     to Which Microsoft Is a Party Should Be Dismissed.

          The DOJ challenges certain non-disclosure agreements
("NDAs") to which Microsoft is a party. (See DOJ Mem. at 36-
39.) As is typical of such agreements, the NDAs require each
party to give the other party notice and an opportunity to
object before disclosing confidential information to third
parties. The DOJ asserts, without foundation, that there is a
"substantial risk" that such NDAs "have chilled, and unless
terminated will continue to chill, disclosure of information
about possible unlawful Microsoft conduct by companies or indi
viduals." (Id. at 38.) At the October 27, 1997 scheduling
conference, the DOJ elaborated on its purported concern:
     The Government is in the midst of a much broader,
     ongoing investigation of a variety of Microsoft's
     conduct beyond the specific issues that are addressed
     here in this proceeding, some of which may raise
     further consent-decree issues and some of which may
     raise the potential for violations of the various
     antitrust laws. The investigation is ongoing, and the
     risk that people might be chilled from providing
     information about whatever sort of activity, as part
     of that investigation, I think, is very real.
(10/27/97 Tr. at 19.) According to the DOJ, the mere
possibility of a "chilling effect" makes it "an appropriate and
warranted use of the Court's power to order that [the NDAs] not
be enforced." (DOJ Mem. at 39; accord DOJ Pet.  32.)
          The DOJ's challenge to the NDAs is baseless and
should be dismissed in its entirety for the following reasons.
     A.   The DOJ Fails to Identify Any Provision of the
Consent Decree
          That the Non-Disclosure Agreements Allegedly Violate.

          As an initial matter, the DOJ's challenge to the NDAs
is not a proper subject of a civil contempt proceeding because
the DOJ does not contend that the NDAs violate any provision of
the Consent Decree. The only provisions of the Consent Decree
that mention NDAs address a completely different subject, i.e.,
agreements between Microsoft and third-party software
developers who receive a "pre-commercial release" of a Covered
Product. (See Consent Decree  II(8), IV(K).) The DOJ does
not-and cannot-suggest that Microsoft is not in full compliance
with those provisions.
          The DOJ instead bases its challenge to the NDAs on
Section V of the Consent Decree, which provides the DOJ with
various mechanisms to "determine and secure compliance" with
the Consent Decree. Contrary to the DOJ's suggestion, Section V
of the Consent Decree does not empower the Court, through civil
contempt proceedings, to void contracts to which Microsoft is a
party simply because the DOJ hypothesizes that abrogation of
such contracts might assist the DOJ in its "ongoing
investigation" of a "variety of Microsoft's conduct" for
possible "violations of the various antitrust laws." (10/27/97
Tr. at 19.)
          What the DOJ is really requesting here is a
modification of the Consent Decree based on its vague and
unsupported assertion that the NDAs are impeding the DOJ's
persistent investigations of Microsoft. Such a request has no
place in a civil contempt proceeding,10 and the relief sought is
unwarranted in any event.
     B.   The DOJ Has No Evidence That the Non-Disclosure
          Agreements Have Had Any "Chilling Effect."

          The DOJ does not cite any evidence, in either its
petition or its supporting memorandum, that NDAs to which
Microsoft is party have in fact prevented anyone from com
municating complaints about Microsoft to the DOJ. In fact, the
          Assistant Attorney General admitted during the press conference
announcing the commencement of this case that the DOJ has "no
way of knowing whether these agreements have deterred people
from voluntarily coming forward with information," and that the
DOJ has simply "heard this might be the case." (Hruska Aff. Ex.
D.) Such speculation is not an appropriate basis for seeking
modification of the Consent Decree, much less contempt
          Moreover, the DOJ's contention that the NDAs may be
having a chilling effect on potential complainants is belied by
the facts. Hostile commentary regarding Microsoft's purported
business practices abounds in the general media and the
software industry trade press, and that commentary shows no
signs of abating. Plainly, none of Microsoft's vocal critics,
who lambaste the company on a regular basis on any number of
topics, is the slightest bit intimidated by Microsoft.
Moreover, the only person in this country unaware that the DOJ
is fully receptive to complaints about Microsoft is Rip Van
Winkle. Two years ago, the New York Times quoted the former
Assistant Attorney General as saying that the DOJ was open for
business as a "Microsoft complaint center," Steve Lohr, Gates,
the Pragmatist, Walked Away, N.Y. Times, May 22, 1995, at D1
(Hruska Aff. Ex. E), and the DOJ has been busily engaged in
highly publicized investigations of Microsoft virtually on a
non-stop basis ever since.
     C.   The DOJ Has Sufficient Means at Its Disposal to
          Investigate Possible Violations of the Consent

          The DOJ's assertion that the wholesale abrogation of
routine confidentiality provisions is necessary to permit the
DOJ "to investigate whether Microsoft is complying with" the
Consent Decree (DOJ Mem. at 37) cannot withstand scrutiny. The
DOJ has broad powers under the existing compliance provisions
of the Consent Decree to obtain information from Microsoft
about the conduct of its business. The DOJ also has the ability
to issue compulsory process to obtain whatever information it
needs to investigate Microsoft's business practices. Moreover,
there is no reason why third parties are required to disclose
Microsoft's confidential information to lodge a complaint about
Microsoft with the DOJ. The DOJ is sophisticated enough to know
how to issue Civil Investigative Demands to obtain evidence
relating to such complaints.
          In short, the DOJ has made no showing that the
Consent Decree should be modified to expand the DOJ's already
extensive powers to compel production of relevant information.
In the absence of such a showing, the DOJ's challenge to the
NDAs smacks of an effort to tar Microsoft with the insinuation
that it has engaged in obstruction of justice. The DOJ should
not engage in that sort of smear campaign, particularly when
its motivation is so transparent.
     D.   Microsoft Has Disavowed Any Interpretation of
          the Non-Disclosure Agreements That the DOJ
          Claims Might Exert a "Chilling Effect."

          From Microsoft's perspective, the DOJ's challenge to
the NDAs came entirely out of the blue. On both occasions when
the DOJ asked Microsoft to disclaim any interpretation of the
NDAs that might interfere with pending DOJ investigations,
Microsoft readily complied. (See, e.g., DOJ Pet. Ex. 32.)
Microsoft had no inkling that the DOJ was unsatisfied with
those disclaimers until one week before the DOJ filed its
petition. The DOJ admits that Microsoft informed the DOJ four
years ago and again recently that-in view of the protections
afforded confidential information subpoenaed by the DOJ under
federal law-Microsoft would disclaim any interpretation of the
NDAs that required other parties to those agreements to inform
Microsoft of their dealings with the DOJ. (See DOJ Mem. at 38.)
The DOJ now suggests, however, that those statements are
insufficient because, although the DOJ can inform and has
informed numerous companies of Microsoft's position, there is a
possibility that some company or individual may elect not to
approach the DOJ for fear of violating an NDA with Microsoft.
(See id. at 38-39.) As noted above, that supposition is
unsupported by any evidence. Moreover, the enormous publicity
surrounding this case guarantees that the entire software
industry is aware of Microsoft's benign interpretation of the
     E.   The Non-Disclosure Agreements in Question Are
          Commonplace in Commercial Transactions.

          The sweeping relief sought by the DOJ-the abrogation
of all NDAs to which Microsoft is a party-would be grossly
unfair to both Microsoft and the other parties to those
agreements. Contracts used in American business routinely
provide that one party will not disclose confidential
information without giving the party who provided such infor
mation prior notice and an opportunity to object. Absent such a
provision, a party would not even know that its confidential
information was at risk until after it had been disclosed, if
it ever knew. Advance notice gives the party whose confidential
information is imperiled an opportunity to object to its
disclosure or take reasonable steps, such as seeking the entry
of a protective order, to safeguard the confidentiality of that
          Literally thousands of contracts in every conceivable
industry contain similar non-disclosure provisions, so much so
that the language challenged by the DOJ has become boilerplate.
In fact, treatises and form books instruct lawyers to use such
language. See, e.g., Gregory J. Battersby & Charles W. Grimes,
Multimedia & Technology Licensing Agreements: Forms and
Commentary 2-12 (1997); Henry Beck, Model Software License
Provisions, in How to Draft, Negotiate and Enforce Licensing
Agreements 299, 326 (Practicing Law Institute, 1997); Robert
Goldscheider, Eckstrom's Licensing in Foreign and Domestic
Operations: The Forms and Substance of Licensing 2-284 to 2-285
(1997); id. at CL7-16; 3 Melvin F. Jagar, Trade Secret Law at
App. C1-5 (1997); 1 Richard Raysman & Peter Brown, Computer
Law: Drafting and Negotiating Forms and Agreements at 6-58
(1997) (Hruska Aff. Exs. F-J). Such provisions are particularly
important, however, in an intellectual property business like
software, where the principal assets of a company are not
factories and equipment, but ideas. Because ideas are extremely
easy to misappropriate, software developers must take special
precautions to preserve the confidentiality of their valuable
proprietary information.
          The DOJ was well aware of the existence of NDAs at
the time the Consent Decree was signed, but the DOJ never
suggested that they had the deleterious effect it now posits.
Against that background, the DOJ's thinly-veiled suggestion
that the NDAs are part of a plot by Microsoft to prevent the
DOJ from investigating Microsoft's business practices is both
preposterous and deeply offensive.
V.   Microsoft Cannot Be Subjected to Contempt
     Sanctions Without a Full Evidentiary Hearing.

          In response to Microsoft's proposed pretrial
procedure contemplating discovery and an evidentiary hearing,
the DOJ took the position at the October 27, 1997 scheduling
conference that "this is a very straightforward consent decree
violation matter, not a big stand-alone antitrust case,"
thereby implying that the DOJ's petition could be treated like
a routine motion and disposed of on the papers. (10/27/97 Tr.
at 2.) In Microsoft's view, the claims in the DOJ's petition
are completely unsubstantiated, and thus the Court can simply
deny the DOJ's petition at this juncture.11 However, because
Microsoft disagrees with a great many factual assertions
contained in the DOJ's petition-assertions based largely on
inadmissible hearsay-the finding of contempt sought by the DOJ
cannot be made without an evidentiary hearing. See Pennwalt
Corp. v. Durand-Wayland, Inc., 708 F.2d 492, 495 (9th Cir.
1983); Sanders v. Monsanto Co., 574 F.2d 198, 200 (5th Cir.
          If the Court decides that the DOJ's petition warrants
further proceedings, Microsoft requests that the Court adopt
the proposed schedule set out at pages 8 and 9 of the
Memorandum of Microsoft Corporation in Advance of the October
27, 1997 Scheduling Conference Before the Court. That schedule
provides for appropriate discovery and motion practice leading
up to an evidentiary hearing on the merits of the DOJ's claims.
          The DOJ cannot identify any exigent circumstances
that warrant a departure from established rules of procedure or
that support the DOJ's request for entry of a contempt finding
on a summary basis. As explained above, the DOJ knew that
Microsoft was incorporating Internet-related technologies in
Windows 95 before the negotiations leading up to the Consent
Decree began. (See pages 6-7, supra.) Moreover, the DOJ was
intimately familiar with Microsoft's license agreements with
computer manufacturers, and thus knew that such computer manu
facturers are not permitted to delete any element of Windows
95, including Internet Explorer. The DOJ likewise knew that
Microsoft had provided interim releases of Windows 95 to
computer manufacturers during 1995 and 1996, called Service
Release 1 and OEM Service Release 2, which included updated
          versions of Internet Explorer (along with numerous other
improvements to the operating system). (See Chase Decl.  4-
5.) Lastly, Microsoft demonstrated a beta test copy of IE4.0 to
the DOJ in November 1996 and explained in great detail its
efforts to upgrade the Internet Explorer element of Windows 95
and distribute it as part of the operating system through
computer manufacturers. (Holley Aff.  6.)
          The only circumstance that changed in recent days was
Microsoft's launch of IE4.0 on September 30, 1997. To the DOJ's
apparent chagrin, IE4.0 has been met with rave reviews, causing
commentators to predict that Windows 95, with its updated
Internet Explorer element, will soon be more popular than
Netscape's Navigator as a means of securing information from
the Internet. Consumers appear to like IE4.0 very much, having
downloaded more than one million copies of it during the first
48 hours it was available on the Internet. (Chase Decl.  28.)
          Although the DOJ professes not to be "taking sides"
in a competitive battle that continues to provide clear
benefits to consumers (see DOJ Mem. at 46), that is precisely
what the DOJ is doing in requesting that the Court order
Microsoft to remove Internet-related technologies from Windows
95. The DOJ's request represents an extraordinary departure
from the antitrust laws, and it should not be entertained
without the most careful consideration of the potentially disas
trous consequences such governmental interference in product
design decisions could have on one the country's most important
VI.  The DOJ Should Be Required to Respect the Confidential
     Nature of Microsoft's Valuable Proprietary Information.

          The DOJ has already demonstrated a shocking disregard
for the confidentiality of documents subpoenaed from Microsoft
in the course of the DOJ's investigation. The Court should
insist that the DOJ refrain from inflicting further injury on
Microsoft by disclosing additional confidential information as
part of the DOJ's publicity campaign. If the DOJ had a
defensible legal position in this case, it would be pressing
that position in court, not on the television news.
     A.   The DOJ Improperly Disclosed Confidential
          Microsoft Documents Before This Court Was Given
          Any Opportunity to Enter a Protective Order.

