
The Wall Street Journal -- February 12, 1997
Technology: Microsoft's Tactics In Internet Market Probed by Texas By Don Clark Staff Reporter of The Wall Street Journal The state of Texas has launched an antitrust investigation of Microsoft Corp.'s business practices in the Internet software market, the first state effort to determine whether the software giant has used anticompetitive tactics in technology's hottest market. Microsoft, Redmond, Wash., said it received a request for documents from the Texas attorney general's office late Monday. The request, known as a civil investigative demand, appeared to be seeking information about competition in Internet software, a company spokesman said. Netscape Communications Corp., Microsoft's chief rival in the Internet market, got a similar CID from Texas in December, said Gary Reback, an attorney representing the Mountain View, Calif., company. The state investigation wouldn't appear to add much to Microsoft's regulatory burden. The Justice Department, egged on by Netscape, has been investigating similar issues since last summer, particularly whether the company used improper incentives to persuade personal-computer makers and Internet service providers to use Microsoft's World Wide Web software instead of Netscape's. But Information Week magazine, which first reported word of the Texas investigation on its Web site yesterday, quoted unnamed people as saying the state may try to work with others in a coordinated action against Microsoft. Such an effort could potentially pressure the Justice Department to be more aggressive in its own investigation, or raise new allegations against the company. The trade magazine also quoted unidentified federal officials as stating that Texas is investigating Microsoft's Internet commerce plans, including whether a travel service unfairly competes with the Sabre Group, a Fort Worth-based airline-reservation service owned by AMR Corp.'s American Airlines. Texas antitrust officials couldn't be reached for comment last night. Microsoft gives away its software for browsing the Web, while Netscape charges for its products. But making a case for predatory pricing or other anticompetitive tactics is unusual in a case where a company doesn't dominate a market. Netscape has about 70% of the Web market, down from 87% last spring, while Microsoft's share rose to 28% from 4%, according to Zona Research Inc., a market research firm in Redwood City, Calif. Microsoft said it is cooperating with Texas officials and is confident that they will conclude that the company's practices in the market are legal. "The Internet is a highly competitive, dynamic and healthy arena," a spokesman said.
Copyright © 1997 Dow Jones & Company, Inc. All Rights Reserved.

The Wall Street Journal -- February 12, 1997

Technology:

Microsoft's Tactics In Internet Market Probed by Texas

By Don Clark
Staff Reporter of The Wall Street Journal

The state of Texas has launched an antitrust investigation of Microsoft Corp.'s business practices in the Internet software market, the first state effort to determine whether the software giant has used anticompetitive tactics in technology's hottest market.

Microsoft, Redmond, Wash., said it received a request for documents from the Texas attorney general's office late Monday. The request, known as a civil investigative demand, appeared to be seeking information about competition in Internet software, a company spokesman said.

Netscape Communications Corp., Microsoft's chief rival in the Internet market, got a similar CID from Texas in December, said Gary Reback, an attorney representing the Mountain View, Calif., company.

The state investigation wouldn't appear to add much to Microsoft's regulatory burden. The Justice Department, egged on by Netscape, has been investigating similar issues since last summer, particularly whether the company used improper incentives to persuade personal-computer makers and Internet service providers to use Microsoft's World Wide Web software instead of Netscape's.

But Information Week magazine, which first reported word of the Texas investigation on its Web site yesterday, quoted unnamed people as saying the state may try to work with others in a coordinated action against Microsoft. Such an effort could potentially pressure the Justice Department to be more aggressive in its own investigation, or raise new allegations against the company.

The trade magazine also quoted unidentified federal officials as stating that Texas is investigating Microsoft's Internet commerce plans, including whether a travel service unfairly competes with the Sabre Group, a Fort Worth-based airline-reservation service owned by AMR Corp.'s American Airlines.

Texas antitrust officials couldn't be reached for comment last night.

Microsoft gives away its software for browsing the Web, while Netscape charges for its products. But making a case for predatory pricing or other anticompetitive tactics is unusual in a case where a company doesn't dominate a market. Netscape has about 70% of the Web market, down from 87% last spring, while Microsoft's share rose to 28% from 4%, according to Zona Research Inc., a market research firm in Redwood City, Calif.

Microsoft said it is cooperating with Texas officials and is confident that they will conclude that the company's practices in the market are legal. "The Internet is a highly competitive, dynamic and healthy arena," a spokesman said.