Microsoft Will Ask Judge to Dismiss Antitrust Lawsuit, Based on Appeals Court Ruling and Facts Established During Pre-Trial Preparation

Redmond, Wash., August 6, 1998 — In Federal District Court today, attorneys for Microsoft said the company would file a motion for summary judgment early next week, urging Judge Thomas Penfield Jackson to dismiss all or some of the claims in the antitrust lawsuit filed in May by the U.S. Department of Justice and state attorneys general.

“We believe the Court can resolve this case now without the need for an expensive and time-consuming trial,” said William H. Neukom, Microsoft’s senior vice president for law and corporate affairs. “The facts established in discovery show that the government’s claims are without merit.” Neukom said Microsoft will file its motion for summary judgment by Monday, August 10, and will work with the government on a briefing schedule so that the matter can be resolved before the trial date.

At today’s hearing, attorneys for Microsoft told Judge Jackson that the company believes the entire case can be resolved without a trial on the basis of undisputed facts established through the discovery process, including evidence provided by Netscape. In its summary judgment motion, Microsoft will show that adding Internet-related improvements to operating systems such as Windows benefits customers, and that these benefits are recognized by other leading operating system vendors, all of whom have added Internet support to their products. Microsoft also will show that Netscape has had no difficulty distributing its Web browsing software widely to customers, contrary to government claims that contracts between Microsoft and various third parties have “substantially foreclosed” Netscape’s ability to do so.

“Microsoft has been working hard for several years to develop and release improved versions of Windows that work well with the Internet,” Neukom said. “The recent Court of Appeals decision reaffirmed the important legal doctrine that building better products for customers promotes competition, and is therefore strongly encouraged by the law.”

In a majority ruling on June 23, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit stated that Microsoft has “clearly” demonstrated “benefits to its integrated design” of Windows 95 with Web browsing functionality. The Court recognized that “integration of functionality into the operating system can bring benefits” for customers. As the Court explained, “Antitrust scholars have long recognized the undesirability of having courts oversee product design, and any dampening of technological innovation would be at cross-purposes with antitrust law.”

“We believe there is a fundamental principle at stake in this case,” Neukom said. “We are trying to protect the ability of every company to improve their products for consumers. We believe consumers in the marketplace, not government regulators, should determine the features that go into a product.”

“The facts show that Microsoft and Netscape are competing vigorously with one another,” Neukom added. “The result has been rapid development of innovative Web browsing software, widely distributed to consumers at little or no charge.”

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