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  Japan Warns Microsoft on Monopoly

Compiled from wire services and staff reports
Saturday, November 21, 1998; Page G1

After a lengthy investigation, Japan's Fair Trade Commission slapped Microsoft Corp. with a warning yesterday after ruling that the software giant engaged in unfair business practices through certain sales tactics and had violated the nation's anti-monopoly laws.

The commission did not, however, rule that Microsoft's inclusion of its Internet Explorer browser in its Windows operating system is illegal, as the U.S. Justice Department is trying to establish in a separate proceeding in the United States.

The commission, Japan's chief antitrust regulator, found that Microsoft attempted to unfairly restrict competitors' access to customers by bundling word-processing and spreadsheet software that was pre-installed in personal computers, said FTC spokesman Kanichiro Nakanishi.

Microsoft Co., the wholly owned Japanese subsidiary of Microsoft Corp., issued a statement in Tokyo saying it had already voluntarily stopped the practices cited by the commission and did not anticipate having to make any additional changes to its marketing in Japan.

A company official, speaking on condition of anonymity, said that Microsoft does not plan to formally protest the ruling but that the company does not believe it violated any laws.

Brad Smith, general counsel for international affairs at Microsoft's Redmond, Wash., headquarters, said the ruling in a way was positive for the company because of the steps the Japanese government did not take.

"It's certainly ironic that the Japanese government has dropped all of the browser allegations, but our own government is continuing its attack on one of America's leading exporters," Smith said.

"Japanese competition law is in fact stricter than the United States," he said. "So we have satisfied a higher legal standard in Japan than we are going to have to do in Washington, D.C."

In Washington, Justice Department officials said the Japanese proceeding has little, if anything, to do with what they contend is a broad pattern of illegal activity at issue in the government's case against Microsoft.

In the U.S. case, being tried in a Washington courtroom, the Justice Department and 20 states contend Microsoft has used its dominance in computer operating systems to quash competition. Key to that allegation is Microsoft's practice of including Internet browsing software in its Windows product, which the Justice Department says is an illegal attempt to use one monopoly to build another.

Microsoft had contracts in Japan whereby companies offering Internet access were promoted via a list linked to its Windows system. In return, these service providers had agreed to promote the Internet Explorer browser.

Those contracts were criticized for being exclusionary, and Microsoft modified them earlier this year, Microsoft's Smith said.

In January, agents from the Japanese commission raided Microsoft's Tokyo offices, confiscating 100,000 pages of documents, including information about Microsoft's Windows and Internet Explorer. It also collected information about Microsoft's word processing program Word and spreadsheet Excel.

In a separate development, Microsoft yesterday notified customers that it will continue to support Java programming technology as the company complies with a federal court order that it meet standards set by Java creator Sun Microsystems Inc. or pull its products from store shelves.

To comply with the order, Microsoft must include technology identified by Sun that will enable programs written in Java to work as well with Microsoft's technology as with software from other companies. Microsoft also must adapt its programming tools so that software developers are flagged when the tools will help create programs that run on Windows but not elsewhere.

Microsoft has until early December to give the court a detailed plan of how it will comply with the order. But yesterday, the company aimed to reassure customers and PC makers that its products would continue to work.

Microsoft has not yet announced whether it will appeal the court's order.

© Copyright 1998 The Washington Post Company

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