          During the course of the DOJ's investigation,
Microsoft produced thousands of pages of documents to the DOJ,
many of which contain highly sensitive business secrets. Those
documents were produced both under the compliance provisions of
the Consent Decree, as well as in response to Civil
Investigative Demands ("CIDs") issued by the DOJ under the
Antitrust Civil Process Act, 15 U.S.C.  1311-14 (the "Act").
Microsoft plainly marked documents that contained business
secrets "Confidential" to alert the DOJ that those documents
should be given confidential treatment. In addition, Microsoft
sent documents to the DOJ under cover of letters expressly
requesting that the DOJ give those documents the fullest
possible protections available under the law.
          The DOJ does not deny that it was on notice that
documents produced by Microsoft "include proprietary
information," and that Microsoft asked the DOJ to give those
documents "the highest level of confidentiality protection
available under compulsory process." (DOJ Sealing Motion at 2.)
Nevertheless, the DOJ decided-without giving Microsoft any
prior notice and thereby depriving the Court of any opportunity
to consider the matter-to include various confidential
Microsoft documents in the publicly filed exhibits in support
of its petition. The DOJ seeks to justify such disregard of its
statutory obligations to maintain the confidentiality of
Microsoft's confidential information based on its entirely
unexplained conclusion that internal Microsoft documents
reflecting communications among Microsoft's most senior
executives about issues of strategic importance "do not appear
to have significant potential to contain confidential business
information." (DOJ Sealing Motion at 3.) That conclusion-with
which Microsoft vehemently disagrees-is not one the DOJ was
entitled to make.
          At the October 27, 1997 scheduling conference, the
DOJ took the position that the Act imposes no "requirement for
either authorization from the Court or a disclosure to defen
dants" before the DOJ publicly discloses confidential
information obtained by means of compulsory process "in a legal
proceeding involving the defendant." (10/27/97 Tr. at 17.) That
interpretation of the Act-which creates a gaping hole in its
confidentiality protections-would give the DOJ absolute
discretion to disclose extremely confidential information
obtained from CID recipients pursuant to compulsory process.
Such unreviewable discretion is an invitation to abuse, and is
plainly not what Congress had in mind when it amended the Act
in1976 to increase the protections available to CID recipients.
See H.R. Rep. No. 94-1343, 94th Cong., 2d Sess. at 7-8 (1976)
("House Report"), reprinted in 1976 U.S.C.C.A.N. 2596, 2602.
          It is beyond dispute that the Act prevents the DOJ
custodian entrusted with confidential material produced in
response to a CID from disclosing such information "without the
consent of the person who produced such material." 15 U.S.C.
 1313(c)(3). In a subsequent subsection, the Act provides that
when a DOJ lawyer is designated to appear before a court in a
proceeding, the custodian may deliver to that lawyer "for
official use" in connection with the proceeding whatever
material produced in response to a CID that the lawyer "deter
mines to be required." 15 U.S.C.  1313(d)(1). The DOJ, without
citation to any authority, takes the astonishing position that
this provision gives the DOJ carte blanche to place whatever
confidential information it likes on the public record,
presumably including trade secrets like the formula for Coca-
Cola worth literally billions of dollars. The DOJ's position is
grossly overreaching and contrary to both the legislative
history of the Act and cases interpreting its provisions.
          The debate surrounding the 1976 amendments to the Act
clearly demonstrates that the Act requires the DOJ to accord
"strict confidentiality" to all confidential material produced
in response to a CID "in order to protect the reputation and
standing of witnesses, as well as their trade secrets and
proprietary financial data." House Report at 3, reprinted in
1976 U.S.C.C.A.N. at 2597 (emphasis added). The notion that the
DOJ's obligation to preserve the confidentiality of such infor
mation terminates merely because the DOJ decides to initiate a
proceeding makes no sense and is contradicted by the
legislative history. Taking trade secrets as an example, the
House Report expressly states that "protective orders are
available to guard against their prejudicial disclosure in any
subsequent proceedings." House Report at 10, reprinted in 1976
U.S.C.C.A.N. at 2604 (emphasis added). Of course, such pro
tective orders are not "available" if the DOJ denies the CID
recipient any opportunity to seek the intervention of the Court
before a "prejudicial disclosure" occurs, which is precisely
what happened here.
          In analogous circumstances, courts have entered
protective orders requiring the DOJ to give CID recipients
prior notice before using confidential information in deposi
tions of third parties. As the DOJ itself has noted, the court
in Aluminum Co. of Am. v. U.S. Dep't of Justice, 444 F. Supp.
1342 (D.D.C. 1978), issued a protective order requiring the DOJ
to give the defendant prior notice before disclosing
confidential documents to third parties in depositions,
including information as to whether the third-party was a
customer or a competitor. See Department of Justice, Antitrust
Division Manual III-35 (2d ed. 1987), reprinted in
6A Department of Justice Manual  7-715 (1997). Such protective
orders are appropriate to guard against "the danger that the
Government may show the [confidential] materials to strangers."
United States v. GAF Corp., 596 F.2d 10, 15 (2d Cir. 1979);
accord Finnell v. U.S. Dep't of Justice, 535 F. Supp 410, 413
(D. Kan. 1982). Here, of course, the DOJ did not just show
Microsoft's internal planning documents to a few customers and
competitors; instead, the DOJ disclosed the documents to the
world, and ironically large portions of them are now available
for anyone to read on the Internet itself. If the DOJ is not
free to use confidential information obtained pursuant to
compulsory process in isolated depositions, then it is patently
absurd to suggest that the DOJ is free to disclose publicly
such confidential information before a CID recipient has been
given a chance to seek a protective order.
          Even the DOJ seems to appreciate the serious harm
that is an inevitable consequence of its extreme position,
because the DOJ filed certain confidential Microsoft documents
under seal in a so-called "Confidential Appendix." Of course,
that action only points up the deficiencies in the DOJ's
position. In the DOJ's view, it-and it alone-gets to decide
which of Microsoft's confidential documents is "truly deserv
ing" of confidential treatment. Such decisions, made by persons
who do not understand Microsoft's business and who are thus in
no position to assess the competitive significance of
particular documents, is inherently arbitrary. More
importantly, the process is not subject to any meaningful
judicial review, subjecting private parties to grievous harm
for which there is no effective recourse.
          It is no secret why the DOJ did not come to this
Court before placing confidential Microsoft documents in the
public record. Within minutes after the DOJ filed its petition,
the Assistant Attorney General was addressing a press
conference and quoting liberally from one of the documents that
Microsoft had designated as confidential. (Hruska Aff. Ex. D.)
Such grandstanding at Microsoft's expense would not have been
possible if the Court had entered a protective order to prevent
the DOJ from violating Microsoft's rights under the Act. The
Court should enter appropriate orders to insure that the DOJ
does not further trample on Microsoft's rights under the Act by
publicly disclosing documents that should remain confidential.
     B.   The Confidential Microsoft Documents Filed Under
          Seal by the DOJ Should Remain Under Seal.

          The DOJ's intuition that the Microsoft documents
included in its Confidential Appendix "potentially contain[ ]
significant confidential or commercially sensitive business
information" is absolutely correct. (DOJ Sealing Motion at 2.)
Exhibits 3 and 4 contain detailed financial information that
Microsoft maintains in strictest confidence and that its
competitors would find invaluable. Exhibits 13 and 14 are
contracts between Microsoft and major computer manufacturers.
The other parties to those contracts have a keen interest in
keeping them confidential vis--vis their many aggressive
competitors, who would be more than anxious to know the details
of their contractual arrangements with Microsoft. Exhibit 28 is
a key strategy document that describes in detail Microsoft's
current marketing plans for Internet-related technologies.
Disclosure of this document to Netscape and other Microsoft
competitors would seriously compromise Microsoft's business in
this area.
          As the DOJ itself acknowledged at the October 27,
1997 scheduling conference, the documents contained in the
Confidential Appendix are precisely "the kinds of things that
might present a problem if they were disclosed" (10/27/97 Tr.
at 17), and Microsoft supports the Court's suggestion that the
burden should be on the DOJ to "show a basis for their being
unsealed." (10/27/97 Tr. at 15.) The DOJ has made no such
showing. As a result, Microsoft respectfully requests that the
documents contained in the DOJ's Confidential Appendix remain
under seal.
          The DOJ has instituted a contempt proceeding that
challenges conduct by Microsoft that (i) was known to the DOJ
when the Consent Decree was signed, (ii) was explicitly
contemplated by the Consent Decree, and (iii) is expressly
permitted under the plain language of the Consent Decree. In
addition, during the Tunney Act proceeding, the DOJ took the
position that such conduct was permissible under the Consent
Decree and that any effort to enjoin such conduct broadly would
be contrary to the public interest. In short, there is
absolutely no basis for the relief the DOJ is requesting, and
its petition should be dismissed.

Dated:    New York, New York
     November 10, 1997

                              Respectfully submitted,

                              John L. Warden
                              Richard J. Urowsky
                              Steven L. Holley
                              Richard C. Pepperman, II
                              Andrew C. Hruska
                              SULLIVAN & CROMWELL
                              125 Broad Street
                              New York, New York 10004
                              (212) 558-4000

                              James R. Weiss
                              PRESTON GATES ELLIS &
                                 ROUVELAS MEEDS
                              1735 New York Avenue, N.W.
                              Washington, D.C. 20006
                              (202) 628-1700

                              William H. Neukom
                              Thomas W. Burt
                              David A. Heiner, Jr.
                              Steven J. Aeschbacher
                              MICROSOFT CORPORATION
                              Law and Corporate Affairs
                              One Microsoft Way
                              Redmond, Washington 98052
                              (425) 936-8080

                              Counsel for Respondent
                                 Microsoft Corporation
                          CERTIFICATE OF SERVICE
          I, Richard C. Pepperman, II, hereby certify that on this the 10th
day of November 1997, I caused true and correct copies of the foregoing
Memorandum in Opposition to the Petition of the United States for an Order
to Show Cause Why Respondent Microsoft Corporation Should Not Be Found In
Civil Contempt, together with various supporting affidavits and
declarations, to be served by hand upon:

               A. Douglas Melamed, Esq.
               Principal Deputy Assistant Attorney General
               Antitrust Division
               U.S. Department of Justice
               10th Street & Constitution Avenue, N.W.
               Washington, D.C. 20530

and by overnight courier on:

               Phillip R. Malone, Esq.
               Antitrust Division
               U.S. Department of Justice
               450 Golden Gate Avenue
               San Francisco, California 94102.

                                        Richard C. Pepperman, II

EDUPAGE STR Focus        Keeping the users informed


Mac Network Computer
Texas Sues Microsoft Over
Nondisclosure Issues
Japan Says Unfair U.S. Pressure
Nixed Supercomputer Deal
Gerstner To Wall Street: Get Onto
The Net
Power/Apple Merger In Low Gear
Graves Forms Learning Technology
Research Institute
Cyberspace Advertising Soars
Senators Want To Know Price Tag Of
Year 2000 Glitch
Conference Webcasts -- By Popular
WorldCom Wins MCI In Bidding War
Apple To Sell Via Internet
Report On Technology In The Schools
Intel Eyes Cheap PC Market
Intel Confirms Latest Pentium Flaw
Microsoft Asks Judge To Dismiss
Antitrust Lawsuit
Internet Fax Pages Pegged At 5.6
Billion By 2000
IBM Introduces High-Capacity Drive
New Technology Creates New
Lawsuit Threatens NGI Funding
Communications Decency Act -- It's
Digital Signature Legislation
Internet Telephony's Advantages
ISP Numbers Still Growing
Company Marketing Pentium Bug Fix
Nader Joins Attack On Microsoft
GTE:  The  Jilted Suitor That Still
Pines For MCI

                           MAC NETWORK COMPUTER

Apple will make new-product announcements that include a stripped down
"network computer" called Macintosh NC, new models at the mid-range and
high-end computer line, and a new PowerBook laptop.  The Mac NC, which is
expected to ship in the first half of 1998, will use  database-server
software from Oracle. Apple is also planning to begin selling its computers
via the World Wide Web.  (Wall Street Journal 7 Nov 97)


The state of Texas -- home to Compaq and Dell, two of the world's largest
PC manufacturers -- is  suing Microsoft for interfering with the state's
antitrust investigation of Microsoft, and is angry  that Microsoft is not
releasing manufacturers from the "nondisclosure" clauses in their licensing
contracts.  The state attorney general says:  "Microsoft's overwhelming
market dominance intimidates computer markers whose very survival depends
on having access to Microsoft's operating system software, which runs more
than 90% of all personal computers sold today.  Manufacturers are afraid to
come forward with information because they can not do so confidentially."
The Microsoft response:  "We remain willing to discuss any accommodations
that will adequately take into account Microsoft's concerns over the
potential disclosure of its property... In the software industry, your code
and the terms under which you license that code to others - those are the
critical assets that any company has.  We don't have tangible property.  We
don't have vast tracks of natural resources.  What we have are ideas,
intellectual property, and terms that we license.  So making sure that
there is adequate protection to that is very important."  (New York Times 8
Nov 97)


NEC computer corporation in Japan has asked the Court of International
Trade to investigate  whether pressure from the U.S. Commerce Department
resulted in the failure of an agreement by  the U.S. University Corporation
for Atmospheric Research to purchase a $35.2 million NEC  supercomputer.
According to NEC, the pressure was intended to steer the purchase toward an
American company, the Cray Research manufacturing unit of Silicon Graphics,
Inc.  (AP 7 Nov 97)


IBM chief executive Louis V. Gerstner Jr. told the attendees of a
conference of security analysts:  "Your entire industry will move to the
Net.  Not just the discounters;  all of you will ... It's going to be a
very bold move for any of the full-service brokers to break with tradition
and throw themselves into direct online trading.  But every day, they have
to listen as their discount cousins  tout low rates and 'round-the-clock
access.  I hope we'd all agree that the worst possible answer is to do
nothing."  (Wall Street Journal 7 Nov 97)

                      POWER/APPLE MERGER IN LOW GEAR

The merger of former Macintosh clonemaker Power Computing into Apple
Computer has been delayed by a federal antitrust review that a Power
Computing attorney thinks is just a ploy by U.S. attorneys to get evidence
for their anti-trust investigation of Microsoft. (AP 6 Nov 97)


Former Educom visiting scholar William H. Graves has left the University of
North Carolina at Chapel-Hill, where he founded the Institute for Academic
Technology, and has created the Learning Technology Research Institute, a
nonprofit organization focused on software tools and  instructional
methodologies.  The new Institute will be located near the Research
Triangle Park  area of North Carolina, and will have a strategic business
relationship  with Collegis, a provider of technology solutions to the
higher education market.  (UNC News 3 Nov 97)


