Microsoft Corp. and the U.S. Department of Justice have reached a settlement in the contempt-of-court case against the software company, by which Microsoft will provide versions of Windows 95 without the Internet Explorer browser to computer makers.
U.S. District Court Judge Thomas Penfield Jackson accepted the agreement today at a packed hearing here and closed the contempt case. The DOJ had threatened to fine the company US$1 million a day if it did not comply with the judge's temporary injunction, issued on Dec. 11.
Microsoft's trial attorney,Richard Urowsky, an attorney with Sullivan & Cromwell of New York, said the agreement settled only the contempt-of-court issue, and does not settle other issues pending against Microsoft in the district or appeals courts. Microsoft said it will actively pursue its appeal of the temporary injunction. The court date for the appeal is set for April 21.
Meanwhile, the larger issue of whether Microsoft has violated its 1995 consent decree with the DOJ by bundling Explorer with Windows is being examined by a technical advisor, known as a special master, appointed by Penfield.
The current DOJ antitrust efforts against Microsoft began in October 1997, when the agency asked the district court to find Microsoft in contempt for violating a 1995 antitrust consent decree that bars the company from tying the licensing of one product to that of another. Six days after Penfield issued the temporary injunction against Microsoft, requiring it to offer computer manufacturers the option of licensing Windows 95 without having to pre-install Explorer, the DOJ asked the court to find Microsoft in contempt for not complying with that order.
The DOJ said Microsoft's reaction to the judge's order was a "mockery" of the order. Microsoft had responded to the order by offering computer makers the choice of an old version of Windows, a version the company said would not work, or the bundled version.
Under the agreement announced today, Microsoft is notifying computer makers that two additional Windows 95 options are available. Both options entail leaving all or nearly all of the Explorer files in Windows 95 but removing or hiding customer access to the browser functionality.
Microsoft agreed to provide each computer manufacturer the option of licensing a version of Windows 95 OSR 2.0 -- a new version -- with Explorer uninstalled. The second option that will be offered to computer manufacturers is a version of Windows 95 in which no Internet Explorer icon appears on the desktop or in the Programs list under the Start menu. With this option, Microsoft will hide from the user an included file called IEXPLORE.EXE.
"We believe this order will obtain all the relief the United States sought quickly, effectively and without any uncertainty," said DOJ attorney Philip Malone.
After the brief hearing, Microsoft lead attorney William Neukom said he was pleased to have resolved this preliminary issue and said that Microsoft would continue to defend the rights of high-tech companies to be innovative as they produce new products for the market.
Neukom noted that under both the court's preliminary injunction and today's agreement computer makers may continue to install the full Windows 95 product including all Explorer files.
Jeffrey Tarter, editor of Softletter, said that the DOJ might have won this round of its antitrust efforts against Microsoft but that it was a meaningless settlement. "What hardware company is going to willingly choose not to include IE [Explorer]? It is a meaningless position. Most customers want it."
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