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  Microsoft to Allow Browser Blocking

By Rajiv Chandrasekaran
Washington Post Staff Writer
Friday, January 23, 1998; Page G01

Microsoft Corp. agreed yesterday to let personal computer makers block access to the company's Internet browser when installing the latest version of its Windows 95 operating system, a significant concession to the Justice Department that prevents the software giant from being found in contempt of court.

The settlement, agreed to this morning by U.S. District Judge Thomas Penfield Jackson in Washington, resolves a major issue in the Justice Department's antitrust battle with Microsoft. It likely will remain in effect until Windows 95 is replaced by a new product, legal experts said.

The settlement, which was reached after intense discussions Wednesday night, does not clear up larger issues in Justice's case against Microsoft. The agency argues that Microsoft, in requiring that PC manufacturers that want to use Windows must distribute its Internet Explorer browser, is violating a 1995 consent decree with the government that sought to mute some of the company's business practices.

"This is a very important victory for consumers and innovators," Assistant Attorney General Joel I. Klein said in an interview. He said the settlement shows technology companies "that their products can compete on their own merits and not be snuffed out by Microsoft's use of monopoly power."

Robert Herbold, Microsoft's executive vice president and chief operating officer, said in an interview that the company decided to settle so it can focus on the broader issue of whether it is violating the consent decree.

"We want to get on with this," he said. "By resolving this controversy, we're putting the focus back where it belongs, back on the substance of this case."

In the limited settlement reached yesterday, the department won relief for its contention that Microsoft was flouting a preliminary injunction issued by Jackson in December by offering two browser-less versions of Windows 95 that were inoperable or that lacked features of the latest version.

The company had insisted that the wording of Jackson's injunction required it to delete all browser files from Windows 95, despite its contention that the operating system cannot function without most of the browser's files. That hard-line position had created a public relations debacle for Microsoft.

The Justice Department wanted the company to let PC makers use the already-developed "add/remove" function to "uninstall" Internet Explorer. That approach removes some – but not all – browser files without harming the underlying operating system.

In issuing his December injunction, Jackson ordered an in-depth review of Microsoft's licensing requirement before making a final ruling. The company has appealed the preliminary injunction and Jackson's decision to appoint a Harvard University law professor as a "special master" to conduct the review.

Under the settlement, Microsoft will give computer makers that don't want to distribute the browser two new options:

They can use an "add/remove" function in Windows 95 to delete a handful of Internet Explorer files, which removes both the desktop "icon" for Internet Explorer and the other ways an ordinary user can access the browser.

They can simply remove the icon for Internet Explorer, making the browser harder – but not impossible – to access.

"It's a pure hiding rather than a removing approach," William H. Neukom, Microsoft's vice president for law and public policy, said at a news conference. Neukom said no PC maker has expressed interest in any versions of Windows 95 without a browser.

In a related development, Microsoft's chief rival in the browser wars, Netscape Communications Corp., said yesterday it will make its Navigator browser free, copying a tactic used by Microsoft.

Although Justice and Microsoft lawyers have been talking off and on since the department sued the company in October, the settlement discussions began in earnest late last week, after Jackson held a two-day hearing into the contempt issue, sources close to the case said.

At the hearing, Jackson skeptically questioned a top Microsoft executive about the firm's compliance with his preliminary injunction – a move that, to some legal observers, suggested he was moving to rule against the company.

During the talks, Microsoft first proposed to Justice that the PC makers only be allowed to remove the icon but not the 26 files that are deleted during the uninstall process, the sources said. Finally, Wednesday night, Microsoft agreed to provide the two options to computer makers, the sources said.

The settlement likely will remain in effect until at least summer, when Windows 95 is to be replaced with a new product, Windows 98, which is the subject of a separate Justice inquiry. The accord is likely to stay in force that long because it will continue for 90 days after Microsoft's appeal is decided, which isn't expected until spring.

Microsoft executives said as recently as a week ago that they were not inclined to make a settlement offer because it could be interpreted as a concession to the government that could affect prospects for an appeal. Herbold and Neukom said yesterday that they felt the agreement would not weaken an appeal.

Microsoft's competitors in Silicon Valley applauded the move yesterday.

"There is enormous significance to what's happened," said Gary Reback, a partner with the Palo Alto, Calif.-based law firm Wilson Sonsini Goodrich and Rosati who represents Netscape. "It demonstrates the government's willingness to go to bat, and that the government can get meaningful results."

Staff writer Elizabeth Corcoran in San Francisco contributed to this report.

© Copyright 1998 The Washington Post Company

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