The Internet Advertising Bureau says that Internet advertising revenue for
the first six months of 1997 jumped to $343.9 million, an increase of 322%
from the year-earlier period.   The IAB  survey also found that 86% of
advertisers think that pricing based on the conventional system of cost per
thousand is the best model for Internet advertising. (Toronto Financial
Post 4 Nov 97)


Senators Alfonse D'Amato (R., NY) and Bob Bennett (R., Utah) want to
require U.S. companies to tell their shareholders how much they will have
to pay to deal with the "Year 2000 Problem" that will cause old software
coded with 2-digit "year" fields to miscalculate dates.  To avert the
problem, the old software needs to be recoded, at a national cost that the
Gartner Group estimates to be $600 billion.  Bennett says:  "Every
potential investor has the right those facts, and the burden must be on the
corporation to disclose them."  (USA Today 7 Nov 97)


Because of the great popularity of the webcasts offered during the EDUCOM97
conference,  Educom will maintain the keynotes for viewing "on-demand" now
that EDUCOM97 is history.   Viewers must have the RealMedia Player, version
5.0, available from The keynote speakers were Eli Noam,
Sherri Turkle, and John Perry Barlow. Webcast site is


WorldCom's offer of $51 a share, or $37 billion in WorldCom stock, has
clinched the deal for its  acquisition of MCI Communications, bringing to
an end speculation over which of the three suitors vying for hand of the
long-distance phone company would win out.  British Telecommunications had
early on declared its intention to purchase MCI, in which it already owned
a 20% stake, and GTE had recently presented a $40-a-share cash offer.  If
the deal goes  through, MCI-WorldCom, as the combined telecom titan will be
known, will be a major player in the Internet, long-distance, and
networking services arenas.  (Wall Street Journal 11 Nov 97)

                        APPLE TO SELL VIA INTERNET

Apple will begin selling its systems over the Internet, allowing purchasers
to have systems built to their individual specifications and delivered by
UPS or Airborne.  Interim chief executive  officer Steve Jobs says that
Apple's newest computers will use the new PowerPC G3 chip developed by
Apple's alliance with Motorola and IBM.  Jobs surprised industry analysts
by not  announcing a rumored deal with Oracle to develop stripped-down
"network computers," with Oracle offering the server software to support
them. (New York Times 11 Nov 97)


A report in Education Week magazine based on survey data collected by
Market Data Retrieval on 55,000 public schools nationwide says that about
18% of those schools met its criteria for being considered a
"high-technology school":  Internet access, a computer network system, and
a better-than-national average ratio of students to computers and CD-ROM
drives."  The states  with the best averages were Alaska, Minnesota,
Nebraska, North Dakota, and Wyoming.  The study concluded, however, that
was very little research available on how computers and other kinds of
technology are actually being used by students, and what effect, if any,
this technology is having on student achievement.  (New York Times 11 Nov

                        INTEL EYES CHEAP PC MARKET

Intel, in a strategic about-face, says it will begin manufacturing
specialized chips that run PCs costing less than $1,000 and other
information appliances.  "What it means is we will have multiple products
in multiple segments under one brand," says Intel CEO Andy Grove.  Intel
previously had focused on building ever-more-powerful microprocessors for
high-end PCs, but  now says it can produce variants of its Pentium II chip
that can be incorporated into much less expensive machines.  (Wall Street
Journal 10 Nov 97)


An Intel spokesman has confirmed that a flaw in the company's Pentium and
Pentium/MMX processors has been discovered.  The "F0 bug," as the glitch
has been dubbed, involves a  sequence of illegal opcodes -- instructions
not normally intended for use with the Intel chips.   "These opcodes are
supposed to create an exception, where the processor raises a flag telling
the program that something's wrong," says one software expert.  "This
particular sequence, instead,  causes a loop and locks up the processor."
Users are unlikely to run into the problematic sequence by accident, he
adds, saying  it is more likely that the flaw was found by an Intel
competitor looking for undocumented instructions on the chip.  (EE Times 10
Nov 97)


Microsoft wants a federal judge to dismiss antitrust lawsuit filed recently
by the Justice  Department;  the lawsuit accuses the company of violating
antitrust laws by incorporating its  Explorer software (for browsing the
Web, handling e-mail, and performing other functions) into  Microsoft's
Windows 95 operating systems rather than competing strictly one-to-one with
standalone  software (such as Netscape). Microsoft argues that the
government has known for  three years that Microsoft considered the
software in question to be part of its operating system.  (AP 11 Nov 97)


A Dataquest study predicts that the number of pages faxed through the
Internet rather than over  phone lines will reach 5.6 billion in 2000, up
from 44 million this year.  The migration from phone lines to the Internet
will mean cost savings for businesses and lost revenues for long-distance
telephone companies.  (Investor's Business Daily 11 Nov 97)


IBM will begin shipping two new drives that use its breakthrough Giant
Magnetoresistive  (GMR) heads technology next month.  The Deskstar 16GP
will have a storage capacity of  between 3.2 gigabytes and 16.8 gigabytes,
and the second drive -- the Deskstar 14GXP -- will  provide up to 14.4
gigabytes of storage.  PCs with the new drives will be available in early
1998.  The company eventually plans to make the GMR technology available in
devices ranging from  notebooks to IBM subsystems.  "There is no reason why
we wouldn't incorporate these advances  into other systems," says an IBM
VP.  "This announcement is aimed at the desktop arena, but the entire
family of hard disk drives will be incorporated into other products."
(InternetWeek 10 Nov 97)


The advent of new information technologies is pitting previously compatible
businesses against  each other, according to a survey conducted by Louis
Harris Associates on behalf of Coopers &  Lybrand.  Examples of new rivals,
all competing for a part of the information industry pie, include software
developers, systems integrators, information providers and phone companies.
(Investor's Business Daily 10 Nov 97)

                       LAWSUIT THREATENS NGI FUNDING

A lawsuit filed last month by a group of companies against Network
Solutions and the National Science Foundation could prohibit the NSF from
spending its share of the money allocated to the  government's Next
Generation Internet project.  Congress recently authorized NSF to spend $23
million on the high-speed network, derived from a trust fund run by Network
Solutions to promote the Internet's "preservation and enhancement."  The
company  contributes about a third  of all Internet domain name
registration fees to the fund.  A lawyer for the plaintiffs says the  money
already in the trust fund is now "subject to the jurisdiction of the
federal court and must  not be touched," but an NSF networking official
told Senators last week that the money had  already been transferred to
NSF's account.  NSF's general counsel says "at this time, we plan to
follow Congress's directive."  (Chronicle for Higher Education 14 Nov 97)


Senator Dan Coates (R-Indiana) has filed a bill to substitute for the
Communications Decency  Act (CDA) that the U.S. Supreme Court declared
unconstitutional last summer.  The new bill is more narrowly focused than
the CDA, and is targeted strictly at impeding the flow of commercial
pornography on the World Wide Web by requiring that commercial distributors
of material that's  "harmful to minors" restrict access by insisting on
getting credit cards with personal identification numbers.  Civil
libertarian Daniel Weitzner of the Center for Democracy and    Technology
says:"I am very willing to recognize that there is a real problem and
parents have real  concerns.  But this continued reliance on old-style
censorship is not going to protect kids and will chill the expression of
legitimate individuals and businesses.  The Internet is coming together to
address these problems ... It is premature to look for a legislative
approach."  Coates's response:  "Every concern was given to tailor this
legislation very specifically to the court's ruling.   Although I think
that many opponents of the CDA, who are feeling very heady, want to call it
CDA 2, it is really very different.  CDA cast a very wide net.  This
legislation hunts with a rifle.  It goes after one specific area."  (New
York Times 13 Nov 97)


A bill introduced in the House Wednesday would make government forms
available online and  allow citizens to use digital signatures to sign
those forms.  "By encouraging the broader use of  digital signatures, it
would also encourage the development of electronic commerce and the
technology associated with it," says Rep. Anna Eshoo (D-Calif.), the chief
sponsor of the  Electronic Commerce Enhancement Act.  Currently, only some
government documents are available electronically and most government
agencies do not accept digital signatures.  (EE Times 12 Nov 97)


The advantages that Internet telephony holds over regular wireline
telephony go far beyond just  offering price breaks.  Using the Internet
rather than conventional circuit-switched networks also  provides a
significant technological edge:  "Originally, it seemed that the
opportunity for Internet telephony was in arbitraging around
regulator-imposed access  charges, and that the window of  opportunity
would close as prices came down," says a senior manager at Andersen
Consulting.   "Now, we find that Internet telephony has a long-term cost
advantage, based on much lower equipment costs.  As players from the
computer industry become involved,  they're bringing a  view on costs from
their own, highly competitive business.  We're basically talking about a
communications network built on computer industry principles, not telco
principles."  ( Nov 97)

                         ISP NUMBERS STILL GROWING

Despite predictions of an imminent shakeout in the Internet service
provider (ISP) market, the  number of providers has almost tripled in the
past 18 months to 4,000.  Industry observers say the  increase is fueled by
large increases in online users:  "Access revenues will be growing rapidly
because more people are getting online," says a senior analyst with
IDC/Link.  The number of online households is expected to rise to around 40
million by  2001, up from 13 million in 1996.  (Investor's Business Daily
13 Nov 97)


A small company called Freedom Fighter says it has developed a fix for the
latest Pentium chip flaw.  The F0 Fighter software is designed to work with
Windows 95 or NT operating systems  and detects and deletes the
problem-causing code before it causes any damage.  Meanwhile, Intel  says
it is still working on a fix, and expects to have some answers early next
week. (InfoWorld Electric 12 Nov 97)


A conference put on by consumer advocate Ralph Nader is taking a look at
the way Microsoft,  "not content with its enormous market share in PC
software, wants to hold our hand as we  navigate the information highway,
and to push us -- not so subtly -- toward its own partners and
subsidiaries."  One of the conference speakers is Microsoft-hater Scott
McNealy of Sun, whose  talk is entitled "No One Should Own The Alphabet."
Microsoft refused an invitation to the conference, saying that it was
stacked with rivals.  Microsoft defender Tony Williams says:   "Nader
doesn't speak for consumers.  He speaks for Nader.  But certainly he is one
who is very media savvy and has an ability to cause heartburn to American
corporations."   (AP 12 Nov 97)


Although its $40-a-share bid to buy MCI was shunted aside in favor of
WorldCom's $37 billion $51-a-share bid, GTE hasn't given up.  Apparently
encouraged by a decline in WorldCom's stock, a GTE executive says that the
original offer "is still on the table. We continue to believe a merger
with MCI is a good strategic fit... but we also have an obligation not to
overpay for these or any  other assets."  Industry analysts say that the
WorldCom-MCI deal is a long way from closing.  (Wall Street Journal 13 Nov

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               Who Decides What Innovations Go Into Your PC?

By Bill Gates
Chairman and CEO, Microsoft Corporation

If you asked customers who they would rather have deciding what innovations
go into their computer - the government or software companies - the answer
would be clear. They'd want the decision left to the marketplace, with
competition driving improvements.

This is the question at the center of the Justice Department's recent
action aimed at forcing Microsoft to remove Internet Explorer from Windows.
In this instance, consumer benefits seem to be less important than the
complaints of a handful of our competitors who want the government to help
them compete - by preventing Microsoft from enhancing its products.

The Justice Department's position is equivalent to the government telling
personal computer manufacturers that they can't include word processing,
spreadsheet or email functionality in PCs because it would be unfair to
typewriter, calculator and courier companies.

Microsoft and the DOJ anticipated this very issue three years ago when we
signed a consent decree that specifically allowed Microsoft to develop
"integrated software products." At the time, the DOJ was fully aware that
we were planning to integrate Internet capabilities into the forthcoming
Windows 95 operating system.

Microsoft has a long history of improving its operating system products and
building in new functionality, just as Apple, IBM, Sun, Novell and others
have. These features have included such things as a graphical user
interface, memory management, type fonts, disk compression and networking.
Every one of these was available first as a separate offering but
eventually was integrated to meet customer demand for greater functionality
in Windows.

Supporting Internet browsing in Windows is a logical, incremental step in
the evolution of the operating system. For 15 years Microsoft operating
systems have included as core technology the capacity to locate and use
information from local sources - such as the hard drive or the CD drive -
as well as remote sources, such as local area networks. Windows 95 simply
permits users to get information from the newest remote source - the

When a PC manufacturer like Compaq, Dell or Gateway chooses to license
Windows it agrees to ship all of the operating system, including Internet
Explorer. Installing Windows 95 does not prevent OEMs from also shipping
competing browser technology, such as Netscape's Navigator, and many
hardware manufacturers do just that. PC manufacturers are free to
differentiate their products from one another in many ways -- including by
adding their choice of software products -- but modifying Windows is not
one of them.

Internet Explorer is much more than just a "web browser." It provides
important functionality that is the basis for other companies' new software
products. Without a uniform Windows installation, end users could not be
sure of the performance of the integrated operating system and Microsoft
could not stand behind its product. Furthermore, Windows would become
Balkanized like the many incompatible versions of UNIX. This would
eventually drive prices for PC products higher as software developers and
hardware manufacturers would have to develop and test their products for
all the different versions of Windows. And innovation would slow because
developers would be reluctant to write new programs if they couldn't be
sure that new features would be present on all Windows PCs.   I doubt The
New York Times would let a newsstand tear out the business section of the
paper just because it wanted to sell more Wall Street Journals. Or that the
Ford Motor Company would let its dealers replace a Ford engine with a
Toyota engine. Microsoft has the right to preserve a consistent customer
experience when using Windows.

Curiously, while the DOJ is claiming that Windows should not include
browsing capabilities, Microsoft competitors are busy incorporating basic
operating system services such as printing and running applications into
their browsers, making them nothing less than_an operating system. If our
competitors can integrate an operating system into their browsers in the
name of competition, why should Microsoft be forbidden to integrate a
browser into its operating system? Enhancing Windows to support Internet
standards more fully is not a frill - it is critical for Windows to stay
competitive. Telling Microsoft that we can't improve Windows is telling us
we can't compete.

