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Why Is The Government Involved With Microsoft?

By Pierre Thomas/CNN

WASHINGTON (May 13) -- A superstar in the computer world, Bill Gates, head of software giant Microsoft, is in a showdown with Attorney General Janet Reno.

Reno

On Friday Microsoft was set to ship its newest product, Windows 98. The company said it would hold off on that, while last-ditch negotiations with the Justice Department continued.

But the Justice Department and several states are still considering filing lawsuits, claiming a broad pattern of anti-competitive practices, which could sidetrack the updated operating system's release.

Microsoft has vowed to fight. And Gates has a warning: "Any government action that would delay or derail Windows 98 would hurt the American economy and would cost American jobs."

That argument hasn't swayed Justice investigators, who are looking into whether Microsoft is exercising too much power in two arenas Americans are increasingly reliant on: computers and the Internet.

Justice attorneys argue Microsoft, which controls more than 90 percent of the computer operating software market, is using illegal tactics to maintain a monopoly.

Gates

It's a violation of U.S. anti-trust law for a company with an overwhelming share of a market to use its power to hurt competitors so it can maintain or extend its dominant position.

And some at Justice believe Microsoft used its monopoly to control another field, the so-called browser market, the software that lets computer users view pages on the Web. Think of the browser as the gateway to the Internet, the country's new information and economic frontier.

At a congressional hearing a Microsoft competitor explained what's at risk.

Sun Microsystems CEO Scott McNealy said, "Microsoft has the power today to exercise predatory and exclusionary control over the very means by which we access this Internet. It's a lot like General Motors having the ability to dictate what gasoline you put in your car."

McNealy

But what has Microsoft allegedly done wrong?

Much of the Justice investigation has focused on Microsoft's competition with Netscape, Microsoft's chief competitor in the browser market.

The Justice probe asks these questions:

  • Is Microsoft illegally tying its browser to its Windows software to kill Netscape and other browser competitors?

  • Did Microsoft offer its browser free to computer makers to undermine Netscape?

  • Did Microsoft try to force computer makers into signing contracts requiring them to install only the Microsoft browser?

Microsoft says it's no monopoly, but an innovative company making access to the Internet just one click away.

Experts say don't expect a last minute compromise. Anti-trust expert John Gardner told CNN, "The Justice Department and Microsoft have drawn a line in the sand."

Justice sources say what is at stake is the public's access to the emerging cyberspace economy.

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Why Is The Government Involved With Microsoft?


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