Contemptuous Compliance with Bare Knuckle Rhetoric

["Charles A. Behney" <charlesaugust@theriver.com>]

  Here's a relevent address for anyone who has some evidence to contribute
  to discovery. If you had a box-making OEM that went bankrupt or some
  other entity with Microsoft NDA's that are no longer germaine to an
  ongoing business, pass the materials on to Mr. Phillip Malone.
  
  CAB
  
  
  http://www.zdnet.com/zdnn/content/zdnn/1217/264448.html
  
  >  December 17, 1997 
  > 
  >  Via Telecopier and Regular Mail 
  > 
  >  Phillip R. Malone
  >  Trial Attorney 
  >  U.S. Department of Justice 
  >  Antitrust Division
  >  450 Golden Gate Avenue
  >  Box 36046
  >  San Francisco, California 94102
  > 
  >  Re: Windows 95 
  > 
  >  Dear Phil: 
  > 
  > I am writing in response to your letter of December 16, 1997. Microsoft believes that it is in full compliance with the Court's December 11, 1997 Order. 
  > 
  > Microsoft's Compliance   The Antitrust Division requested an order directing Microsoft to give computer manufacturers the option of not installing the Internet Explorer part of Windows 95 when installing the rest of the operating system. The Court issued such an order, apparently based  on the Division's express representation that deleting Internet Explorer would not adversely  affect the operation of Windows 95. Microsoft  consequently advised computer manufacturers  that they were not required to install Internet  Explorer when installing Windows 95. (As you  requested, a copy of Microsoft's letter to its  Windows 95 licensees is enclosed.)    
  > 
  > With respect to Internet Explorer 4.0, Microsoft  has done precisely what the Division requested  and what the Court ordered. Computer  manufacturers are free to install Internet Explorer  4.0 (which provides the latest enhancements to  Windows 95, including a new user interface) or  not, as they choose. 
  > 
  >  Microsoft has also provided the Division with all  the relief it requested and the Court ordered with  respect to Internet Explorer 3.0. Consistent with  the express terms of the Court's December 11,  1997 Order, Microsoft has informed computer  manufacturers that they may install Internet  Explorer 3.0 or not, as they choose. If any  computer manufacturer avails itself of the option  of not installing Internet Explorer 3.0, it is an  inescapable fact that the remainder of the  operating system will not function. That is  precisely what David Cole said would happen in  his two declarations. We agree with you that  such an outcome does not make much sense.  That is one reason why Microsoft opposed the  Division's request for contempt sanctions and  why we have appealed the preliminary injunction  entered by the Court sua sponte after it rejected  the Division's request for a contempt order. As  Microsoft has previously advised the Division, in  detail on several occasions, I!
  !
  nternet Explorer  3.0 is an integral part of OSR 2.0, and it cannot  be removed from that version of Windows 95  without substantially degrading the operating  system.  
  >  The order that the Division requested, and that  the Court issued based on the Division's  representations, cannot lead to a sensible  outcome because it is based on a false  premise. That premise -- strenuously urged by  the Division but nonetheless incorrect -- is that  Microsoft has done nothing more than  contractually "bundle" two "separate products,"  namely, Internet Explorer 3.0 and Windows 95.  Thus, the Division requested an order directing  Microsoft to "cease and desist" from requiring  "OEMs to license any version of Internet  Explorer as an express or implied condition of  licensing Windows 95." (DOJ Petition, Prayer  for Relief at 2.) The Division represented to the  Court that "[i]n the absence of Microsoft's  license prohibitions, OEMs easily could remove  Internet Explorer from the Windows 95 package  they install on their PCs without compromising  the functioning of Windows 95." (DOJ Petition  19 (emphasis added).)  
  >  
  > In its response to the Petition, Microsoft  explained in detail that Internet Explorer 3.0 is  an integral element of the version of Windows  95 currently being installed by computer  manufacturers, so much so that there is no  practical way to distinguish the Internet Explorer  portion from the remainder of the operating  system. In response, the Division stated  unequivocally that:    
