Re: Letter to U.S. Department of Justice regarding
Microsoft and Internet Browser Market
The following is a sign-on letter to the U.S. Department of Justice
asking that the agency take action to prevent Microsoft from
monopolizing the market for Internet browsers. Specifically, the letter
asks DOJ to stop Microsoft from engaging in predatory pricing of
Microsoft Explorer (MSE), and that Microsoft be prevented from bundling
MSE with operating system (OS) software such as Windows 95. If you are
interested in adding your name, send the following information to James
Love <love@cptech.org> by October 10, 1997.
<html>
Mailto:love@cptech.org
</html>
Name: ____________________
Title (optional): ___________________
Affiliation (optional): ____________________
City, State: ____________________
Internet address: ____________________
Comments: ____________________
(an html version of this is at:
http://www.essential.org/antitrust/ms/browserletter.html)
The letter follows:
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Joseph I. Klein
Assistant Attorney General
Antitrust Division
U.S. Department of Justice
Washington, DC
antitrust@usdoj.gov
Dear Mr. Klein:
We are writing to ask the Department of Justice (DOJ) to protect
consumers by taking action to prevent Microsoft from using
anticompetitive practices to monopolize the market for Internet
browsers. Specifically, Microsoft should not be permitted to drive
Netscape and other products out of the market by offering the Microsoft
Explorer (MSE) for free; and Microsoft should not be permitted to bundle
the MSE with its operating system, or integrate the MSE with the
operating system in ways that are unavailable to other firms.
As you know, Microsoft now has achieved a remarkable degree of monopoly
power in the worldwide market for the operating system (OS) for personal
computers. The problem with this monopoly is not so much that Microsoft
overprices the OS. The problem is that Microsoft has used its monopoly
in the OS market to gain unfair advantages in the markets for
applications and services which work with the OS. There is ample
evidence that Microsoft has used its control over the proprietary
operating system in a number of anticompetitive ways, such as closely
controlling access to information about the current and future
functionality of the OS, making it difficult for competitors to design
products which fully exploit the capabilities of the OS, while remaining
compatible with current and future versions of the OS.
When Microsoft engages in anticompetitive behavior to monopolize
applications markets, it effectively drives products out of the market.
This has the effect of reducing competition, not only in terms of the
prices that are charged, but even more importantly, in terms of
innovation. As you know, software products compete on more than price,
and we are very concerned about the impact of Microsoft’s monopoly power
on software innovation.
It is the responsibility of DOJ to ensure that Microsoft does not use
its OS monopoly to monopolize the market for applications. More needs to
be done in this area. The unfolding drama in the market for Internet
browsers is our immediate concern.
The Importance of the Browser Market
Today Internet browsers operate on top of the Microsoft OS to manage a
large number of important applications which run over the Internet. In
addition to providing the user interface for viewing and interacting
with Web pages, browsers can launch new applications, such as streaming
audio or video. Independent developers write plug-ins and other
applications that work with the browsers. Microsoft correctly sees this
as a threat to their OS monopoly. If there are several browsers in the
market, it is more probable that the standards for browsers, web pages
and various applications will be open, rather than proprietary. We are
concerned that if Microsoft succeeds in bankrupting Netscape or driving
Netscape from the browser market, by pricing the MSE at zero, Microsoft
will exercise too much power in key areas of standard setting for
Internet applications.
We also believe consumers have suffered from the dearth of competition
among firms that could offer competing browser products, if the prices
for browsers were greater than zero. While consumers do benefit
currently from head-to-head competition between Netscape and Microsoft,
the predatory pricing of the MSE has discouraged other firms from
entering the market. The predatory pricing of the MSE has also changed
the functionality of browsers in important ways, particularly in terms
of consumer preferences for privacy.
Since Netscape or new entrants have difficulty in charging the consumer
for their browsers, they have to rely upon business plans that use the
browser as an interface for commercial transactions. This has had a
profound effect on the design of Browser features, and it is likely to
have very important effects on future Internet standards for information
flows.
Consider, for example, the dilemma faced by Netscape. Netscape is now
largely unable to charge consumers for the browser, but it hopes to set
non-zero prices for its server software. Important features in the
server market may involve such issues as tracking the identity of
consumers, broadcasting advertisements, or tracking the redissemination
of information. In each of these areas, consumers may prefer privacy or
the ability to better avoid commercial content. This presents
conflicts. But the predatory pricing of the MSE pushes Netscape (and
Microsoft) to model the functionality of the browser to suit the server
market, rather than address the concerns of end users. In our view,
this is a consequence of Microsoft’s predatory pricing.
Our objection to the predatory pricing of the MSE is not a general
complaint about free software or even promotional offers. Indeed, we
support many of the freeware, shareware and free promotions that are
offered on the Internet. What is different about the MSE case is that
Microsoft is clearly seeking to drive competitors out of the browser
market to extend its current OS monopoly power to the platform for a new
generation of Internet applications.
DOJ Should Seek Remedies
We urge DOJ to immediately take steps to protect competition and open
standards in the area of Internet browsers. Microsoft should be
prevented from charging a zero price for the MSE, which it spends untold
millions of dollars to produce, advertise and distribute. Microsoft
should also not be permitted to bundle or integrate its browser into the
OS, which is a monopoly. This matter is extremely important to the
future of an open and competitive platform for Internet communications.
In considering this issue, DOJ should appreciate the social significance
of Internet communications. The market for Internet browsers is
particularly important because it concerns the technologies used to
facilitate publishing and broadcasting information over the Internet.
The public interest in avoiding the monopolization of this market is
substantial.
Sincerely,
Names added here...
--
James Love | Center for Study of Responsive Law
P.O. Box 19367 | Washington, DC 20036 | http://www.cptech.org
voice 202.387.8030 | fax 202.234.5176 | love@cptech.org