Microsoft and Intel face US government action

Microsoft and Intel face US government action
Tom Foremski in San Jose PC industry leaders Microsoft and Intel are facing US government actions which could threaten their dominant market positions. The Department of Justice (DoJ) and 13 US states are reported to be preparing antitrust lawsuits aimed at delaying the launch of Microsoft’s Windows 98. Meanwhile, sources close to the Federal Trade Commission (FTC) report that Intel may soon be served with a lawsuit concerning its practice of cutting off customers from its future product information. Microsoft has responsed by calling upon the PC industry to support the roll out of Windows 98 and to speak out against state or government attempts to block the operating system. Microsoft’s CEO Bill Gates said that government involvement would be “like telling General Motors that it could not introduce new cars this fall.” Any delay to Windows 98 would be serious, he said, “and ripple through the economy.” PC makers are concerned that delaying Windows 98 would complicate PC purchases, and with PC growth slowing this year, it could affect the entire $100bn industry. But Microsoft’s claims of it damaging the economy appear overblown, since major corporations have said that they won’t be upgrading to Windows 98. “We have found that corporations won’t upgrade to Windows 98 because of fears about compatibility problems and because of the logistical challenges,” said Dan Kusnetzky, senior analyst at market research firm IDC. Microsoft’s problems stem from Windows 98 integrating Internet technologies with the operating system. The DoJ believes that the company is violating an agreement it made in 1995 not to bundle software in such a manner. But Microsoft claims that this integration is essential if computer use is to be simplified, and that it is the market should decide and not government regulators. Microsoft opponents include large computer firms such as Oracle, Netscape Communications and Sun Microsystems. These firms have complained to the government about Microsoft’s 90 per cent share of the PC operating systems market. They have formed an anti-Microsoft industry group called Procomp, aimed at promoting the idea of a fair, competitive market. Mike Pettit, head of Procomp, said that Microsoft’s public statements and publicity events, were an attempt to “bully” US policy makers from continuing with antitrust investigations of Microsoft. Intel is also undergoing antitrust investigations but its position is less precarious than Microsoft’s because there are competitors that offer Intel clone microprocessors. However, it may be forced to modify business practices such as its power to cut off companies from information on its future products. Without such information such companies cannot develop new systems. Intel has used such actions several times. Last year, it restricted data to Digital Equipment and Intergraph because of legal disputes. Early this year a US judge ordered Intel to supply Intergraph with the information it needed, noting that Intergraph has a good antitrust case against Intel.


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