  > 
  > "The requested relief is a simple order that  would prohibit Microsoft from forcing OEMs to  accept and preinstall the software code  Microsoft distributes at retail as 'Internet  Explorer 3.0.' " 
  > 
  >  (DOJ Reply Mem. at 16.) The Division  specifically assured the Court in its opening  papers that "Internet Explorer 3.0 can be  removed readily from PCs on which it has been  preinstalled by an OEM without affecting the  performance or functioning of the underlying  Windows 95 operating system." (DOJ Mem. in  Support of Petition at 27.) 
  > 
  >  The Court issued the precise order sought by  the Division, directing Microsoft to "cease and  desist from ... licensing the use of any Microsoft  personal computer operating system software ...  on the condition, express or implied, that the  licensee also license and preinstall any  Microsoft Internet browser software ..." The  Court specifically adopted the Division's  definition of the portion of Windows 95 that  Microsoft should give computer manufacturers  the option of not installing: the Court enjoined  Microsoft "from forcing OEMs to accept and  preinstall the software code that Microsoft itself  now separately distributes at retail as 'Internet  Explorer 3.0.'" (Mem. and Order at 15-16.)
  >   
  >  Microsoft has complied with that order. On  December 15, Microsoft informed its Windows  95 licensees in writing that they no longer  needed to comply with their Windows 95 license  agreements to the extent that those agreements  require installation of the files that comprise  Internet Explorer 3.0 in the Internet Explorer  Starter Kit that is sold through the retail channel  to the installed base of Windows 95 users. Thus,  Microsoft has eliminated the alleged  "conditioning" by contract that the Division  complained about. 
  > 
  >  If this really were only a case of contractual  "bundling," as the Division insisted to the Court  that it is, then there would be no need for this  exchange of correspondence. Computer  manufacturers could license and install the  current version of Windows 95, called OSR 2.0,  with or without Internet Explorer 3.0. But this is  not a contractual "bundling" case. Although the  Division may ardently wish the facts were  otherwise, Internet Explorer 3.0 is an integral  part of Windows 95. Microsoft can lift the  general (and perfectly sensible) license  requirement that computer manufacturers install  Windows 95 in its entirety, but that does not  mean that it will ever be feasible for computer  manufacturers to delete important parts of a  complex product that was designed, developed  and tested as an integrated whole. 
  > 
  >  Microsoft has provided computer manufacturers  with an additional alternative not required by the  Court's order. Although Microsoft's license  agreements with computer manufacturers  generally provide that they will install the latest  version of Windows 95 (for obvious reasons,  previously explained to the Division), Microsoft  has advised computer manufacturers that they  may install the original version of Windows 95  (Build 950.6) if they wish. Unlike OSR 2.0, Build  950.6 will boot up and generally function even if  Internet Explorer 1.0 is removed from the OEM  version of the product. (At the time Build 950.6  was released, the integration of Internet Explorer  with the rest of Windows 95 entailed many fewer  code dependencies, making it easier to  remove.) This alternative allows computer  manufacturers to install the version of Windows  95 that is available in the retail channel today  (minus Internet Explorer files) - and it is the very  same version that the Divi!
  !
  sion has repeatedly  held up as supposedly showing that Windows  95 is separate from Internet Explorer. We are  making Build 950.6 available once again to  computer manufacturers, but as we have  previously explained, it does not provide the  many benefits of Microsoft's ongoing  development of Windows 95 since the operating  system was initially released -- including  benefits that flow from the tighter integration of  Internet Explorer with the balance of the  operating system. 
  > 
  >  The Division's "Icon" Proposal 
  > 
  >  The Division now suggests that Microsoft should  provide computer manufacturers with a "current"  version of Windows 95 from which the icon for  Internet Explorer and other "means of access" to  the software has been removed. That  suggestion is unsound for several reasons. 
