Partial settlement divorces IE and Windows '95

In a stunning about-face, software colossus Microsoft Corp. agreed Thursday to settle one significant aspect of its ongoing imbroglio with the U.S. Dept. of Justice by in effect removing all visible connections between its Internet browser and its omnipresent Windows operating system.

The move has worldwide implications for any companies or individuals who do or plan to do business on the Internet.

In a separate development Thursday, Microsoft rival Netscape announced it would give away its popular browser.

William Neukom, Microsoft’s senior VP for legal and public affairs, said at a press conference the company will release a new version of the Windows 95 operating system that is completely up-to-date in functionality but does not include either the Internet Explorer software nor the Active Desktop that the company previously insisted was “integral” to that system.

Sends a message

DOJ lead antitrust attorney Joel Klein, who had been heading the federal antitrust case against the Redmond, Wash.-based software giant, said the partial settlement is a clear message to software creators that they can proceed to innovate without fear of “being snuffed out by Microsoft’s monopolistic power” in the industry.

“Today’s decision is a victory for consumers and innovators alike,” Klein said at a Washington press conference.

Softens tone

In addition, the settlement softens somewhat the consistently antagonistic tone Microsoft has taken toward the government — something that had hardly endeared the company to its customers or other members of its industry.

And with more active competition among browser makers — which are the main points of entry for every Internet user in the world — commerce and innovation on the Net may be the ultimate beneficiaries.

Klein has pressed for a $1 million per day contempt citation against Microsoft because it initially offered PC manufacturers either flawed, out-of-date or totally inoperative versions of Windows 95 in a move to flout –except on the most literal level — the order of federal District Court Judge Thomas Penfield Jackson to decouple IE from Windows 95.

But now Klein has dropped that part of his case against Microsoft as a result of the settlement.

Still at issue in the case are:

- Microsoft’s appeal of Jackson’s order;

- its petition to remove court-appointed special master Lawrence Lessig, a Harvard professor, from advising the court on anti-competitive issues;

- and the company’s reaction to Lessig’s examination of those issues.

Klein confirmed the DOJ will still be examining the newest version of Windows, Windows 98, which is scheduled to be released later this year. Microsoft execs have said the IE browser is even more tightly integrated in the operating structure of Windows 98, but Thursday’s settlement may represent a change in that position, at least publicly.

Another development Thursday may cause Microsoft to reconsider its Internet strategy as well.

Free Netscape browser

Its archrival in the Web-browser business, Netscape Communications, announced it would no longer charge individual users of its Navigator browser, thereby eliminating one of the major advantages Microsoft had enjoyed in the browser wars: The fact that it gave IE away for nothing.

Additionally, Netscape execs said they will allow software developers access to the basic code of Navigator, thereby giving innovators a considerable edge in creating new uses and add-ons for the browser.

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