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October 20, 1997updated 03 Sep 2016 9:23pm

WHAT A LONG STRANGE SUIT IT’S BEEN

By CBR Staff Writer

The August 21st 1995 court order that the Justice Department obtained against Microsoft Corp, filed in July 1994, was widely criticized by some of Microsoft’s rivals as toothless – a judgment all the more ironic if Janet Reno succeeds in making Redmond pay the headline figure of $1m per day fine. The court order followed both a long period of inaction by the antitrust investigators in Justice, caused by the Reagan administration’s relative lack of interest in the topic, especially after the disastrous end of the botched 1969-1982 US Government look into IBM’s allegedly monopolistic practices. But pressure to give Gates the third degree from aggrieved Microsoft competitors, spearheaded by Ray Noorda, then CEO of Novell Inc, in the early 1990s finally paid off when Justice effectively blocked the proposed $1.5bn takeover by Bill Gates of the Quicken personal software suppliers, Intuit Inc, in 1994. Microsoft was seen as getting off relatively lightly with the consent decree’s terms, and it was bound to be only a matter of time before there was a second round. It is believed it was Netscape Communications Corp – which has succeeded Novell as poster boy for the anti-Microsoft camp – which alerted law firm Wilson, Sonsini, Goodrich & Rosati in Palo Alto in August, writing to Deputy Assistant Attorney General Joel Klein on Netscape’s behest, charging Microsoft was breaking the consent decree.

By Gary Flood

To add to its woes, Microsoft is in the potentially unenviable position of facing numerous other investigations by the wonks, separate to this case. It was only in August that the Department ended work on the ramifications of its video streaming rampage, as in its August $425m purchase of WebTV Networks Inc, its $75m takeover of internet video startup Vxtreme Inc the same month, and its related investments in Progressive Networks Inc and VDONet Corp in 1997 and 1996 respectively (CI No 3,229). And there is known to be scrutiny underway into its August $150m Apple investment, seen by some as both a way of extending Explorer’s reach on the desktop and as a means of heading off antitrust evaluations. Meanwhile, Microsoft’s legal problems extend beyond having Uncle Sam as the plaintiff. There is the Sun Microsystems Inc’s suit about Java, but perhaps more potentially damaging may be a private antitrust suit brought by, ironically enough, Ray Noorda’s new company, Caldera Inc, which is complaining of illegal conduct by Microsoft, calculated and intended to prevent competition in the computer industry, this time concerning DR DOS, the older PC operating system Caldera owns. That is set to go to trial next May. And only last month (CI No 3,251) Microsoft settled a case brought by Borland International Inc concerning allegations of uncompetitive behavior related to hiring Borland developer talent. Then again, Microsoft can afford the best lawyers in this sector of the Galaxy, so all these cases may turn out to be simply annoying, though obviously it is hardly the best PR. Whatever the outcome of the Monday DoJ-Redmond spat, however, there are many observers who wonder if the current form of antitrust legislation – drawn up in earlier, Industrial Age, times – works as well in the Information Age, especially given the blurring of industries (TV, cable, home computing) Microsoft is aggressively promoting. Among its other doings this year, Big Green has invested at least $2bn in TV so far in 1997 ($1bn in Comcast Corp, the $425m WebTV buy, its ongoing investments in the MSNBC channel), a figure which may rise by another $1bn if speculation about plans for Redmond to put that amount in Tele- Communications Inc are correct.

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