Since its inception more than 20 year ago, the PC industry has grown
incredibly rapidly and provided real benefits for customers without the
government regulating product designs. Creativity and entrepreneurship are
flourishing as hundreds of new software companies and thousands of new
products come to market each year.

Microsoft Windows has played an important role in this innovation, largely
because it serves as an open, integrated platform for software developers,
hardware vendors and solution providers. This gives them the incentive and
the certainty they need to build products for Windows, which attracts more
customers and, in turn, encourages greater demand, more innovation and new

There is no question that consumers are the big winners. Today, you can buy
a PC for under $1,000 that is more powerful than a PC that just a few years
ago was three or four times more expensive. Prices for software are
constantly falling too, thanks, in part, to the stable development platform
provided by Windows. In the late 1980s, business productivity applications
such as word processors or spreadsheets typically cost several hundred
dollars each. Now, you can buy a full suite of far better productivity
applications for about the same price. In 1990, CD-ROMs containing games,
encyclopedias and personal finance software cost $80 to $200. Today, it's
rare to see CD-ROMs for home users priced above $49.

And although Windows is by far the most popular operating system on the
market today, the price has remained virtually the same for years while its
performance has leapt forward. Unlike other operating systems, Windows will
always be an open platform available at a reasonable price because that's
the key to attracting new software development and giving customers the
kind of low-cost, innovative PCs they want and have come to expect. A high-
volume, low-cost approach works only as long as the platform remains open,
so we have a vested interest in keeping it that way.

The PC has provided millions of workers with the tools to do their jobs
better, empowered students to become lifelong learners, and enabled
consumers to enjoy exciting new forms of information, communication and
entertainment on the Internet. In fact, the Internet promotes openness and
competition more than almost any other invention of the last 100 years. The
government should encourage the rich support for Internet standards that
Microsoft is providing. The popularity of Windows does not create a
chokehold on the Internet any more than a popular word processor chokes off
free speech. Windows PCs allow people to browse the entire Internet easily.
They allow anyone to become a publisher and to offer their goods and
services to the global market at minimal cost and without anyone taking a

U.S. antitrust laws do not exist to prop up competitors. The laws are
intended to ensure that consumers benefit from the widespread availability
of goods and services at fair prices, and that's exactly what we have
today.   Microsoft spends more every year to improve the Windows operating
system. This year we will spend more than $1 billion on R&D for future
versions of Windows. Over the next several decades we will enhance Windows
so that computers can talk, listen, see and learn, making it dramatically
easier to get at the benefits of the Internet. The PC business will have an
exciting future if the government does not hold it back by regulating
product design.

A letter from William H. Neukom, Senior Vice President Law and Corporate
Affairs, Microsoft Corporation to Sen. Orrin G. Hatch.

November 3, 1997

The Honorable Orrin G. Hatch
Senate Judiciary Committee
Hart Office Building
Washington, DC 20510

Dear Chairman Hatch:

I write to respond to the concerns you recently expressed in the media
about confidentiality provision in various contracts to which Microsoft is

The confidentiality provisions in these contracts are standard in the
software industry, and indeed, in American Commerce generally.
Confidentiality protection is particularly important in high technology
industries, where the principal assets of a company typically consist of
ideas, not any tangible asset. In most cases both parties to a high
technology contract seek assurances from the other that confidential
information will remain confidential.

Confidentiality provision used by many companies typically contain language
providing that confidential information may be disclosed pursuant to
judicial or other government order, provided the other party to the
contract is given appropriate notice and an opportunity to object. The
purpose of the "notice" language is to give each party to the contract an
opportunity to seek an appropriate protective order in court that would
govern the disclosure and use of any confidential information. Some
confidentiality provisions broadly state that confidential information may
not be disclosed to any third party, without providing an explicit
exception for information sought pursuant to subpoenas and other forms of
compulsory process (although contacting parties obviously cannot trump
compulsory process though such language).

I am enclosing examples of confidentiality provisions employed by Novell
Inc. and Sun Microsystems, two leading software vendors, and an example of
confidentiality language contained in a Microsoft contract. As you will
see, the language in all of these agreements is identical in substance. I
am also enclosing examples of confidentiality provisions found in two
lawyers' "form books," Multimedia and Technology License Agreements: Forms
and Commentary (1997) and Computer Law: Drafting and Negotiating Forms and
Agreements (1997). Again, provisions of this nature are absolutely standard
in the high technology industry. As I hope you will appreciate, such
provisions are not directed at thwarting government investigations.

With regard to government investigations, you should be aware that
Microsoft has cooperated fully with various investigations of the company
undertaken by the Department of Justice since 1993. Four years ago, at the
request of the Department, Microsoft informed the agency, in writing, that
it does not interpret its license agreements with computer manufacturers
with computer manufacturers as requiring a manufacturer to inform Microsoft
of any dealings or discussions with the Department. Microsoft entered into
this understanding with the Department on the basis of strong
confidentiality protections provided by law for information supplied to the
department - protection that the Department confirmed in writing to
computer manufacturers. Microsoft further agreed that the department could
show Microsoft's letter to any computer manufacturer that expressed concern
about this subject.

That was the last Microsoft heard from the Department about confidentiality
provision until last month, when the Department asked Microsoft to provide
a new, updated letter that would apply more broadly to any party that
signed a contract with Microsoft, not just computer manufacturers.
Microsoft promptly provided the requested letter, and again, authorized the
Department to share it with anyone. Thus, as of September 1997, Microsoft
had fully complied with every request made of it by the Department on this

Notwithstanding this history, the Department has now sought to raise an
issue concerning confidentiality provisions in the context of the consent
decree contempt proceeding that it recently initiated against Microsoft.
The Department now claims that such confidentiality provision may have a
chilling effect on the willingness of some persons to approach the
Department with information concerning Microsoft, although Assistant
Attorney General Klein has stated publicly that the Department is not aware
of any instance in which such "chilling" has actually occurred. In view of
the well-publicized and extensive nature of the many Department
investigations of Microsoft, and the public statements by Mr. Klein's
immediate predecessor, Anne Bingaman, the Department was open for business
as a type of "Microsoft Complaint Center," it appears very unlikely that
anyone would be reticent about speaking with the Department about

I hope this clears up any misunderstanding or misrepresentation about
confidentiality provisions in the software industry. Please feel free to
contact me if I can provide any further information.


William H. Neukom
Senior Vice President
Law and Corporate Affairs
Microsoft Corporation

Senate Judiciary Committee Members
Mr. Joel Klein, Assistant Attorney General

A letter from Bob Herbold, Executive Vice President and Chief Operating
Officer, Microsoft Corp. to consumerist Ralph Nader.

November 13, 1997
Mr. Ralph Nader
PO Box 19312
Washington, D.C. 20036

Dear Mr. Nader:

Like other Americans, I have long admired your commitment to the well being
of consumers. The intensely competitive nature of the software industry has
produced a steady stream of innovative new products, at attractive prices,
that is unambiguously good for consumers. As a result, it is regrettable
that you appear to have aligned yourself with a small band of Microsoft's
detractors whose apparent goal is to enlist the government's assistance in
their efforts to compete with Microsoft.

Your conference this week in Washington, D.C., "Appraising Microsoft and
Its Global Strategy," might more appropriately be entitled "Microsoft: A
Conclave of Critics." Virtually all of the speakers at the conference are
either litigation opponents, leading competitors or well-known Microsoft
critics. The conference makes no pretense of presenting an objective or
balanced treatment of the issues. Moreover, you and your colleagues have
already taken an aggressively hostile stance toward Microsoft in your
public statements. This conference makes one wonder whether your speakers
traveled by Qantas because it has all the hallmarks of a kangaroo court.

At last count, some 30 anti-Microsoft speakers filled your two-day agenda.
You and your staff rejected our suggestions for several respected industry
participants and observers who could have presented a balanced view of
Microsoft's business practices and products. For us to participate in this
kind of an environment would be like walking into an ambush with
sharpshooters on every hilltop. Furthermore, it would dignify an event that
will inevitably devolve into Microsoft bashing.

For a supposedly pro-consumer conference, it's interesting that you charged
attendees $1,000, yet Novell earlier in the week was handing out free
tickets to 40 of its closest friends. It's also curious that the conference
was advertised in full-page national newspaper ads costing upwards of
$50,000 apiece. How is it that a non-profit operation like yours can find
the money to finance such expensive advertising and marketing efforts on
behalf of companies that compete with Microsoft?

Your premise that Microsoft has been a disincentive to competition and
innovation is simply wrong. As an AT&T executive observed last year, the
cost of computing has fallen 10 million-fold since the microprocessor was
invented in 1971. That's the equivalent of getting a Boeing 747 for the
price of a pizza. If this innovation had been applied to automotive
technology, a new car would cost about $2; it would travel at the speed of
sound; and it would go 600 miles on a thimble of gas.

Meanwhile, American software companies provide over 600,000 direct American
jobs and grew at seven times the rate of the U.S. economy from 1987 to
1994. That's certainly not a portrait of an industry in decline due to lack
of competition. In fact, the growth in jobs and decline in the cost of
computing has been helped by the operating system technology in Microsoft
Windows, which has enabled software developers and hardware manufacturers
to develop thousands of compatible products.

It's important that the public and journalists covering your event
understand the extent to which you appear to have stacked the deck against

Your first session is entitled "An Overview of the Microsoft Strategic Plan
and How They Accomplish Their Goals." The speaker is Gary Reback of the
Palo Alto law firm of Wilson, Sonsini, Goodrich and Rosati. Mr. Reback is
an outspoken opponent of Microsoft who is on the payroll of some of
Microsoft's most notable competitors. He represented an anonymous group of
clients who attempted to intervene in a judicial review of Microsoft's
Consent Decree with the Justice Department in 1994. His challenge was
firmly rejected by the D.C. Court of Appeals. PC Week has described Mr.
Reback as a "headline-seeking lawyer," and he plainly has a significant
personal stake in portraying himself as the savior of Silicon Valley
companies in their competitive battles with Microsoft. Reback's boss, Larry
Sonsini, is on Novell's board and owns 54,100 shares of stock.
The speaker for the session entitled "Microsoft and Increasing Returns" is
Brian Arthur, an economist closely affiliated with Mr. Reback's efforts to
limit the vigor of Microsoft's competitive efforts. Mr. Arthur was a major
contributor to a paper submitted in 1994 by Mr. Reback on behalf of
anonymous clients to the Antitrust Division of the U.S. Department of
Justice. Mr. Arthur's economic theories regarding Microsoft were recently
described by Rich Karlgaard in The Wall Street Journal as "old and
discredited. Mr. Arthur's is a very bad argument. The scandal of it is that
he can't defend it himself, except as a tautology." The essence of Mr.
Arthur's theory of economic returns is that Microsoft's success
establishing Windows as a popular operating system for the PC had
everything to do with luck and nothing to do with delivering a quality
product that customers wanted. According to Mr. Arthur's reasoning,
millions of consumers the world over simply made stupid choices.

The speakers for the session entitled "Digital Commerce of the Future" are
representatives of companies that compete with Microsoft Expedia and
Microsoft CarPoint. These speakers are unlikely to be objective about one
of their major competitors.

Your "keynotes" are being given by the CEOs of two of Microsoft's
competitors, including Scott McNealy of Sun Microsystems. Sun Microsystems
is a very large company with $8.8 billion in revenues and $747 million in
profits last year. The subject of Mr. McNealy's speech - "No One Should Own
the Alphabet" - is ironic. Sun is aggressively pushing its own proprietary
standard, Java, which it hopes will compete with Windows, while wrapping
itself in a half-hearted promise of openness. Just weeks ago, U.S.
representatives rejected Sun's gambit to have the International Standards
Organization shield Java from competition by designating it as an "open"
standard while allowing Sun to continue to control the technology and the
Java trademark. It's also important to understand that Sun's large Unix
workstation and outdated minicomputer business model is under pressure from
Microsoft's Windows NT, which offers far better price and performance for
customers. Your second keynote speaker, Mitchell Kertzmaan, is CEO of
Sybase, which competes with Microsoft in database products.

The speakers for the session entitled "The Theory of Increasing Returns and
the Essential Facilities Doctrine" are both longstanding opponents of
Microsoft. Garth Saloner is another economist who contributed to Mr.
Reback's efforts to block Microsoft's proposed acquisition of Intuit.
Morgan Chu of the Los Angeles law firm of Irell & Manell was lead counsel
for Stac in its patent infringement action against Microsoft, and is
currently counsel to AT&T in another lawsuit against Microsoft. It's hard
to see how such a biased panel could actually shed any light on fair

The speakers for the session entitled "Level Playing Field" are perhaps the
most partisan of the entire conference. Roberta Katz is the general counsel
for Netscape, which is locked in a competitive contest with Microsoft in
the development and marketing of Internet-related software. Jamie Love, who
works for you, has devoted virtually all of his time in recent weeks to
stirring up controversy about Microsoft on electronic forums and offering a
wide range of uninformed opinions regarding the legality of Microsoft's
actions under the antitrust laws (even though he is not a lawyer, much less
a lawyer with any antitrust experience.)

The second day of the conference begins with a session entitled "Government
Antitrust Enforcement Activities." The speakers include Graham Lea and
Christine Varney. Mr. Lea is a freelance writer who used to work for an
English magazine called Computing. He has called Bill Gates "a spoiled
brat," "boorish," and "immature," and Microsoft a company "that lacked
ethical principles, that used sordid business practices." Your agenda lists
Christine Varney as a former commissioner of the Federal Trade Commission.
What you don't say is that she is now a paid consultant to Netscape. The
suggestion that she brings the perspective of an antitrust enforcement
agency is thus misleading.

