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  Justice Dept. Says Microsoft In Contempt

By Rajiv Chandrasekaran and Elizabeth Corcoran
Washington Post Staff Writers
Thursday, December 18, 1997; Page E01

The Justice Department yesterday accused Microsoft Corp. of flouting a federal judge's ruling by offering computer makers poor alternatives if they choose not to include its Internet-browsing software on their machines.

For the second time in two months, the department asked that Microsoft be held in contempt of court and fined $1 million for every day it violates the order.

"Microsoft's naked attempt to defeat the purpose of the court's order and to further its litigation strategy is an affront to the court's authority," the department wrote in papers filed yesterday in federal court here.

The department also is seeking an unprecedented scrutiny of Microsoft in the future. In its filing, Justice asked U.S. District Judge Thomas Penfield Jackson to order the company to provide details of any new or revised PC operating system or Internet browser to the government and the court at least 30 days before commercially releasing the product.

Jackson last Thursday issued a preliminary injunction temporarily preventing Microsoft from forcing PC makers to install its Internet Explorer browser when licensing its dominant Windows 95 computer operating system software. The Justice Department argued that requiring the joint distribution of Windows and Internet Explorer violated the terms of a 1995 agreement with the government that was intended to limit some of the company's business tactics.

In an attempt to comply with the judge's order, Microsoft said Monday it would offer PC manufacturers who don't want the integrated browser two different, stripped-down versions of Windows 95. One contains no Internet Explorer files and will not operate. The other lacks key functions offered in current editions of Windows and will not work with new versions of several popular consumer software titles.

The company contends that it is following the letter of Jackson's ruling by deleting all the Explorer files from Windows 95. Microsoft maintains that new versions of Windows 95 are inoperable without the browser files.

But the Justice Department, which wants Microsoft to offer current versions of Windows 95 without the browser, called Microsoft's options "commercially worthless." The department said yesterday that it doesn't want all the Internet Explorer files to be removed, just those that create the browser. Other Explorer files – those that are essential to Windows and other software applications – can remain, the department said.

To make the change, the Justice Department argues, PC makers should be allowed to use an "uninstall" program, which is included in every copy of Windows 95. The program removes some Internet Explorer files without harming the underlying operating system, the department said.

Microsoft sent a letter yesterday to the Justice Department in which it said it "believes that it is in full compliance" with Jackson's order. A company spokesman accused the government of an "about face" in its stance.

"In their initial filing they wanted us to remove all the Internet Explorer [files]," spokesman Mark Murray said. "Now they're flip-flopping and saying that we should leave virtually all the Internet Explorer code in [Windows]."

Murray also lashed out at Justice's request for advance details on Microsoft products. "This seems to be inserting the government deeper and deeper into complex issues of product design and product engineering," he said.

"We think that's a very dangerous precedent for the entire U.S. software industry."

Microsoft also is being scrutinized on another legal front. Attorneys general in 10 states have been working together to assess whether they should take action against Microsoft, contending that the software giant's business practices violate state antitrust laws.

Connecticut Attorney General Richard Blumenthal said in an interview that the state attorneys general are "close to a decision" about how to proceed. "I think a lawsuit is very likely," he said.

The states have a number of legal options, including weighing in on the dispute between the Justice Department and Microsoft, filing cases separately, or filing together as they did in suits against the tobacco industry. Representatives from eight of the states held a three-day, closed-door meeting in Chicago last week to coordinate their efforts.

In addition to New York and Connecticut, other states investigating Microsoft are California, Texas, Illinois, Wisconsin, Minnesota, Florida, Massachusetts and Iowa. Texas is the only state to have taken legal action against the company.

© Copyright 1998 The Washington Post Company

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