PublishedJuly 11, 2001

Microsoft Admits its Monopolist Behavior, Offers Only Cosmetic Changes

Washington, DC- Microsoft today announced that it is changing it licensing agreement for Windows XP with OEMs in response to findings by the Federal Courts that its current practices are illegal. The new agreement will allow OEMs to continue to add icons on the Windows desktop and Start menu, a practice that would have ended with Windows XP.

While Microsoft will give OEMs and consumers the ability to remove the Internet Explorer icon, Microsoft has not stated the code can be removed from the operating system, only the end-user access to Internet Explorer’s components. More fundamental, as Computer & Communications Industry Association (CCIA) President and CEO, Ed Black, stated, “This is meaningless because Microsoft has chosen to do this only after they possess an 87% market share and no effective competition remains because of its illegal conduct in the browser market.”

Microsoft does not let OEMs or end users substitute non-Microsoft products for Microsoft products. For example, Microsoft does not indicate whether they will allow OEMs or consumers to have meaningful choice with respect to other products, such as the Windows Media Player and Microsoft Instant Messenger. Microsoft has indicated that these products, unrelated to the basic operations of a computer system, will be more tightly integrated into Windows XP than Internet Explorer was in past operating systems. Black comments, “Microsoft has clearly learned the lesson that in the slow paced environment of litigation, they are free to abuse their monopolistic position to kill competition and then offer consumers a false choice.”

Black continues, “this also does nothing to provide real choice in the .NET and Hailstorm areas where they are leveraging their dominant operating system position to create a proprietary world where every Internet user must pass through Microsoft’s gates and pay whatever toll Microsoft deems necessary to use the Internet.”

CCIA also recognizes that these limited actions do nothing to stop the bundling that Microsoft uses to strip consumers of choice with their Office Suite.

Black also stated that, “with Internet Explorer code still bundled into the operating system, even with out the cosmetic appearance of an icon, it is difficult to believe that Microsoft will not use lack of interoperability as a way to foil real choices. The fundamental problem remains: Microsoft retains massive monopoly and market power in several areas, and has not forsaken using a vast array of tools and techniques to abuse that power and restrict choice and competition.”

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