The speakers at the session entitled "Perspectives of Software Developers
and Users" cannot pretend to represent software developers who create
products that run on Microsoft's operating system, or the users of any
Microsoft products. Andrew Schulman is a journalist who testified as an
expert against Microsoft in the Stac litigation. Rick Ross is a
representative of the Java Lobby, which is a mouthpiece for Sun. Daniel
Nachbar is director of the Public Software Institute. Your colleague, Jamie
Love, is a board member of Nachbar's organization. None of these speakers
is qualified to speak about the advertised topic. Moderator of the panel is
Audrie Krause, director of NetAction, which has ties to some of Microsoft's
most vocal critics. According to published reports, Krause recently
received a grant from Sun Microsystems, the details of which neither would
discuss. She also receives free legal assistance from a Washington, D.C.
lawyer who does work for Netscape and Oracle. While NetAction says it is a
501(c)3, it recently organized an anti-Microsoft lobbying day in Washington

The three speakers for the session entitled "Private Antitrust Enforcement"
are all involved in antitrust litigation against Microsoft that is
currently pending in Salt Lake City. Bryan Sparks is the CEO of a company
called Caldera, which is owned by Mr. Noorda's family foundation. Caldera
purchased the defunct DR-DOS operating system from Novell in 1996 and
promptly sued Microsoft based on claims that purportedly had been assigned
to Caldera by Novell. Those claims are identical to the allegations that
were thoroughly investigated by the FTC and the Justice Department at
Novell's behest between 1990 and 1994. A Forbes article quoted Sparks as
saying: "We could have just purchased a license to DR-DOS, and that's
originally what we were talking about with Novell, but by purchasing it
outright, we got the right to litigate." Steve Susman of the Houston law
firm of Susman Godfrey, and Steve Hill of the Salt Lake City law firm of
Snow Christensen and Martineau, are both counsel to Caldera in that
litigation. Obviously, Caldera and its lawyers will do nothing more than
repeat the unfounded allegations of the complaint. Mr. Sparks evidently was
so excited about being invited to attend your conference that he issued his
own press advisory on PR Newswire announcing his participation.

The speakers for the last session, "Video, Telephony, Consumer Protection
and The Future of Television" have all been vocal critics of Microsoft. Ed
Black is president of the Computer and Communications Industry Association,
an organization that sought to persuade the court to reject the Consent
Decree agreed to by Microsoft and the DOJ in July 1994. Those efforts were
ultimately unsuccessful when the Court of Appeals in Washington, D.C.
ordered the lower court to enter the Consent Decree without modification.
Philip Monego is CEO and president of NetChannel, which is closely allied
with Oracle in its competition with Microsoft's Web TV.

Once the TV lights have been turned off and the reporters have packed away
their notebooks, I hope you will take the time to seriously study the
market dynamics that shape the computer industry. As a consumer advocate,
you should want to support a market defined by strong competition that
results in continually improving product quality and declining prices.

How dynamic and viable is the PC software industry today? There are 7,500
commercial software companies in the U.S. alone and more than 4 million
developers worldwide for Windows. Hardly an industry on its knees. We did a
study a few years ago that showed more than 500 new companies were formed
each year because of Windows, and that number has undoubtedly risen since
then. Interestingly, some of our most vocal opponents have built
significant businesses and realized hundreds of millions of dollars of
revenue annually as the result of the PC and Windows.

Yet Microsoft, though the most visible company in the industry, accounts
for only 1 percent of total information technology industry revenues of
$1.1 trillion. We account for less than 4 percent of total software
industry revenues of $250 billion. Microsoft is not even the largest
software company - $13 billion of IBM's $75 billion in revenues is in
software, compared to our $11 billion.

As a consumer advocate, you know that any dialogue on competition needs to
be focused on the consumer. When companies complain about the vigor of
competition, that is typically a sign that they are having difficulty
keeping up with the pace of innovation or remaining profitable in the face
of declining prices. That doesn't mean, however, that consumers are
suffering. Nor does it imply that other companies have in any way

Rather than blindly supporting efforts by Microsoft's large competitors to
enlist the government to help them compete in the marketplace, I urge you
instead to learn about our industry, which is at the center of America's
economic growth. Rather than trying to start an inquisition against
Microsoft, I urge you explore the innovation and falling prices that have
provided consumers with new products that improve the way we work, live and


Bob Herbold

Executive Vice President and Chief Operating Officer

Jason's Jive

Jason Sereno, STR Staff

                             Windows 95 CD-ROM
                           Street Price: $49.95
                            For ages 13 and up
                           Southpeak Interactive
                            One Research Drive
                              Cary, NC 27513
                             tel 919-677-4499
                             fax 919-677-3862

Southpeak's new release, Temujin, is a supernatural adventure that is one
of a kind.  It is the first game ever to feature Video Reality.  You
interact with live characters and hundreds of puzzles in a brilliant 35mm
view.  This first person also includes a original music score on three
discs of gameplay.

Temujin is an adventure set in the present.  Although the game is based
largely on the past. You see, there is a great force inside the Stevenson
Museum.  The force that enslaved an entire continent is hidden somewhere
among the artifacts of the great conqueror, Genghis Khan.  The only thing
you are sure of is the key to saving the entire human race has something to
do with the Capricorn.  It is a jeweled goat head that was used in the
burial of Genghis Khan.

One thing that definitely sets this game apart from others is the use of
Video Reality.  Temujin is the first game to feature this cinematic marvel
and the results are very pleasing.  Not only are the cinematic sequences
superb.  The special effects, which are also a product of Video Reality,
are excellent as well.  The overall result is very nice.

All of the live characters are also a part of this new technique.  The
characters look as if they come straight of an actual movie.  The actors
portray their characters well and this 35 mm enhancement certainly adds to
their portrayal. There are hundreds of puzzles that look very convincing as
well.  The jigsaw puzzles actually look as if they are made of cardboard.
It seems everything in the game is real, this lets you immerse yourself
into the adventure.

Musically, Temujin contains an original score that adds drama to this
already creepy game.  In fact, the overall sound effects really add
dimension to gameplay.  With every special effect their has to be a sound
effect to compliment it.  The sounds truly bring this game full circle.

I would recommend this game to fans of first person games.  It may be too
tricky for beginners because of the amount of puzzles within the game.  I
would also tell people to get a copy too see for themselves the brilliance
of Video Reality.  Temujin is a great buy and a great mystery to unravel.

System Requirements
IBM PC compatible Pentium 90 MHZ, Windows 95, 16 MB RAM, Double Speed CD-
ROM Drive, 16 Bit
Windows Compatible Sound Card, 30 MB of Temporary Space on hard drive,
SVGA Graphics for 640x480 High Color, 2 MB VRAM strongly recommended,
Microsoft Compatible Mouse.

                  More things to come in the near future.

Put your Raybans on for Southpeaks' MIB The game.We'll bring in Psygnosis'
G-Police for questioning.Let's get POSTAL with Ripcord Games.and will
Constructor get Acclaim?!!  And as always:  Much, much more.

Special Notice!! STR Infofile       File format for Articles

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                         STReport International Online Magazine

Classics & Gaming Section
Editor Dana P. Jacobson

>From the Atari Editor's Desk              "Saying it like it is!"

     I'm hard-pressed for time this week, so I'll be brief.  What I do want
to stress this week, however, refers to the first article below - the Atari
Times Awards.  If you haven't voted yet, grab the "ballot" below and do so!
What better way to show your appreciation for some of the Atari community
than to take a few minutes and vote.   And if you've the inclination, drop
a vote for one or more of our Atari staff here at STReport!  Remember,
folks such as Joe Mirando, Michael Burkley, and Albert Dayes have brought
you a wealth of informative articles over the years; here's a way  to show
your appreciation for all of that work.

Until next time...

                            Atari Times Awards

From: "Colin Polonowski" <>

I've still only had a few votes, and it's only a few weeks to the voting
deadline. If you are planning to vote please do it soon or you'll miss
your chance.  Please note that votes posted in this Newsgroup may go
uncounted, therefore if you wish to vote please either use the Form on the
AT Homepage,or send a private email to me with your nominations...

                          1997 Atari Times Awards

In order to pay tribute to those people who have supported the Atari scene
over the last year, the Atari Times is launching the Atari Times Awards...
All you have to do to vote is fill in the form on the Atari Times Homepage
- - or email your votes on
the categories below to

The biggest award is the 'Special award for services to the Atari
community'. Before voting on this we think you should consider your answer
very carefully.  Voting will end on the 1st December 1997 so make sure
you've made your contribution to the final results. The December issue of
the Atari Times (UK) will be the first publication to print the results.
After this a few other Atari magazines will be given access to the results
for possible publication. If you wish to print the results in your
publication then email Colin Polonowski at the address above.

The final results will also be made available on the Atari Times Homepage
as soon as they have been confirmed, even if this is before the release of
the December Atari Times.  That's all you need to know, so go on and get

z    Best Programmer of 1997
z    Best commercial release of 1997
z    Best Shareware release of 1997
z    Best PD/Freeware release of 1997
z    Best TOS game of 1997
z    Best Jaguar game of 1997
z    Best Demo of 1997
z    Best hardware add-on of 1997
z    Best Atari supporting company of 1997
z    Best non-profit making Atari organization of 1997
z    Best Disk Magazine of 1997
z    Best paper based magazine of 1997
z    Best Atari supporting web page
z    Best Internet Service Provider for the Atari range
z    Most exciting announcement for Atari owners in 1997
z    Best thing to happen in 1997
z    Worst thing to happen in 1997
z    Special award for services to the Atari community

This is similar to the lifetime achievement awards that are given out at
things like the oscars.  Should be someone who you feel deserves a
significant amount of recognition for what they have done in the past for
the Atari platforms. This person does no longer needs to be an active Atari
supporter but they must have made a significant impact when they were...

Thanks to Neil Jones-Roadway, Steve Delaney, Joe Connor, Roy Goring, Mike
Kerslake, Ronald J Hall, Andrew Whittaker, Greg George and You!
Colin Polonowski

Have ICTARI, will travel...
From: G Greenway <>

Hello again,

I'm going to really start publicizing ICTARI properly now. For those who
don't know, ICTARI is a disk-zine / user group for Atari programmers. You
can read, download and contribute to the zine on the WEB:

If you know any keen programmers not on the 'net, I'd be grateful if you
could print this out and give them a copy. Why not take it to your local
user group meeting ?


                               I C T A R I   U S E R   G R O U P
       G Greenway, 8 Denmark Road, Reading, Berks, RG1 5PA. 0118 756668

Dear Atari User,

Thank you for  enquiring about the ICTARI programmer's user group. This
non-profit making group was set up in 1993 by Nick Bates and was then run
by Peter Hibbs until the beginning of 1997. The group was set up for Atari
programmers to exchange ideas on software, solve programming problems, help
beginners to programming, etc. We are open to all programmers of any
ability, we have beginners and experts alike, in any language from machine
code to Pascal.

We send out a disk magazine each month containing programming tips, source
code in most languages, requests for help on software problems, useful
programs for programmers etc, etc.  The service itself is completely free,
members send us a blank disk each month and the postage (or the cash
equivalent) in return for next month's disk.

If you are an experienced Atari programmer, the group would very much value
your programming expertise, however, this does not mean that we would
expect you to provide programming articles, tips, etc, for each disk. If
each member only contributes two articles a year we would have enough
material to fill a disk each month, and if you decide to join the group we
would hope that you could occasionally send in some contributions for the
magazine. The sorts of material we try to publish are programming
techniques, useful sub-routines, C functions, BASIC procedures, MACROs,
etc, which would be of interest to other members. You may also be able to
help other programmers with software problems and there may be other
members who could help it you with a software problem that you have, after
all, even experts don't always have all the answers.

If you are a beginner to programming or are just starting to learn a new
language we can probably help with any software problems you have as we
often run tutorials on various languages and programming techniques. If you
have any programming queries, please send them in (on disk if possible) so
that other members can hopefully provide a solution for you.

We trust that you will consider becoming a member of the group and provide
some useful input to the magazine occasionally.  If you are interested
perhaps you would fill in and return the enclosed questionnaire to us at
the above address. To receive the next issue you will also need to send a
double-sided disk together with two 2nd class stamps or 75p cash for each
month.  Please return these as soon as possible so that we can place you on
our mailing list for the next issue which will be despatched about the 15th
of the month. The questionnaire and latest issues are also available from
the ICTARI WEB page.  Cheques or postal orders should be made payable to Mr
G. R. Greenway.  Back issues are also available for 1UKP each.

If you decide not to become a member we would be grateful if you would
pass this letter and questionnaire on to someone who may be interested.  We
hope that you will agree to join the group, we are sure you will find
something of interest on each disk and for just a few pence a month can you
afford to miss out on the chance?  We look forward to hearing from you in
the near future.

Surname: ____________________ First name: __________
Address:  ____________________

I wish to become a member of the ICTARI user group and contribute to the
magazine occasionally.

Do you agree to have your name and address published in the magazine ?
        Yes      [ ]    No        [ ]
Do you agree to have your telephone number published in the magazine ?
        Yes      [ ]    No        [ ]
Which languages do you program in ?
        ST BASIC [ ]    GFA BASIC [ ]
        STOS     [ ]    Assembler [ ]
        C        [ ]    FORTRAN   [ ]
        Pascal   [ ]    Other     [ ]   (specify)
What sorts of programs do you write ?
        Games    [ ]    Apps      [ ]
        Graphics [ ]    Utilities [ ]
        Sound    [ ]    MIDI      [ ]
        Any      [ ]    Other     [ ]   (specify)
What items of hardware do you own ?
        STFM     [ ]    STE       [ ]
        Falcon   [ ]    TT        [ ]
        Clone    [ ]    Emulator  [ ]
        HD       [ ]    Printer   [ ]
        RAM      [ ]    Other     [ ]   (specify)
        (how much)

Please make any comments on the ICTARI user group below. Mark as private if
not for publication.

                              Gaming Section

"Jet-Moto 2"!
"Newman/Haas Racing"!
"Consumer's Guide to Holiday Hits"
"Frogger" Returns!
And more!

Industry News STR Game Console NewsFile  -  The Latest Gaming News!

         Frogger Leaps Onto Computer and Video Game Store Consoles

Hasbro Interactive Brings 1980s' Classic Arcade Hit To New Generation of
Game Players

BEVERLY, Mass., Nov. 12 /PRNewswire/ -- FROGGER(R), the 1980s'  blockbuster
video game originally developed by KONAMI Co., Ltd. in Tokyo, returns to
the gaming scene in full force this month in Hasbro Interactive's all-new
3D FROGGER for the PC and the PlayStation game console.  The game has been
widely predicted by gaming industry insiders to be one of the season's
best-sellers since Hasbro Interactive and KONAMI first announced their
plans earlier this year to revive and rebuild the classic.

