Justice Dept. Again Targets Microsoft

WASHINGTON — A week after winning an antitrust injunction against Microsoft Corp., the Justice Department marched back to court Wednesday, accusing the software giant of flouting an order requiring it to unbundle its Internet browser software and Windows 95 operating system and asking the court to impose a $1-million-a-day civil fine.

In a U.S. District Court filing, the Justice Department said Microsoft was trying to circumvent a preliminary injunction issued by Judge Thomas Penfield Jackson by offering computer vendors a choice of either a crippled Windows 95 or a 2-year-old “commercially worthless” version of the operating system software.

“Microsoft has gone from tying its products to tying the hands of its vendor,” Assistant Atty. Gen. Joel I. Klein said Wednesday.

Last week, Jackson temporarily barred Microsoft from requiring computer manufacturers to install its Internet Explorer browser as a condition of using the Windows software on their machines. Microsoft, whose Windows operating system runs more than 80% of all personal computers, appealed that order Monday.

The Justice Department’s action came on the same day it received a letter from Microsoft senior attorney David A. Heiner saying that the Redmond, Wash.-based software maker would comply with the federal court order by offering computer manufacturers one of two truncated versions of Windows 95.

“If any computer manufacturer avails itself of the option of not installing Internet Explorer,” Heiner warned in his letter, “it is an inescapable fact that the remainder of the operating system will not function.”

The Justice Department termed Microsoft’s conduct “an affront to the court’s authority.”

“Microsoft has cynically acted as if the preliminary injunction permits it to perpetuate the very [licensing practices] the court enjoined,” the filing stated.

Justice Department officials and some computer experts scoffed at the notion that Microsoft could not comply with Jackson’s order without crippling Windows 95.

In fact, officials at rival Netscape Communications Corp. said Wednesday they were putting the finishing touches on a program that would help users download Netscape’s browser software and, if they chose, erase Internet Explorer.

Rob Enderle, a senior analyst with Santa Clara-based computer research firm Giga Information Group, said unbundling Internet Explorer from Windows 95 would require tinkering.

“There is obviously a problem with removing 100% of the software code for Internet Explorer,” Enderle said. “But the easy way around that is that you leave the shared files in place” to allow other applications to work.

For its part, Microsoft has painted its intensifying legal war as an unprecedented test of how much oversight the government can exert over the largely unregulated field of software development.

Microsoft spokesman Adam Sohn called the Justice Department’s filing “very bizarre.”

“This is what happens when the government gets involved” in product decisions, he said.

If the Justice Department prevails, Microsoft said, software developers risk greater government scrutiny.

“The software industry is striving to make computers easier to use,” Heiner wrote in his letter to the Justice Department. “Hiding important features and functionality of a software product like Windows 95 is antithetical to that goal. . . . We think it is completely inappropriate for a government agency to suggest that a software developer redesign a product to make it difficult for customers to find and thereby benefit from features of the product. Antitrust law should promote product improvement, not product degradation.”

In addition to seeking the civil fine, Justice officials asked Jackson to require Microsoft to notify the government 30 days before releasing any upgrade of the operating system or browser.

Separately, attorneys general from nine states, including California, are reportedly considering a coordinated antitrust action against Microsoft. Although the Justice Department has talked with state officials, it is not involved in those efforts.

Shares of Microsoft closed at $135.63, down $3.44 on Nasdaq.