Tech giants back Microsoft
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April 30, 1998: 9:00 p.m. ET
Move comes as states mull legal action to block release of Windows 98
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NEW YORK (CNNfn) - A group of high-powered technology firms, including such industry heavyweights as Intel Corp., Dell Computer Corp. and Hewlett-Packard Co. urged the government Thursday not to block the introduction of Microsoft's Corp.'s Windows 98.
In a letter to Assistant Attorney General Joel Klein, the firms said they have spent millions of dollars developing, marketing and promoting products that depend on the on-time launch of Windows 98, and a delay in the launch date would disrupt their plans just as the market is gearing up for the all-important holiday buying season.
"The direct effect on the U.S. economy of a delay to Windows 98 would be considerable: more than 2 million Americans, for instance, develop software that runs on Windows, while a similar number work in the computer services industry," the firms said in the letter.
"Government intervention into the launch of Windows 98 would endanger what we have all worked for -- and harm consumers and the economy too," the companies said.
Last year, the Justice Department went to court against Microsoft, charging it had violated a 1995 agreement that was supposed to help increase competition in the software industry.
A federal appeals court heard an appeal on several aspects of that case earlier this month and is expected to issue a decision soon.
Microsoft's Windows software is used to operate more than 90 percent of the world's personal computers.
States mull antitrust suit
In a separate investigation, officials from 13 states are considering legal action against Microsoft aimed at blocking the introduction of Windows 98.
Connecticut Attorney General Richard Blumenthal told CNNfn Thursday a decision on whether to file a lawsuit should come within two weeks.
"We're concerned about the extension of Microsoft's monopoly on certain products by using restraints on competition and tying and leveraging with respect to other products," Blumenthal said.
Other issues that concern the states are whether Microsoft's Internet Explorer Web browser gets preferential treatment, making it difficult for customers to install another browser, such as Netscape Communications Corp.'s Navigator, and use it to browse the web.
News of a possible lawsuit by the states was originally reported by CNNfn last Friday.
Microsoft spokesman Jim Cullinan said the company believes it must be allowed to integrate products if it is to keep up with competitors.
"Integration of new functionality into our products is a principle that we believe is the most important. We should recognize that when the Justice Department wanted us to offer manufacturers an option of taking Windows 95 without [Internet Explorer], not one has chosen that option," he said.
States under the gun to make a decision
The states are under the gun since Microsoft intends to begin shipping the operating system to computer makers in mid-May. Production has not started on the CD-ROM disks that existing computer users will use to upgrade their systems. The upgrade and full versions will ship to stores in late June.
Cullinan expressed hope the states will start a dialog that will allow the two sides to hammer out an agreement.
"We've talked to [the states] on a regular basis over the past three months to find out exactly what they're looking for. We haven't heard specific concerns that we might be able to address. We hope they will come forward and explain to us their concerns, but we don't know what their concerns specifically are," he said.
Blumenthal said the attorneys general hope they can work with the U.S. Justice Department.
"Our hope and expectation is that if we go forward, we will act in concert and coordination with the [Justice Department]," he said.
States may go it alone
However, if Justice and the attorneys general cannot agree on common issues to pursue, Blumenthal said the states were prepared to mount a separate legal challenge. The states' lawsuit would likely be filed in federal court to allow nationwide enforcement.
Some of the remedies that would satisfy the states' concerns include Microsoft stopping the bundling of other products with its operating systems.
Microsoft (MSFT) shares ended down 3/8 to 90-1/8.
--by staff writer Cyrus Afzali
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