  > 
  >  First, providing such a version of Windows 95  plainly would not constitute compliance with the  Court's order. If Microsoft merely removed the  icon and other means of accessing Internet  Explorer, nearly all of the Internet Explorer  software would still remain as part of Windows  95 -- contrary to the Court's injunction that  Microsoft offer Windows 95 to computer  manufacturers without such software. In this  regard, please note that under no circumstances  will the "Add/Remove Programs" utility in  Windows 95 uninstall Internet Explorer 3.0 from  OSR 2.0. In the unusual circumstance where a  second copy of Internet Explorer 3.0 is installed  on top of OSR 2.0, this utility can be used to  remove a very small subset of Internet Explorer  3.0 files. But the great bulk of Internet Explorer  3.0 will remain. 
  > 
  >  Second, the Court's order does not direct  Microsoft to develop a new version of Windows  95 built to meet the Division's preferences with  regard to "icons," and the Division did not  request such relief in its petition. In fact, the  order says nothing about icons. Notably, in a  footnote discussing the possibility of relief  relating to "icons," the Division emphatically  stated that it was requesting an order directing  Microsoft to allow computer manufacturers to  license Windows 95 free of Internet Explorer "in  all respects" -- not merely free of the Internet  Explorer icon. (DOJ Reply Mem. at 16 n.16)  (emphasis in original). 
  > 
  >  Third, no order concerning "icon" placement  could possibly be entered against Microsoft  under the Consent Decree or the Division's  theory of this case. An "icon" is not a "product"  under any conceivable definition of that term,  and thus the prohibition in Section IV(E)(i) on  conditioning the licensing of Windows 95 on a  computer manufacturer's agreement to license  an "other product" cannot sensibly have any  application to an icon -- even assuming that the  proviso does not permit such integration. 
  > 
  >  Fourth, the Division cannot walk away from the  order it urged the Court to enter because the  Division now understands that its erroneous  representations to the Court have produced a  senseless result. Microsoft welcomes the  Division's apparent (though belated) recognition  that Internet Explorer 3.0 cannot be removed  from OSR 2.0 without making the operating  system, as you put it, "commercially unviable."  OSR 2.0 is not viable absent Internet Explorer  3.0 because Internet Explorer 3.0 is an integral  part of the operating system. That is simply a  matter of fact. 
  > 
  >  Fifth, we believe that the Division's suggestion  that Microsoft break Windows 95 a bit -- by  making it hard or impossible for end users to  find many of the Internet-related features of the  product -- is profoundly anti-consumer and could  advance no conceivable goal of the antitrust  laws. 
  > 
  >  The software industry is striving to make  computers easier to use. Hiding important  features and functionality of a software product  like Windows 95 is antithetical to that goal. With  all respect, 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 any event, none of this focus upon the Internet  Explorer 3.0 portion of OSR 2.0 is likely to have  any commercial significance at all. The market  has moved on to Internet Explorer 4.0, which  provides the latest enhancements to Windows  95 -- enhancements that extend well beyond  simple "Web browsing." All or nearly all of the  leading computer manufacturers will be  installing Internet Explorer 4.0 over the next few  months lest they be left behind in the race to  deliver the latest technology to consumers.  Installation of Internet Explorer 4.0, as the  Division requested, is entirely optional. 
  > 
  >  As always, we would be pleased to discuss any  of these matters further, particularly the reasons  why Internet Explorer cannot be removed from  OSR 2.0 without seriously damaging the  remainder of Windows 95.  
  >  
  > Sincerely, 
  > 
  >  David A. Heiner
  >  Senior Corporate Attorney
  > 
  >  Enclosure 
  > 
  >  Read the Letter to Microsoft from the
  >  Department of Justice(12/16/97) 
  > 
  >  (c) 1997 Microsoft Corporation. All rights
  >  reserved. Legal Notices.