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MS OS and MS Applicaitons - How leverage works

  Info-Policy-Notes | Available from listproc@cptech.org
  November 24, 1997
        -    Discussion of Microsoft Leverage of Windows 
             to market its applications
        -    Special attention to distribution license for 
             Common Control DLL, which is an example of 
             Microsoft licensing practices which require
             competitors to market MS applications if they use 
             updated Windows components
       The past few days there have a few articles which talk about the
  ways that Microsoft is seeking broad integration of Windows (3.1, 95 or
  NT) operating systems with Microsoft applications as a way of
  "leveraging" the OS market share for the applications. This was the
  topic by James Gleick's interesting "Justice Delayed" in the November
  23, 1997 New York Times Magazine (not on the Web at this time), my own
  article in Intellectualcapital.com
  http://www.intellectualcapital.com/issues/97/1120/icpro.asp (no comma),
  and the recent Department of Justice reply brief in the Microsoft case.
       One item referenced in the November 20, 1997 DOJ brief was a
  December 20, 1996 document sent by Microsoft's Jim Allchin (who now
  heads Microsoft's personal and business systems group) to Paul Maritz
  (group vice president for Microsoft's platforms and applications group. 
  The message, which was titled: "concerns for our future," states:
                1. Ensuring that we leverage Windows. 
                I don't understand how IE is 
                going to win. The current path is simply 
                to copy everything that Netscape
                does packaging and product wise. . . . 
                My conclusion is that we must
                leverage Windows more. Treating IE as just 
                an add-on to Windows which
                is cross-platform [is] losing our biggest 
                advantage -- Windows  marketshare. We 
                should dedicate a cross group team to come 
                up with ways to leverage Windows 
                technically more. . . . . 
                We should think  first   
                about an integrated solution -- that is 
                our strength.
                [Gaspar Conf. Decl. 17, Exh. 14 (December 
                 20, 1996 e-mail from Jim Allchin to Paul 
  The DOJ brief is on the Web at:  
  http://www.usdoj.gov/atr/cases3/micros2/1277.htm (no period).  Other DOJ
  documents in the case are available from 
         In a November 19, 1997 post to info-policy-notes, I reported
  Great Plains Software's letter to DOJ, objecting to Microsoft's decision
  to force third party software companies to distribute Microsoft's
  Internet Explorer (MSIE), if they distribute the latest version of the
  "Common Control DLL,"
  (http://www.essential.org/listproc/info-policy-notes/msg00274.html), a
  file which is part of Windows.  
  Brett Glass, wrote to say:
         "COMCTL32.DLL is a general-purpose library that's 
          used by virtually every application. One thing this 
          particular article did not point out, though, is the 
          consequences that ripple through from the MSIE 
          license agreement. 
          These are key to understanding the full 
          import of the tying arrangement."  As MSIE licensees 
          (and all developers must be, since COMCTL32.DLL is 
          fundamental to shipping a Windows app), are 
          literally required to make their Web sites 
          incompatible with Netscape browsers. What's more, 
          they're required to issue press releases saying 
          they've adopted IE, creating the perception of 
          incredible momentum in the press. What's more, if 
          they get on Microsoft's bad side, it pulls the 
          license and they can no longer ship product."
          At Brett's suggestion, we reviewed Exhibit C of the Microsoft
  distribution license for MSIE.  A copy is attached below. It is a
  textbook case of Jim Allchin's proposal for leverage.
       Jamie Love
                                EXHIBIT C
                          Marketing Activities
      Company shall participate in the following marketing related
     (i) Issue a press release announcing that Company has licensed
  Internet Explorer, Outlook Express, or NetMeeting within sixty (60) days
  following execution of this Agreement, or authorize Microsoft to use
  Company's name in press releases to identify Company as a licensee of
  Internet Explorer, Outlook Express or NetMeeting. The party preparing
  the press release shall provide such release to the other party for
  review at least five (5) days prior to release;
     (ii) Use and display the Microsoft Internet Explorer logo online logo
  on the home page for Company's Internet Product along with a hot link to
  www.microsoft.com/ie on home page of Company's primary web site(s) in
  accordance with the terms set forth at www.microsoft.com/ie/logo, or any
  successor thereof; 
     (iii) Use the Microsoft Internet Explorer name and logo depicted in
  Exhibit A in Company' packaging, advertising an promotional materials.
  Such use shall be pursuant to the Guidelines in Exhibit A and
  Microsoft's standard trademark policies as may be provided by Microsoft
  to Company from time to time;
     (iv) Make Internet Explorer and Outlook Express available for use
  internally under Company's customary information services policies and
  procedures; and
     (v) Deploy [and promote where appropriate] at least one advanced
  feature of Internet Explorer 4 (e.g., Channel webcast optimization via a
  CDF file, Dynamic HTML, or NetShow content) on Company's Internet
  Product page.
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