"This is one of the games that started it all, so we knew we had to bring
FROGGER back," commented Hasbro Interactive President Tom Dusenberry.
"FROGGER has always had one of the most compelling game play patterns and
that core element, combined with the interest in retro-gaming, made FROGGER
a must from a development standpoint."

Hasbro Interactive has preserved many of FROGGER's classic elements so that
twenty somethings who played the game well into the wee hours a decade ago
can make an immediate, familiar connection and hop right into the action.
But now, they'll also get to explore many levels of play in nine different
immersive, 3D environments - FROGGER "worlds," leaping through highway
traffic, hopping furiously from the mad lawn mower, or maneuvering through
the alligator-infested swamp.

Sure to appeal to those who grew up with the original, the new FROGGER will
also satisfy the appetites of a whole new generation of challenge-hungry
gamers.  The multi-frog race mode delivers split-screen action for up to
four players on the PlayStation((TM)) game console or on a PC.

Hasbro Interactive also worked extensively for nearly two years to develop
the FROGGER character under the license from KONAMI, using the best toy
sculptors in the industry to create hard 3D prototypes that could
eventually be animated.  The result is a FROGGER with totally new, 1990s'
abilities, from his super jump to the formidable power croak and
heat-seeking tongue.  Multiple original music scores, including the classic
FROGGER music, keep players hoppin' for hours.

FROGGER first appeared as a popular arcade game in the early 1980s,
produced by KONAMI. Hasbro, Inc.'s Parker Brothers partnered with KONAMI to
develop the first in-home version of the game, which went on to become a
huge success.  Designed for the Atari and Commodore platforms, FROGGER was
quick to leap onto Billboard's best-selling video cartridge game chart and
won a number of industry honors, among them the Best Arcade Video/Computer
Game Merit Award from Electronic Games Magazine.

Hasbro Interactive's FROGGER will be available beginning this month at a
suggested retail price of $39.99 for both the Windows CD-ROM and the
PlayStation(TM) game console.  For more information on FROGGER check out

             Jet Moto 2 Goes Where No Jet Bike Has Gone Before

FOSTER CITY, CALIF. (Nov. 11) BUSINESS WIRE - Nov. 11, 1997 - Sony Computer
Entertainment America Inc. is giving gamers who are tired of the old racing
standards the thrill ride of their lives with the introduction of Jet
Moto(TM)2, the extreme all-terrain, high-speed and fast-action racing game
that breaks all the rules -- available exclusively for the PlayStation(TM)
game console.

The sequel to last year's top-selling game Jet Moto(TM), Jet Moto 2 has 10
new 3D race tracks, graphics and TruePhysics(TM) technology, which gives
gamers the feeling they are riding an authentic power-packed jet bike.
Unlike many other racing games, Jet Moto 2 isn't tied down to a set track,
but features "free roaming" courses loaded with obstacles for riders to
overcome and conquer.

"The TruePhysics technology incorporated into Jet Moto 2 gives gamers the
unique experience of actually feeling the sensation of riding a real jet
bike," said Peter Dille, senior director, product marketing, Sony Computer
Entertainment America.  "We have also complemented the impressive gameplay
with seamless 3D polygonal graphics, that add incredible detail to the
bikes, riders and landscapes."

Jet Moto 2 provides gamers with the freedom to race across various
terrains like river rapids, national forests, deep caverns and canyons,
roller coasters and more.  Treacherous new obstacles include corkscrews,
waterfalls and bottomless pits.

      Psygnosis Teams Up with Newman/Haas Racing for New Racing Game

FOSTER CITY, CALIF. (Nov. 11) BUSINESS WIRE - Nov. 11, 1997 - Psygnosis has
signed a licensing agreement with the Newman/Haas Racing team to produce
Newman/Haas Racing, a motor-sports racing game for PlayStation game console
and PC CD ROM systems.  The title is expected to be released for both
platforms in March 1998.   This pairing of the three-time CART
(Championship Auto Racing Teams, Inc.) champions and the publishers of the
international best-selling racing games Formula 1 and Formula 1:
Championship Edition represents one of the most exciting alliances in
motor-sports gaming. The title is set to feature the formidable pairing of
Newman/Haas Racing drivers Christian Fittipaldi and Michael Andretti, in
addition to a number of other licensed drivers and tracks from the world of

"Psygnosis has enjoyed a great degree of success in the racing-games genre,
and for our first American motor-sports title we're thrilled to be
partnering with the Newman/Haas Racing organization," said Psygnosis
Product manager Munir Haddad.  "With their tremendous history, legendary
drivers and winning attitude, they're a flagship motor-sports race team."
The Newman/Haas Racing organization was co-founded in 1983 by former
race-driver and noted team owner Carl Haas, and actor, team owner and
race-driver Paul Newman.  The team has won 52 Indy car events and three PPG
titles, while driver Michael Andretti leads active-drivers in terms of
wins, with 36.

"We're very excited to be involved with Psygnosis and their new game
featuring our race team," said Carl A. Haas, team co-owner of Newman/Haas
Racing.  "Today's technology enables us to get more people involved with
CART racing through interactive racing games such as this  one.  On track,
we offer close, competitive racing and now we can offer additional hours of
excitement through the game. Only a very small percentage of the world will
ever be able to drive a racecar like we compete with in CART.  Through the
Newman/Haas Racing game we will provide the closest thing to driving a real
race car."

Drivers also set to appear in the game include 1996 CART Champion Jimmy
Vasser, Arie Luyendyk, winner of the 1997 Indy 500 and Robby Gordon (who
will be racing in CART in 1998).  With negotiations on going, around 15
licensed drivers are planned for inclusion.  Eleven licensed tracks are
planned with well known locations like the Milwaukee Mile, Road America,
the Rio 400 and Laguna Seca all confirmed to appear, plus, new to CART in
1998, the Texaco Grand Prix of Houston.  The game will feature a varied
selection of 'oval', 'street' and 'permanent' race tracks, plus the
'Firebird' test track. ABC/ESPN commentators Danny Sullivan and Bob Varsha
will provide commentary.

Newman/Haas Racing is the first product from new developers Studio 33, who
were founded by former Psygnosis Director of Software Development, John
White.  An avid racing enthusiast himself, White has assembled a team of
like-minded race fans who were introduced to the world of American
motor-sport when then-reigning Formula 1 Champion, Nigel Mansell, raced in
the U.S. during the 1993 and '94 seasons (ironically for the Newman/Haas
Racing team, for whom Mansell won the 1993 PPG Cup).  Studio 33 personnel
visited with Newman/Haas Racing earlier this year, where they met with team
engineers and gathered invaluable research data.

                          MGM: WAR is not a GAME

NOV 12, 1997, M2 Communications - Missiles are set to fly in April '98 with
the simultaneous release of WarGames for PlayStation and Windows 95, two
ballistic salvos from entertainment super-power MGM.   Featuring fully 3D
landscapes and units with the ability to pan, rotate and zoom - all
presented in glorious high colour and high resolution SVGA display -
WarGames is the most advanced, real-time, 3D battle simulation to be
created to-date. Its AI, route finding and flexible camera perspective all
blend perfectly to provide the next generation in addictive wartime

With over 100 types of fully controllable land, sea and air units, variable
weather effects and a hard-hitting orchestral CD soundtrack, WarGames
really is going to be an all-new war experience for PlayStation and PC
gamers in 1998.  30 campaign driven single player missions - each with
unique landmarks and detailed scenery - create an addictive experience when
played solo, but WarGames offers even more playability with its completely
original two-player split screen option and full multiplayer compatibility
over a network, serial link, modem or Internet for total global domination.

The campaigns and dialogue have all been scripted by the writer and
director of the original motion picture and all the main characters are
also present ensuring a consistent and pertinent style. As in the film,
hacking plays an important role by allowing the player access to cash,
vital information and power-ups.   Continuing the story twenty years after
the events of the original motion picture, David Lightman (played in the
film by Matthew Broderick) has now been employed by the U.S. government to
help reprogram the WOPR (War Operations Planned Response) to ensure there
will never be a repeat performance of the events that unfolded in the 1983
cinema hit.

Working undercover and being a real games player at heart, David buys out
Protovision Inc. (the games company from the film) as a front to make the
WOPR and., more importantly, its scenarios available to the on-line gaming
community. Who better to challenge the computer at its games than the
experienced gamers of the world? However, the WOPR breaks through David's
carefully constructed security programmes and lays down the gauntlet for a
WarGames challenge.   This situation presents the player with a series of
increasingly difficult scenarios where they face the WOPR and its forces -
but is this really just a game or does the WOPR have a much more sinister
agenda?   WarGames is being developed by Interactive Studios and will be
published by MGM for the PlayStation and Windows 95 in April 1998.

         Rascal Brings Many Firsts to PlayStation in 3D Platformer

SAN FRANCISCO (Nov. 12) BUSINESS WIRE - Nov. 12, 1997 -  Action Platformer
Zips Along at 60 fps, Displaying Deft Graphic Touches Like Real Time
Environmental Texture Mapping Action-packed 3D platform game Rascal(TM)
brings new advances in graphics technology and a Jim Henson Creature
Workshop-created character to the PlayStation(TM) game console in March
'98. Developed by platform-gaming specialists Travellers Tales (responsible
for console hits Mickey Mania and Toy Story, plus Sega's upcoming Sonic R),
this time-travelling adventure features an incredible array of special
effects including real-time environmental texture mapping, plus true 3D
gameplay, running at 60 frames per second, a first for the 3D platform
genre on PlayStation.

"We believe Rascal is the most technically advanced 3D platform game on the
PlayStation," notes Psygnosis Product manager Robin Kausch. "Travellers
Tales have applied their wealth of experience in this area to create a very
polished product, and gamers will be amazed at numerous clever touches and
graphic innovations."    The Rascal character was created in collaboration
with the world-renowned Jim Henson Creature Workshop in London.  He's the
misbehaving son of an inventor, who aims to rescue his kidnapped Father and
takes a spin in the prototype time machine.  Travelling through six worlds
in three different time zones, he observes subtle (and not so subtle)
changes in the environments along the way.

As the developers explain, "There are six different zones: The Castle,
Aztec, Western, Galleon, Atlantis, and the Lab where the story begins.
Each zone encounters different obstacles and problems, while also having a
past, present and future.  For example, the Galleon of the past is a
working Pirate Galleon caught in the middle of a battle.   "The Galleon of
the present is a sunken wreck at the bottom of the sea, with sharks and sea
creatures, while the Galleon of the future is found in a desert, half
buried in the sand from post apocalyptic storms that have ravaged the
earth."  Thus gamers may explore a level on foot in one time period and
then swim through it for an all-new perspective.   The game features
incredibly fast loading times for what developers describe as a "classic
cartridge feel," and a host of enemies both big and small inhabiting
spectacularly realised, hazardous 3D levels. Gamers will have to avoid
fiendish traps and hostile creatures, while solving puzzles which will
reveal hidden time bubbles, new levels, and bonus games.

               IDSA Releases First Annual 'Consumer's Guide
                       to Top Entertainment Software

WASHINGTON, Nov. 11 /PRNewswire/ -- Releasing its first annual  'Consumer's
Guide to Holiday Hits' list of top entertainment software available this
holiday season, the Interactive Digital Software  Association (IDSA)
reported today that video and computer game sales are headed for a
record-breaking year in 1997 with sales for the first nine months of the
year already surging 35.7 percent over the previous year.

"All signals are now pointing to total entertainment software sales
breaking the $5 billion barrier," said Douglas Lowenstein, President of the
IDSA, the trade body representing the U.S. video and computer game
industry. "And this holiday season will be exceptional not just for the
booming sales, but the array of games appealing to all ages, genders, and
interests.  In fact, as our 'Consumer's Guide to Holiday Hits' reveals,
there is literally something for everyone being introduced this year.  From
sports to simulations to story games, publishers are sending an incredibly
wide variety of titles to store shelves and the Internet."

Citing data compiled by the NPD Group from its Interactive Entertainment
Software Service, Lowenstein said that January through September sales of
video game software were approximately $1.5 billion and sales of PC
entertainment software were approximately $979 million. NPD reports that
the fastest growing genre categories for PC games were compilations/trivia,
strategy, and sports, and for console games were action, strategy, and
puzzle. And with more than 50 percent of total industry sales historically
occurring in the fourth quarter, the industry is on target to sell more
software than ever before.

Lowenstein said it is especially gratifying to see the market for
entertainment software continue to broaden and deepen.  According to the
IDSA's recent annual consumer survey, fielded by the custom research
division of the NPD Group, video game users are almost evenly divided
between people under 18 (53.5%) and adults 18 and older (46.5%), while 72.8
percent of people playing PC games are 18 and over, and half of those are
36 or older.  The data also shows that women make up more than one-third of
the most frequent users of interactive entertainment software.  "Video and
computer games are no longer only for kids," said Lowenstein. "The IDSA's
recent annual consumer research, the most in-depth study conducted of
entertainment software users, offers a compelling explanation for the wide
range of titles now on the market -- the fact that video and computer games
are used by people of all ages and genders."

