(Washington, DC) — In a news conference this morning at the National Press Club, Ed Black, President of the Computer & Communications Industry Association (CCIA), made the following statement:
Good morning and thank you for coming. I am Ed Black, President of the Computer & Communications Industry Association. For those of you who are unfamiliar with our organization, we are a 25 year old Association dedicated to preserving full, free and open competition not just for our member companies, but for the entire computer and communications industry. CCIA seeks level playing-fields which freely allow existing players and new entrants fair opportunities for participation. This has meant a commitment to open standards, open and interoperable systems, open markets at home and abroad, including the government marketplace, and of course open competition.
To accomplish this mission, we have often had to challenge some of our industry’s giants, including IBM, AT&T and Microsoft. Today, we find ourselves once again in that position. Last evening, CCIA filed a motion for the United States District Court to accept CCIA’s friend-of-the-court-brief supporting the Justice Department’s recent litigation against Microsoft. As you know, Justice has asked that Microsoft be found in violation of its Consent Decree for allegedly forcing PC manufacturers to distribute its Internet Explorer web browser software as a condition to having a license to install the Windows operating system. As an advocate for the industry, we believe that it is in the best interest of competition, consumer choice, and future of the Internet that Microsoft be prohibited from making these restrictive and anticompetitive licensing agreements with manufacturers.
CCIA agrees with Justice that by forcing the Internet Explorer browser to be combined with its dominant Windows operating system, Microsoft could unfairly undermine competition. Please know that the Association’s position is not designed in any way to favor Netscape’s browser product — nor are we anti-Microsoft.
However, CCIA fears that by bundling its browser software with Windows, Microsoft could expand its dominance from the PC market to the Internet and stifle both competition and innovation.
This potential — of an expanding market dominance by Microsoft — was recognized in the original 1995 Consent Decree following the Justice Department’s investigation of alleged illegal and anticompetitive behavior by Microsoft to maintain its operating system software monopoly. The conclusion of that investigation was that because of the Microsoft dominance, competition had been impeded, innovation slowed and consumer choices limited.
In the three years since United States v. Microsoft, the company’s market power is even greater. More than 90 percent of new PCs use Windows and the company’s desktop operating dominance has provided Microsoft’s applications developers with an advantage in creating new software. For example, Microsoft products such as spreadsheets and word processors have quickly advanced in the applications market and effectively supplanted its competitors.
And now the same could occur in the browser market. A market research firm recently reported that Microsoft has nearly doubled its share of the Internet browser market to 39 percent in the third quarter of this year…since the end of 1996…and comes at a time when the share of market-leader Netscape has dropped by 73 to 58 percent.
The global potential of the Internet and electronic commerce is so great that our industry cannot afford to have one company or one set of standards dominate. By bundling the next generation operating system with access to the Internet, Microsoft has the capability of effectively dominating the information age the way they have the PC markets — with far greater consequences.
These concerns were expressed in detail to the Court in our filing. We first detailed that there is clear and substantial evidence that Internet Explorer is a separate product — from the Windows 95 operating system. The terms of the Decree clearly distinguish separate products from integrated products. Microsoft distributes and sells Internet Explorer as a stand-alone product. Now, Microsoft contends that because it has “packaged” Internet Explorer — with Windows — the products are by definition integrated. However, integrate means more than just placing two products in the same package. Using Microsoft’s concept of “integration,” its solitaire game program would be defined as part of the Windows 95 operating system — simply because it is included in the package.
If the Court were to agree with Microsoft’s broad interpretation of integrate, the company would be able to force future anticompetitive tying arrangements — by simply claiming that the products are “integrated” — even though those products may not be integrated into a functioning or unified whole.
Further, we find that Microsoft’s definition of the functions of an operating system to be contrary to the industry’s view of what an operating system is. While Microsoft contends that one function of an operating system is to “provide access to information stores”– on hard drives, floppy disks or on outside networks, the true function of a operating system is to directly control the local hardware on which the operating system runs. The operating system provides the means for an applications such at Internet Explorer to access data and interpret the meaning of that data. If we accept Microsoft’s definition, then other browsing applications — from the original Mosaic, Gopher and even the Netscape browser would be wrongly defined to be integrated parts of the operating system.
We contend that Microsoft is attempting to use overly broad and incomplete technical arguments to broadly re-define, for its purposes, what are standard technical terms and industry-wide understanding of an operating system and its functions.
Contrary to Microsoft’s argument that the Justice Department action is denying consumers the benefit of new technology, we believe that the action will promote innovation and the availability of new technology to consumers. Our industry has thrived when new entrants into the market have tweaked competition, thereby spurring innovation, which leads to new and improved products to benefit consumers — and the industry as a whole. But when Microsoft ties the sale of its Internet browser to the sale of its operating system, such licensing arrangements have an unfair and illegal effect on competition.
The action requested by the Justice Department will allow PC manufacturers to choose freely among competing Internet browsers — thereby establishing a more level playing field between Microsoft and its competitors.
CCIA’s filing represents the views of the Association and may not directly represent the opinions of any individual company within the Association. It is not surprising to me that few — if any — companies have taken a public position — similar to ours — on this issue. Whether they are a competitor, a customer or a business partner of Microsoft, other companies in our industry may find it difficult to be overly critical. That’s the power of Microsoft.
Let me again stress that we are in no way against Microsoft — and have regularly worked with them on other important policy matters. Our Association also has a history of opposing unnecessary government regulation and interference into private sector business decisions. But, protecting the marketplace from the anticompetitive conduct of overly dominant companies is at the heart of our Association’s mission — and an appropriate role for government — and a responsibility that it should not relinquish.
CCIA’s counsel for antitrust, John Chapman, partner in the law firm, Tenzer Greenblatt, is here with me to answer questions you may have regarding provisions of the Consent Decree and details of CCIA’s brief.