Microsoft and DOJ Reach Agreement on Compliance with Court Order

Microsoft and DOJ Reach Agreement on Compliance with Court Order

REDMOND, WA, January 22, 1998 — Microsoft Corp. and the U.S. Department of Justice today reached an agreement that resolves Microsoft’s compliance with a December 11th preliminary injunction, but preserves the company’s appeal of the injunction. Microsoft’s appeal, which has been expedited by the court of appeals, is scheduled to be heard on April 21.

“We are pleased to have worked out a settlement of this very preliminary aspect of the case,” said Bob Herbold, Microsoft Chief Operating Officer. “We believe we have been complying fully with the court’s preliminary order, but we think it’s important to put the compliance question behind us so that we can focus on the real issues involved in the case.”

“Operating systems are useful only if they provide features and functionality that meet the needs of software developers and customers. Today that means building Internet-related technologies into the operating system,” Herbold continued. “We believe every software company must have the ability to continually improve its products and add new features for consumers. These are the central issues in this case, and they are the issues at the heart of our appeal.”

Under the agreement announced Thursday, Microsoft is notifying computer makers that two additional Windows 95 licensing options are available. Both options entail leaving all or nearly all of Internet Explorer in Windows 95, but removing or hiding customer access to the browser functionality. The new options, approved by the DOJ and the Court, are:

(1) As the DOJ requested, computer makers may install Windows 95, but delete the Microsoft Internet Explorer icons and a small number of files that are deleted when a customer runs the Windows “Add/Remove” utility. Removing these files will impair a few features of Windows 95, all of which are related to Internet access.

(2) The parties have also agreed upon a second alternative, proposed by Microsoft, that also removes the Internet Explorer icons, but leaves all Internet Explorer software in the operating system. Since all Windows 95 files get installed under this option, fewer features of the operating system are impaired.

Under either approach, nearly all third party software programs that rely upon Internet Explorer platform services will continue to function properly.

The agreement today only resolves the question of Microsoft’s compliance with the preliminary injunction issued by the court. Microsoft will actively pursue its expedited appeal of the injunction and the presentation of the merits of its case in the trial court.

“While we are pleased to resolve this compliance question, Microsoft will

continue to defend the software industry’s right to update and enhance products without unnecessary government interference,” said William H. Neukom, Microsoft senior vice president for law and corporate affairs.

Neukom noted that under both the Court’s preliminary injunction and Thursday’s agreement, computer makers may continue to install the full Windows 95 product, including all Internet Explorer files and easy customer access to its browser functionality. Alternatively, under Thursday’s agreement, they may install Windows 95 with all or nearly all Internet Explorer software intact, but merely remove or hide the means by which customers typically access the software.

“Today’s resolution preserves Internet Explorer as a part of Windows 95. This is very important for software developers who create applications that rely upon Internet Explorer, and for customers,” Neukom said. “Under any of the new options announced today, software developers can continue to write programs that call upon our Internet services.”

Neukom pointed out that neither the Justice Department lawsuit nor the new options for computer makers affect consumer choice. “PC manufacturers have always been free to install Netscape Navigator on any computer they sell, and many have. Consumers have always been free to use Netscape Navigator or Internet Explorer, or both,” he noted.

On December 11th, U.S. District Court Judge Thomas Penfield Jackson issued an order denying the DOJ’s petition to hold Microsoft in contempt for allegedly violating a 1995 consent decree. He also denied the DOJ’s challenge to Microsoft’s non-disclosure agreements with other computer industry companies. However, the Court’s order set up a process to study some of these issues further, and it entered a preliminary injunction regarding Windows 95 licensing during that process. Specifically, the Court’s preliminary injunction prohibits Microsoft from requiring computer makers who wish to license Windows 95 or other Microsoft operating systems to also license and preinstall “any Microsoft Internet browser software.”

Microsoft promptly offered computer makers the option of installing Windows 95 without any Microsoft Internet browser software. In particular, Microsoft advised computer makers that they were not required to begin installing the latest version of Windows 95’s browser functionality, Internet Explorer 4.0. This was an important part of the relief sought by the DOJ. Despite Microsoft’s waiver of this requirement, the vast majority of computer makers are already voluntarily shipping Windows 95 with IE 4.0 technology. Microsoft also advised computer makers that they were not required to install the Internet Explorer 3.0 feature of a version of Windows 95 released in 1996, but that resulted in a non-functioning operating system (as Microsoft had stated in court papers would happen). Microsoft also made available the original version of Windows 95 which the company introduced in 1995 and which continues to be available today in retail stores.

After recognizing that the 1996 version of Windows 95 would not function without Internet Explorer, as Microsoft had warned repeatedly, the DOJ suggested that Microsoft allow computer makers merely to hide, rather than remove, Internet Explorer. That approach provides the basis for today’s resolution.

The alternatives announced Thursday are in addition to the two earlier alternatives Microsoft provided computer manufacturers. According to company officials, Microsoft will be sending a letter to computer manufacturers within the next few days, outlining these new options.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. Other products and company names mentioned herein may be the trademarks of their respective owners.

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