The IDSA's 'Consumer's Guide to Holiday Hits' highlights what publishers
expect to the be the top-selling products this holiday season.  Following
each entry in parentheses, where available, is the rating for the title
issued by the Entertainment Software Rating Board, the nation's premier
interactive entertainment software rating service. The industry created the
ESRB, which provides age and content ratings, to ensure that consumers, and
especially parents, have the information they need to make informed
purchasing decisions. Offering a "Parents Guide to Interactive
Entertainment Software Purchases," the ESRB has been praised by Members of
Congress, national consumer groups, leading academics, and leading
children's advocates.  For a copy of the guide or more information, please
visit the ESRB web site located at

The Interactive Digital Software Association (IDSA) is the only U.S.
association exclusively dedicated to serving the business and public
affairs interests of companies that publish video and computer games for
video consoles (such as Nintendo 64, Sega Saturn, and Sony PlayStation),
personal computers, and the Internet.   The Association's members include
the nation's leading interactive entertainment software publishers,
representing more than 80 percent of the U.S. market.  In addition to
presenting the E3 Expo, the world's largest and most prestigious
interactive entertainment trade event, the IDSA serves as a leading source
of industry information and survey data. The IDSA also conducts a worldwide
anti-piracy program and works with the U.S. government at all levels on
policy issues such as copyright protection and Internet regulation.  For
more information, please visit the IDSA web site located at

                     Christmas Will Be Gold for Games

ZDNet News (November 12, 1997) - Pundits predicting the primacy of computer
games over traditional video games are not going to be pleased this
Christmas.   According to studies released by the interactive entertainment
industry, video game revenues are expected to outpace PC game revenues by
more than 50 percent. "This will be a banner year for the U.S. video game
industry," said Ed Roth, president of the Leisure Activities Tracking
Service for The NPD Group, a marketing information company. Roth believes
the video game market will hit $5.2 billion this year, compared to $3.7
billion in 1996.

According to NPD estimates, total sales for video games in the first three
quarters of 1997 topped $1.5 billion -- up 60 percent over the same period
in 1996. PC games have grown only 10 percent, to reach $979 million.  "Last
year, PC and console title sales were neck and neck," said Jennifer Doyle,
an analyst at media and information industry watcher Cowles/Simba
Information. "This year, console games are looking to blow by the PC
games." A Cowles/Simba report predicted that the interactive entertainment
industry would grow from $5.5 billion in 1997 to $11.6 billion in 2001.

Both Playstation and Nintendo 64 have had more than a year to create a
solid software base. This Christmas it pays off.  "Both consoles have
really hit the consumer price point, the economy is strong. ... There
really are a lot of ways to look at their success," said Ryan Brock, an
analyst at the NPD Group.   Many industry experts watched PCs catch up to,
then pass by, consoles in terms of graphics power, and expected that sales
would follow. But it's a little bit more complex than that, said Brock.
"It's hard to compare a $2,000 machine to a $150 player," he said.

Yet the two are coming closer every year. In August and September,
sub-$1,000 PCs made a big splash in the computer industry. Although not
graphics powerhouses, the machines can play today's games at a respectable
pace.  In addition, as the PC has shown, graphics improve faster on an
upgradeable machine. Before a falling out with graphics chip maker 3Dfx
Interactive Inc., Sega's next console -- due to ship in late 1998 -- was
designed to use 3Dfx's newest chip. The chip -- now called the Voodoo 2 --
will be available to PC users on boards starting in March, almost nine
months before the first console hits the shelves.

Can consoles overcome the disadvantage of being hard-wired? Possibly, say
analysts. "There always is the chance that the next-generation consoles
will be expandable," said Brock. Rumors are that Sega's next console will
run a version of Windows.  If so, video-game consoles may stay on top for a
long time to come.

Must History be ALLOWED to REPEAT Itself?
STR Spotlight

               Austrian watchdog tracks neo-Nazis on the Web

     Neo-Nazis are sidestepping national borders by communicating in
cyberspace, using the Internet to swap information and spread their
propaganda.  "Did Six Million Really Die?" asks a headline in a Web site
run by Ernst Zundel, a Toronto-based revisionist who denies the extent of
the Holocaust. Sites like his, easily accessible to Web surfers, are
particularly disturbing to European governments, whose strict anti-Nazi
legislation is being circumvented by groups publishing hate diatribes on
the Internet from providers in the United States and Australia.

     In Austria, The Documentation Center of the Austrian Resistance is the
top monitor of national extremist activity.  The center, which works in
close association with Nazi-hunter Simon Wiesenthal, is now responding to
cyperspace xenophobia and denial of World War II Nazi atrocities.  The
watchdog agency has set up its own Web site in order to inform the public
and combat computerized rightists more efficiently:

     "This is new territory for us," Wolfgang Neugebauer, head of the
center, said.  It has just published a book, "Das Netz des Hasses" ("The
Net of Hate"), in which 15 contributors take stock of online international
revisionist, anti-Semitic and neo-Nazi material.  Though the Web offers a
new vehicle for radicals, German-language Web pages are mainly recycling
standard propaganda, Neugebauer said. "We are dealing with familiar
content.  In Austria, the same people and groups we have observed printing
neo-Nazi propaganda material in the past are at work.  Currently the
intellectual level is very low."


     Against the backdrop of a common language and an ideological alliance
that  culminated in Adolf Hitler's Third Reich, Austrian and German neo-
Nazis can now  comfortably communicate through computer networks.
Neugebauer's book cites the "Thule-Netz" as the biggest thorn in the side
of German authorities.  About 150 neo-Nazis are believed to maintain
contact through this electronic bulletin board, forming an extremist
"virtual community."  While a Thule Web site is accessible to the public, a
system of passwords restricts its inner chambers to select members.

     Neo-Nazis made use of the Internet and mobile phones in an attempt to
coordinate rallies in Germany marking the 10th anniversary of Nazi veteran
Rudolf Hess's death last summer.  Although some argue that the amount of
propaganda on the Web is slight compared to the bulk of miscellaneous
information transmitted every day, Neugebauer warns of its increasing
global reach: "This has dynamic potential. ... Neo-Nazis are communicating
across  borders. They will stop at nothing."  According to a new U.S. Anti-
Defamation League publication, the number of hate sites on the Web has
doubled to approximately 250 since last year. American  white supremacy
sites such as "Stormfront" or "Aryan Nations" include handy links to like-
minded European radicals.


     Most hate literature published on the Internet through U.S. providers
is protected by liberal legislation. For Austrian Neugebauer, freedom of
speech is a cultural issue.  "The United States has not experienced
National Socialism and genocide. It can afford to be tolerant. Austria and
Germany cannot," he said.  In what is seen as a landmark case, however,
Zundel is on trial before the Canadian Human Rights Commission for
allegedly masterminding the Web site.  A manifesto on the site seeks to
play down the magnitude of the Holocaust  extermination of Jews.

     "There is growing credible evidence that what purport to be the
remains of gas chambers at Auschwitz and elsewhere are frauds.  They're
less believable than Potemkin villages," it further states.  While Austrian
law allows for the elimination of neo-Nazi propaganda from  domestic
servers, court action is difficult if Austrian based radicals use an
overseas server.  "But if we can prove authorship.. for example; through
textual  analysis, we can then initiate legal proceedings," Neugebauer
said. "Our aim is not preventive censorship but the penalization of Nazi

                           NEVER AGAIN!  NEVER!!

ONLINE WEEKLY STReport OnLine          The wires are a hummin'!

                           PEOPLE... ARE TALKING

Compiled by Joe Mirando

     Hidi ho friends and neighbors. Well, as the holidays get closer and
closer we're bound to hear more about all the neat things available on
other platforms that will be coming out just in time to be given as gifts.
Now I'm not poking a finger at anyone in particular but this time of year
has always turned me cold as far as computer-related offerings are

     While there's really nothing wrong with this, something just seems a
bit odd about it. I've always  seen hardware and software as something that
the user should buy. After all, they are the ones that know what they want,
need, and most importantly, can use.  There are 'safe' gifts of course, but
exactly how many Star Trek mouse pads can you use? I mention that only
because I picked up a really cool one for myself the other day. It's got a
3-D view of the original Enterprise ("No   Bloody A, no bloody B, no bloody
C, no bloody D") and several Klingon battle cruisers all firing back and
forth. As you move, the scene evolves. While the mousepad caught my eye
quickly in the store, I find it irritating as heck now that it's on my
desk. I have trouble concentrating on what  I'm doing on the screen
because, as I move, out of the corner of my eye I can see something moving.

     I've been told by several people that I should just not pay attention
to it. Easier said than done. It's one of those things you really have no
control over. I guess I've always been one of  those people  who catch the
little things and store them away for future reference. Although some may
say that  this is my most annoying trait, they really don't know me well
enough... I have so many other  traits that are even more annoying than
that. <grin>

     This particular trait though, has helped me keep perspective as I
navigate through the hordes of folks who simply must have the latest and
greatest. There's nothing wrong with having the fastest, most modern
computer available, and if I was to buy a computer today, I'd probably
'shoot the moon' and get the top of the line model. But while that puts me
in the same category as most computer buyers, I fully understand that no
matter how fast or memory-laden a computer I  buy, it will be overshadowed
by another model within a year. There will be things that newer models can
do that this machine will not, and I'll have to upgrade in one way or
another if I wish to take advantage of new features.

     Meanwhile, I sit here typing away on my Atari. Outdated? Yes.
Overshadowed by newer computers? Most definately. But, while it is true
that there are things that I cannot do that others  can, they are of little
consequence to me at the moment. I don't feel the need to take advantage of
PUSH technology (or to be taken advantage _of_ by it), or to have the text
that I'm writing now available to me in any one of 16 million colors. One
interesting thing I've found about computer  advancement is that, the older
the computer is, the slower the rate of overshadowing. For those of you
scratching your heads and wondering what I'm talking about, let me explain.
A computer you  buy today will be overshadowed quite quickly by newer
models. While it is true that our Ataris are also falling behind, they are
_so_ far behind in the eyes of the rest of the world that a few  more
"can't do that"s don't add up to all that much. I've got all I need right
here... text editing,  spell checking (thank goodness for that one),
telecommunications, internet access, CD ROM  capability, and many other
things that don't come to mind right now (mostly because I'm busy using my
text editor and spell checker while cruising the internet and listening to
my favorite music CD through the computer <grin>).

     Yessir, I've got CAB 2.5 on order for myself as a Christmas gift, and
that'll make me happy for a while... until I get the bills for the gifts I
bought for everyone else!  Well, let's take a look at what's going on in
the newsgroups.

>From the COMP.SYS.ATARI.ST NewsGroup

When Gary Priest mentions that he just purchased CAB 2.5, Daniel
Dreibelbis asks him:
     So CAB 2.5 is actually OUT? In ENGLISH? That's VERY
     interesting news, Gary! Tell us all about it! Did it come
     with a manual or are you having to wait just like I did when
     I bought CAB 2.0a from Systems Solutions in April? What
     upgrade paths are they offering?

     Something tells me chro_Magic is going to be getting in
     contact with me RSN (I'm on the North American waiting list,
     you see) <smile>"

Gary replies:
     "I believe it only came out in the last couple of days. But
     yes, it was on sale at the London show, and yes I bought it
     :) It comes with the English manual (that apparently was the
     delay). CAB2 has always had an English .rsc file all the way
     through it's development (I know 'cos I beta test it). It's
     just the manuals that cause the delay.

     Basically, I bought CAB2.5 from System Solutions for 24UKP
     (that is the price if you have already registered 1.5 via

     I'm not sure what upgrade prices are. You'd be better off
     emailing System Solutions and asking them:

     Hmm. No idea. Don't even know what it (chroMAGIC) is.

For anyone else who doesn't know, chroMAGIC Software Innovations
is taking pre-release orders here in The States for CAB 2.5 and
has done a fair amount of hand-holding for those who just get a
little lost with a new program like CAB... That's where I've got
my copy of CAB 2.5 on order. <grin>

Austin Walshe asks about configuring HSModem7, the serial port
fixer-upper program for all Atari computers:
     "I am currently attempting to set up my TT modem port 2 to
     run at 28800 bps (or higher?). I have set up HSModem7 but are
     having trouble configuring it using setter.ttp to obtain the
     higher transfer rate.  Sketchy German documentation doesn't
     help!  If any one knows how to configure HSModem please let
     me know."

Raymond Collins tells Austin:
     "The following are settings I use with HSMODA07 on my TT030,
     TOS 3.06.  These settings are enfluenced in part by the use
     of STalker v 3.05, CoNnect v 2.46, and Geneva v 1.0 rel 005.

     I also use a Cyrel Sunrise M16-1280 graphics card and some
     of the serial drivers and graphic drivers influence the modem
     and serial ports.  Also serial timing is effected by my TT's
     CPU being modified to 48Mhz with a CaTTamaran.

     Program order DRIVN, MFP, SCC, MFP_TT, and [RSVX (from

     I use the SETTER.PRG to modify my settings, this program came with

     FASTINT  - off
     EXOPEN   - on

       SCC.PRG (I now use ESCC.PRG)
     M2TT   -  u
     M1IMU  -  off
     LANBIT -  on
     LANEXT -  on
     LAN_S2 -   1
     DTRM2  -  on
     DTRS2  -  on
     M2DR1  -  off
     RBLM2  -  64
     TBLM2  -  64
     RBLS2  -  64
     TBLS2  -  64

     RSVE   -  on
     REPL   -  set all six of these to "u"
     DTR    -  on
     RBL    -  32
     TBL    -  64

     RSVE   -  on
     REPL   -  set all six of these to "u"
     RBL    -  32
     TBL    -  64

     Some tips:
     1) In the drvn.prg turn fastint off.
     2) scc.prg or escc.prg can not use TT RAM.
     3) set mfp and mfp_tt transfer buffers only to 32k for
        STalker's use.

     4) set STalker's file transfer buffer to 1/3 that of mfps
        for write verify timing slack during HD file transfer

     5) Higher modem speeds are remapped through lower settings
        into Atari's MODEM.CPX.  This information is described in
        SCC_X.TXT, in both English and German.

     6) When in doubt contact the authors of each program involved
        (they helped me STalker, Connect, and hsmoda06)."

On the subject of using STinG, the TCP/IP connection package by
Peter Rottengatter, Joerg Sprenger asks for help:
     "I've got some major problems, using the Sting-Distribution
     to connect to the web via compuserve. I suppose, the main
     reason ist, that MODEM1 (I'm usin'a POWERBOOK with MM 1.25)
     is set to 8N1 instead of 7E1, which is expected by
     compuserve.  After setting these parameters in serial.cpx to
     57600 7E1, activating sting by sting.internals.cpx, starting
     dialler and quit it immidiatly, the serial.cpx shows a
     changed MODEM1 to 57600 8N1.

