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Microsoft probe expands
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July 23, 1998: 7:30 a.m. ET
Justice Department reportedly investigating multimedia dealings
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NEW YORK (CNNfn) - Federal prosecutors are reportedly investigating whether Microsoft Corp. is using illegal tactics to monopolize the multimedia-software market.
Lawyers and industry executives familiar with the investigation told the Wall Street Journal that investigators are examining whether Microsoft tried to persuade Apple Computer Inc. (AAPL) to stay out of the broad consumer market for multimedia software.
That echoes a charge in the government's pending antitrust lawsuit against Microsoft that it tried to carve up the Internet-browser market with Netscape Communications Corp. (NSCP) That case goes to trial Sept. 8.
Sources told the Journal the Justice Department is studying information obtained from Apple indicating that Microsoft executives proposed three times -- most recently in March -- that Apple retreat from its plans for the Windows multimedia market and leave that field to Microsoft, in exchange for an endorsement of Apple software tools.
Apple rejected the proposal, according to the sources.
Also reportedly under scrutiny is whether onscreen error messages or other technical incompatibilities in Microsoft's Windows operating system or browser software were intended to thwart Apple and other rivals; whether Microsoft pressured major personal-computer makers to drop Apple's video software; and whether agreements the company has struck with video-programming providers were exclusionary.
A Microsoft spokesman rejected the charges, saying the companies have worked together to make their multimedia-software packages more compatible. Spokeswomen for Apple and the Justice Department declined comment to the Journal.
The investigation comes at time when Apple's Interim Chief Executive Officer Steve Jobs has sought a closer relationship with its one-time arch rival. Last year, Microsoft took a $150 million non-voting stake in Apple and paid an estimated $100 million more for access to its patents.
The two companies are also combining their Java programming language technologies to create a single Java platform for the Mac.
Justice Department officials have previously said they are examining terms of that agreement to determine if it is anti-competitive.
The Journal said the Justice Department is also investigating Microsoft's behavior toward RealNetworks Inc. (RNWK), the leader in a key multimedia-software technology known as video streaming.
The company last fall was ordered by investigators to provide documents and was visited most recently by a Justice Department team "four or five weeks ago," Bruce Jacobsen, RealNetworks president, told the paper.
A year ago, RealNetworks licensed some of its technology to Microsoft after selling Microsoft a 10-percent stake in the company.
Microsoft makes the NetShow streaming software, a direct competitor to RealNetworks' RealPlayer.
But RealNetworks' relationship with the software giant has become strained: Its chief executive, Robert Glaser, is set to testify Thursday at a Senate Judiciary Committee hearing examining Microsoft's tactics.
Mr. Glaser is expected to disclose that Microsoft's dominant Windows and Internet software are designed to disable competing software offered by RealNetworks.
Microsoft (MSFT) shares gained 3-15/16 to close at 116-3/4 in Wednesday trading. 
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