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Nov 10, 1997, Vol. 3, No. 09 • By BRIT HUME
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BUY A COMPUTER RUNNING Microsoft's Windows 95 these days, and you get something extra. There is an icon on your screen that looks like a magnifying glass above a globe. It is labeled simply "The Internet." Activate it and it takes you through the process of setting up Microsoft's World Wide Web browser, called "Internet Explorer." Now in its fourth edition, Internet Explorer is a full-blown Internet-access program with all the bells and whistles expected of such software. There is no additional charge for it, and you don't have to use it. It does not prevent you from using a competing program, such as Netscape's Navigator, still by far the most popular Web browser and a major thorn in Microsoft's side. But a computer manufacturer that wants to include Windows 95 with new models cannot get the operating system without Internet Explorer. Furthermore, Microsoft does not allow manufacturers to delete either the program itself or that little icon from the opening screen, known in the world of Windows as the "desktop."

To users, the icon might look like a bonus -- a powerful program thrown in free. But to Janet Reno's Justice Department, it looks like an illegal scheme by mighty Microsoft to squeeze out the competition. The department charged Microsoft on October 20 with violating the consent decree it reached with Justice on anti-trust matters two years ago. "Forcing PC manufacturers to take one Microsoft product as a condition of buying a monopoly product like Windows 95," Reno said, "is not only a violation of the court order but it's plain wrong." Joel Klein, Reno's anti-trust chief, insisted, "We're not taking sides in a browser war." To him, the case is simple. "We think the evidence will show unmistakably that these are two separate products," he said, "Everybody knows you have an operating system and you have a browser." Those statements suggest that Reno and Klein have some understanding of what's now happening in the world of computer software, but not much.

For one thing, Microsoft's operating systems have always been a combination of basic software needed to make a computer function and additional stand- alone programs intended to enhance its capabilities. By the time Windows 95 came along, the list of stand-alone additions had grown to include two word processors, a modem communications program, fax software, electronic-mail software, and a set of computer games. A manufacturer that wanted Windows 95 had to take the whole package. From the earliest days of the personal computer, each successive edition of Microsoft's software has included new features that hurt, or even wiped out, the market for programs that other software houses had developed to fill gaps left by Microsoft. Software houses that had prospered handsomely swimming in Microsoft's wake did not like it when their markets suddenly shrank or vanished. Some have been complaining to the Justice Department for years. The department has been sympathetic, encouraged, some suspect, by the generosity many Silicon Valley firms have shown President Clinton's campaigns. Microsoft, by contrast, has refused to play that game, maintains only a small office in Washington, and does little lobbying compared with other firms of its size.

But the Justice Department has little to show for its pursuit of Microsoft, which dates back to 1993, when Justice took over a stalled Federal Trade Commission investigation. It isn't easy, after all, to get the courts to order a company to stop improving its product. But Justice seems determined to keep trying, and Reno, Klein, et al. clearly think they've caught Microsoft dead to rights trying to parlay its operating-system hegemony into domination of the market for Internet "application" software. It isn't nearly that simple. The reason is that Microsoft, for all its size and success, or perhaps because of it, has proved as slow to react to change in the 1990s as IBM was when it nearly drove itself off a cliff in the 1980s. In both cases, the problem was failure to recognize the importance of a new technology. In IBM's case, it was the personal computer itself. In Microsoft's, it was the Internet.