     I know, that PPPCONNECT uses 7E1 for compuserve, because
     while using 8N1 I've got only unreadable signs, but no valid

     So, could somebody confirm to this exspiriences, or better
     lead me to a solution, using STING correctly for compuserve
     and t-online?"

Jean-Michel Mercier tells Joerg:
     "I have exactly the same problem.  I think that the only way
     is to use another program to get thru the login procedure and
     jump to STING's DIALER when the "One moment please..."
     sentence appears.

     I don't know if terminal emulators that do scripting exist on
     ST (such as TELIX or PROCOMM and so) do on PC ?  But I think
     that I will write a small GFA program for this purpose very

     But for the moment, you could try to experiment like I do :
     using e terminal Emulator (the standard VT52 accessory for
     example) to dial and log into CIS and switch to the dialer

Peter Rottengatter tells Joerg:
     "So PPP-connect does a PPP connection using 7E1 ? I find
     that really hard to believe. The PPP RFC states clearly that
     an 8 bit connection is required, and that is completely
     obvious from the fact that PPP uses many control characters
     above 127, therefore actively using the 8th bit that won't
     exist in 7E1.

     Some guy in the Maus-Gruppe "Internet"
     (maus.sys.atari.internet) posted his setup that he uses to
     log into T-Online."

Actually folks, it is true that CompuServe requires a 7 bit
connection when you are giving it your account name and password.
I don't remember _why_ CIS requires this, but it does. There is,
however, a way around it. Simply edit your dial-up script so that
when CIS sends the string "HOST:" instead of replying CIS (or CSI,
or CompuServe, or whatever), simply add a plus sign (+) to the
front of the string (so it would become "+CIS", "+CSI", or
"+CompuServe"). Of course, you'll have to do this with WAIT
statements since STinG won't be able to see the "HOST:" prompt in
the first place.

Claude Bourgoin asks:
     "Has anyone been able to get STing PPP working on a TT030.
     If you have could you email me a copy your default.cfg and
     dial.scr. I can get a successful Link Initialization, but I
     am unable to resolve any hosts."

Malcom Cooke tells Claude:
     "Sting Has always worked great on my TT. I also Use MagiC."

Andreas Sickert asks for help with jumping platforms:
     "I've got a problem. One year ago I changed the systems from
     Atari, which I used because I'm a music-teacher, to PC. I
     wrote many MIDI-Files with my ATARI and I don't want to loose
     them.  Can anybody tell me, how I can transfer these files
     from my old ATARI 1040 STFM to my PC? I think that I can't
     use the floppy because of the different formats."

Robert George tells Andreas:
     "Actually a PC can read a Atari disc.  The problem is that
     Atari uses a Single sided disc and the PC wants a double
     sided.  So unless you have a drive on your Atari that is high
     density/souble sided my suggestion would be to put all your
     Atari midi files in a zip file and e-mail them to some one
     with a pc.  Otherwise I'm out of suggestions.  My solution
     was to buy a Floptical drive some years ago on my Atari that
     reads and writes high density floppies that  pop right into
     my PC.  The flopital drives work good but are only available
     used if you can find one.  they also hold 20 meg on
     flopitical discs."

Well folks, that's about it for this week. Tune in again next week, same
time, same station, and be ready to listen to what they are saying when...

                            PEOPLE ARE TALKING

                            EDITORIAL QUICKIES


Federal Bureaucrat Virus -- Divides your hard disk into hundreds of little
 units, each of which do practically nothing, but all of which claim to be
                 the most important part of the computer.
 Dan Quayle Virus -- Their is sumthing rong with your compueter, ewe just
                          can't figyour out watt.
 Gallup Poll Virus -- Sixty percent of the PC's infected will lose 38% of
 their data 14 percent of the time (plus or minus a 3.5% margin of error).
 Paul Revere Virus -- revolutionary virus doesn't horse around.  It warns
       of impending hard disk attack once if by LAN, twice if by C:
  Politically Correct Virus -- never calls itself a "virus," but instead
            refers to itself as an "electronic micro-organism."
 Ross Perot Virus -- Activates every component in your system just before
                            whole thing quits.
  Mario Cuomo Virus -- It would be a great virus, but it refuses to run.
 Oprah Winfrey Virus -- Your 2000 MB hard drive suddenly shrinks to 80 MB,
                    then slowly expands back to 200 MB.
 AT&T Virus -- Every three minutes it tells you what great service you're
  MCI Virus -- Every three minutes it reminds you that you are paying too
                            for the ATT Virus.
          Ted Turner Virus -- Colorizes your monochrome monitor.
 Arnold Schwarzennegger Virus -- Terminates and stays resident.  It'll be
   Government Economist Virus -- Nothing works, but all your diagnostic
                     software says everything is fine.
 New World Order Virus -- Probably harmless, but it makes a lot of people
                    really mad just thinking about it.
      Texas Virus -- Makes sure that it's bigger than any other file.
     Adam and Eve Virus -- Takes a couple of bytes out of your Apple.
Michael Jackson Virus -- Hard to identify because it's constantly altering
                              its appearance.
  Congressional Virus -- The computer locks up, screen splits erratically
 a message appearing on each half blaming the other side for the problem.
     Airline Virus -- You're in Dallas, but your data is in Singapore.
  Freudian Virus -- Your computer becomes obsessed with marrying its own
      PBS Virus -- Your PC stops every few minutes to ask for money.
    Elvis Virus -- Your computer gets fat, slow and lazy and then self
destructs, only to resurface at shopping malls and service stations across
                              rural America.
     Ollie North Virus -- Turns your printer into a document shredder.
                        Nike Virus -- Just does it!
 Sears Virus -- Your data won't appear unless you buy new cables, a power
                       supply, and a set of shocks.
                 Jimmy Hoffa Virus -- Nobody can find it.
Congressional Virus -- Runs every program on the hard drive simultaneously,
            but doesn't allow the user to accomplish anything.
  Kevorkian Virus -- Helps your computer shut down whenever it wants to.
Imelda Marcos Virus -- Sings you a song (slightly off key) on boot up then
 subtracts money from your Quicken account and spends it all on expensive
                    shoes it purchases through Prodigy.
 Star Trek Virus -- Invades your system in places where no virus has gone
Health Care Virus -- Tests your system for a day, finds nothing wrong, and
                       sends you a bill for $4,500.
 George Bush Virus -- It starts by boldly stating, "Read my new
files!" on the screen, proceeds to fill up all the free space on your hard
        drive with new files, then blames it on the Congress Virus.
Cleveland Indians Virus -- Makes your 486/50 machine perform like a 286/AT.
 LAPD Virus -- It claims it feels threatened by the other files on your PC
                    and erases them in "self-defense."
Chicago Cubs Virus -- Your PC makes frequent mistakes and comes in last in
                    the reviews, but you still love it.

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       STReport  "YOUR INDEPENDENT NEWS SOURCE"   November 14, 1997
      Since 1987  Copyrightc1997 All Rights Reserved   Issue No. 1345

1    For example, the DOJ obtained a declaration from an
executive at Micron who, although quick to say he was "not an
engineer," opined-based on his "general understanding of the
nature of the code and file structure of Internet Explorer and
Windows 95"-that it would be "technically feasible to remove
. . . the software code constituting Internet Explorer from
Windows 95 without impairing the proper functioning of the
operating system." (Declaration of Eric Browning, dated Oct.
14, 1997,  7 (Ex. 5 to DOJ Petition)). Moreover, having been
told that he was not "a technical person," the DOJ asked
Packard Bell's vice president of marketing whether-based on his
"basic knowledge of software"-it would be possible "to remove
the Internet Explorer code from Windows 95 without affecting
the functioning or performance of Windows 95." (Transcript of
Deposition of Mal D. Ransom, taken Oct. 1, 1997, at 12-14 (Ex.
7 to DOJ Petition)). The DOJ apparently credited the uninformed
testimony of these witnesses because the DOJ provided no other
support for the demonstrably incorrect assertion that removing
Internet Explorer from Windows 95 would have no adverse effect
on the remainder of the operating system.
2    The Assistant Attorney General told this Court that she,
"Anne K. Bingaman, reached the conclusion that there was only
one case made out at that point in time against Microsoft. And
I thought the other claims which these people have alleged,
which we investigated, were not provable. . . . We had a
licensing case, and we didn't have another case at that time."
(Hruska Aff. Ex. B at 23.)
3    The Assistant Attorney General stated: "I didn't care what
I sued them on. I didn't care. I'd sue them on vaporware. I'd
sue them on anything if I thought I could win the case. But,
your Honor, I didn't think I could win these other claims at
that time. Now, if somebody comes to me with the evidence and
shows me I can win it, hey, I sort of like suing these guys.
. . . Your Honor, it would be the height of irresponsibility
and abdication of my duty to sue people when I didn't believe
in my best good faith as a lawyer of 26 and a half years and 20
years in litigation that I'm going to lose this case." (Hruska
Aff. Ex. B at 27.)
4    As the DOJ told this Court during the Tunney Act
proceedings, "we don't think it's fair to [Microsoft] to be in
the position where their presumption of innocence in a sense
has been reversed, where there is an obligation for them
without really a chance to cross-examine witnesses or the
like." (Hruska Aff. Ex. C at 26.)
5    See also Browning Decl.  4 (Ex. 5 to DOJ Petition)
(Micron's customers "overwhelmingly expect" the operating
system preinstalled on their computers will be Windows 95);
Transcript of Telephonic Deposition of Jerry T. Kozel, taken
Sept. 19, 1997, at 11 (Ex. 6 to DOJ Petition) (IBM preinstalls
Windows 95 on 100% of its consumer line of computers "based on
the demands from [its] retailers and customers"); Ransom Tr. at
10-11 (Ex. 7 to DOJ Petition) (Packard Bell preinstalls Windows
95 on 100% of its consumer line of computers because it is "the
only competitive available operating system that speaks to our
marketplace in the world"); Transcript of Deposition of James
J. von Holle, taken Sept. 19, 1997, at 12-13 (Ex. 8 to the DOJ
Petition) (Gateway preinstalls Windows 95 on a large proportion
of its computers due to the "market success" of the operating
system); Transcript of Telephonic Deposition of Stephen A.
Decker, taken Oct. 17, 1997, at 10 (Ex. 9 to the DOJ Petition)
(Compaq preinstalls Windows 95 on 100% of its consumer line of
computers because that is what the competition does and because
that is what makes new computers easier to use "from a customer
point of view").
6    Although they are beyond the scope of the Consent Decree,
Microsoft's product design decisions are subject to whatever
constraints might be imposed under the antitrust laws
generally. Recognizing that "[p]roduct innovation,"
particularly in high-tech industries like software, is "the
essence of competitive conduct," Foremost Pro Color, Inc. v.
Eastman Kodak Co., 703 F.2d 534, 542 (9th Cir. 1983), cert.
denied, 465 U.S. 1038 (1984), courts routinely reject so-called
"technological tying" claims. See ABA Section of Antitrust Law,
1 Antitrust Law Developments 184 n.1008 (4th ed. 1997). To even
begin to establish such a claim, an antitrust plaintiff must
allege that the design of an integrated product was conceived
solely "for the purpose of tying the products, rather than to
achieve some technologically beneficial result." Response of
Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1330
(5th Cir. 1976). Courts have stressed that any other rule
"would enmesh the courts with technical and uncertain inquiry
into the technological justifiability of functional integration
and cast unfortunate doubt on the legality of product
innovations in serious detriment to the industry and without
any legitimate antitrust purpose." Telex Corp. v. IBM, 367 F.
Supp. 258, 347 (N.D. Okla. 1973), rev'd on other grounds, 510
F.2d 894 (10th Cir.), cert. dismissed, 423 U.S. 802 (1975).
7    The DOJ's heavy reliance on the Competitive Impact
Statement, which the DOJ drafted without any participation from
Microsoft, is misplaced. The DOJ neglected to mention the
existence of the proviso when discussing Section IV(E)(i) of
the Consent Decree in the Competitive Impact Statement. Such
efforts to diminish the significance of the proviso cannot
alter the clear understanding that the DOJ and DG IV reached
with Microsoft in July 1994.
8    Admissions contained in court papers are binding on the
party who made them. See National Assoc. of Life Underwriters
v. Commissioner of Internal Revenue, 30 F.3d 1526, 1530 (D.C.
Cir. 1994); see, e.g., Simpson v. Washington Metro. Area
Transit Auth., 688 F. Supp. 765 (D.D.C. 1988), aff'd per
curiam, 1990 WL 104842 (D.C. Cir. June 5, 1990)
9    Accord Gates v. Shinn, 98 F.3d 463, 472 (9th Cir. 1996),
cert. denied, 117 S. Ct. 2454 (1997); Hughey v. JMS Dev. Corp.,
78 F.3d 1523, 1532 n.12 (11th Cir.), cert. denied, 117 S. Ct.
482 (1996); Harris, 47 F.3d at 1349; Project B.A.S.I.C. v.
Kemp, 947 F.2d 11, 16 (1st Cir. 1991); In re Baldwin-United
Corp., 770 F.2d 328, 339 (2d Cir. 1985); H.K. Porter Co. v.
National Friction Prods. Corp., 568 F.2d 24, 26 (7th Cir.
1978); cf. United States v. NYNEX Corp., 8 F.3d 52, 55 (D.C.
Cir. 1993) (reaching same conclusion in criminal contempt
10    Modification of the Consent Decree would, in any case,
require specific notice to Microsoft and an evidentiary hearing
to determine whether such modification is necessary and
appropriate. Western Elec. Co., 894 F.2d at 436-37.
11    As a result of the DOJ's unwillingness or inability to
understand the facts surrounding Microsoft's inclusion of
Internet-related technologies in Windows 95, the DOJ's papers
are replete with inaccurate factual assertions. For instance,
the DOJ asserts that what it defines as a "browser" is able to
access information on the hard disk drive of a computer
"without interacting with the underlying operating system on
the PC." (DOJ Mem. at 31.) That statement is absurd and
reflects a profound confusion about the nature of the
relationship between Internet Explorer and other elements of
Windows 95.

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