Justice Department: Microsoft leaned on Compaq

Microsoft Corp. threatened to revoke Compaq Computer Corp.'s Windows 95 license if the computer maker did not install Microsoft's Internet Explorer icon on its Presario line of PCs, according to documents filed by the Department of Justice (DOJ) this week.

Stephen Decker, Compaq's director of software procurement, said in a deposition to DOJ investigators that if Compaq chose Netscape Communications Corp.'s Navigator browser over Microsoft's browser, "Microsoft would terminate our [Windows 95] agreement," according to reports published today by Reuters and Dow Jones.

Microsoft spokesman Greg Shaw today acknowledged in a phone interview that Microsoft said it would withdraw Compaq's Windows 95 license if Compaq refused to display the Internet Explorer icon. However, Shaw said testimonies like Decker's emerging from the Justice Department's investigation are "a dramatic mischaracterization of what happened."

Decker gave his testimony last week as part of a Justice Department investigation into whether Microsoft is unfairly leveraging the popularity of its Windows operating system to ensure that computer manufacturers promote its Web browser software, the reports said.

Decker told the DOJ that Compaq had wanted to install the Navigator browser on its desktops because the two companies had an existing relationship. But in the end Compaq capitulated to Microsoft's demands and installed the Internet Explorer icon instead, according to the reports.

Decker did not return a call seeking comment.

Reiterating the position Microsoft has taken since the Justice Department's investigation was announced Monday, Shaw said Microsoft's browser and operating system have been so closely integrated into Windows 95 that they are essentially two parts of the same product.

"We try to present a consistent user interface regardless of what brand of PC a customer is buying," Shaw said. "If part of the contract is that you run Windows in its entirety, then that includes Internet Explorer and that is a contractual obligation."

When manufacturers agree to license the operating system, they implicitly agree to install the Internet Explorer icon, Shaw said.

One analyst said if the statements made by Compaq officials are accurate, Microsoft potentially could be in violation of the consent decree. But he cautioned that since Microsoft has not yet stated its case, it is too early to draw conclusions.

"It'll be interesting to see how Microsoft puts out its version of events," said Jim Balderston, an analyst at Zona Research, Inc.

Microsoft was given 11 days to respond to the Justice Department's petition in writing. A judge then will decide if a hearing is appropriate.