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In September of 1996, Microsoft received a written request for information, (this is known as a civil investigative demand) from the Justice Department. Netscape had accused the company ?of going beyond vigorous competition into the realm of illegal tactics in the browser war,? (Just. Dept. Examining 1). Netscape also charged, through letters to the Justice Department, that Microsoft had violated its 1994 consent decree (settlement) with the government by offering PC manufacturers a $3 discount on Windows 95 for giving their browser, Internet Explorer, a more prominent place on computer screens than Netscape?s browser, Navigator.

Further complicating Microsoft?s problems, they received another civil investigative demand in May of 1997. This time, the Department of Justice was seeking internal documents having to do with Microsoft?s planned purchase of WebTV for $425 million. ?WebTV is a start-up producer of set-top boxes that bring the Internet to television sets,? (US Requests?1). A major industry is expected to develop from the delivering of the Internet via television and other home appliances. So, the opportunity to be among the first in a very promising market is what attracted the company to WebTV.

About the same time the government was looking into Microsoft?s purchase, Oracle (another software producer) announced it was buying control of Navio Communications Inc. Navio was developed by Netscape Communications, which, ?[facing] ever-stiffer competition from Microsoft?decided to conserve it?s financial resources and shed Navio,? (US Requests?2). Microsoft officials pointed to this move by Oracle in response to the government?s most recent allegations. They claimed that the deal was a sign that their purchase of WebTV was prompting capable companies to get into the market, thereby promoting competition.

Drawing further attention to itself, Microsoft invested in Apple Computers. They purchased $125 million in non-voting stock. This act was seen by many, upon first glance, as an effort to further dominate the computer market by swallowing another competitor. However, if one were to consider the pressure that Microsoft was, and is, enduring from the government, one can see an entirely different motivation for the investment. Apple was struggling and this purchase of non-voting stock was designed to help keep the company afloat. As long as Apple remains intact, the computer giant we know as Microsoft has another ?competitor? that it can point to in its fight against antitrust violations.

In October of 1997, the government finally asked a judge to order Microsoft to stop requiring PC makers to include Internet Explorer when they install Windows 95 in their computers. Attorney General Janet Reno, who referred to the company as a monopoly several times in her press conference, claimed that the company had violated the 1994 settlement, and that the Justice Department would seek a $1 million per day fine if they didn?t stop the practice. She said,

This administration has taken great efforts to spur technological innovation, promote competition and make sure that the consumers have the ability to choose among competing products. [This} action shows that we won?t tolerate any coercion by dominant companies in any way that distorts competition. (Labaton 2)

The government?s petition was designed to receive an order that would bar Microsoft from compelling PC manufacturers to accept their browser as a condition of receiving operating system. It also asked the court to order the company to notify Windows 95 users that they can use any compatible Internet Browser, as well as provide instructions on how to remove Internet Explorer from their computer.

In response to the petition, Bill Gates, Microsoft?s chairman and chief executive, said that his company was not violating the antitrust agreement. He proclaimed his belief that his company had every right to improve and add to the basic features of Windows. He went on to say that he hoped to further improve Windows by adding new capabilities, such as speech recognition and machine vision.

The Justice Department has several key issues that it has to deal with in its case against Microsoft. By deal with, I mean they have to get around Microsoft?s answers to their charges. First, the department is accusing the company of threatening computer makers who delete the Internet Explorer icon. The company answers this by claiming that ??computer manufacturers are free to ship any competitor product they wish, but they are not allowed to disable features of our products,? (Just Dept v MS 2). Second, the government is contending that the terms of Microsoft?s non-disclosure agreements are an obstacle in the way of their attempts to gather evidence for their investigation. Microsoft says that their non-disclosure agreements are no different than those of most companies within the software industry, as well as outside it. Finally, there is the matter of the competitive browser possibly representing a threat to Microsoft?s key product, its operating system. Company officials claim that by not allowing them to include their browser with Windows, the government is preventing innovation. They say that the pace of the competition will quickly pummel a company that stops innovating, and that the consumers win because competition

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