Microsoft's Supplemental Memorandum in Support of MSJ.
Re: DOJ v. Microsoft, Case No. 98-1232, 1233.
Date: September 14, 1998.
Source: Microsoft.

[caption omitted]

DEFENDANT MICROSOFT CORPORATION’S
SUPPLEMENTAL MEMORANDUM IN SUPPORT
OF ITS MOTION FOR SUMMARY JUDGMENT

In its opening memorandum in support of its summary judgment motion, Microsoft explained why the integration of Internet Explorer technologies into Windows 98 achieves numerous technologically beneficial results that assist both consumers and independent software vendors ("ISVs") and that could not otherwise be achieved. (See Microsoft Summ. J. Mem. at 6-9, 33-37.) During oral argument on Microsoft’s motion, the Court asked several times why Microsoft, rather than OEMs or end users, must carry out this integration in order to achieve those technological benefits. (Tr. at 8-13, 83-85.) In holding that Windows 95 is "a genuine integration," the Court of Appeals addressed the same question based on the declarations that Microsoft had submitted to this Court in opposition to the DOJ’s October 1997 petition for an order to show cause and on the factual record developed during the January 1998 hearing on the DOJ’s subsequent contempt motion. See United States v. Microsoft Corp., 147 F.3d 935, 951-52 (D.C. Cir. 1998). Because this question is obviously important to the Court, Microsoft wishes to ensure that its answer is clear. The record support for the facts discussed below is provided in Microsoft’s papers in support of its summary judgment motion.

Although "[i]t might seem, superficially, that the OEM [or end user] is just as capable as Microsoft of combining the browser and the operating system," id. at 951, they are not, as the Court of Appeals concluded in the Consent Decree case, see id. at 951-52. The technological benefits discussed in Microsoft’s opening memorandum result from the integrated design of Windows 98. Neither OEMs nor end users could duplicate this integration merely by combining an operating system with a web browser if both were designed as standalone products. That is true because, if there was a possibility that OEMs or users might not install the separate web browsing software, then Microsoft could not rely upon the presence of that software in designing operating system software whose functionality depends upon it. Microsoft’s choices were thus simple and stark: (i) integrate web browsing functionality into the operating system to ensure that the capability exists to perform other necessary functions, or (ii) cease to innovate in ways related to the Internet in designing and developing its operating systems software.

As it is, Microsoft designed and developed Windows 98 so that the very same software code that enables the user to locate and view information on the World Wide Web also performs a number of other essential functions. For example, the entire Windows 98 user interface—what the user sees on the screen when he or she interacts with the computer—is displayed by the same software code that provides web browsing functionality, making the user interface richer and more customizable. That same software code also displays the contents of the "Help" topics in Windows 98, providing a richer display of those topics and simplifying user navigation between them. In addition, the same software code that enables users to browse the World Wide Web also provides the mechanism by which users search and display information on the computer’s hard drive, on a local area network ("LAN") and on a wide area network ("WAN"), permitting users to navigate seamlessly between files and folders stored on various local and network devices—as well as on the Internet.

Needless to say, using the same software code for these and many other functions is more efficient (it requires less code), thus reducing the overall size and increasing the speed of the operating system. It also makes computers easier to use by permitting users to access information irrespective of its location using a standard navigational paradigm. Because the same software code that enables users to browse the World Wide Web also performs these other essential functions, it cannot be removed from Windows 98 without breaking the operating system. Of course, given the nature of software, Microsoft could ship Windows 98 on multiple CD-ROMs, but those separate CD-ROMs would be useless until they were all loaded onto the computer and the operating system fully installed.

There is a second reason why it does not make sense to attempt to redesign Windows 98 so that OEMs or users have the option of not installing software code that provides web browsing functionality. The same software code in Windows 98 that provides such functionality also exposes a large number of application programming interfaces ("APIs") that ISVs use to obtain system services that increase the functionality of their products. Because those system services are included as a standard part of the operating system, ISVs need not "reinvent the wheel" by developing and including similar functionality in their own products. For instance, the software code that reads and displays documents in the "HTML" format—first popularized on the World Wide Web, but now used more broadly—is available in Windows 98 for any ISV to use in developing applications.

Thanks to the availability of such system services in Windows 98, ISVs can focus their energies on adding new features to their products, knowing that the system services they need will be there—a highly efficient result. If OEMs or users were permitted to remove some of the software code that exposes those APIs, then ISVs would have to include additional functionality in their products, resulting in larger, more inefficient applications. Such applications would be more difficult to distribute, and their more complex installation would result in increased product support costs.

Windows also would lose much of its attractiveness as a dependable (uniform) platform to which ISVs can write applications if OEMs or users were permitted to remove software code that exposes APIs. In this respect, the APIs exposed by the software code that provides web browsing functionality are no different from the thousands of other APIs that Windows 98 makes available to ISVs. The uniformity of Windows (in contrast to the many different flavors of the UNIX operating system) is one of the primary benefits of the operating system, leading to the availability of a vast range of compatible hardware and software products at attractive prices from thousands of different hardware manufacturers and ISVs.

In short, the software code in Windows 98 that provides web browsing functionality cannot be removed from the operating system because it both (i) performs other essential operating system functions, and (ii) provides system services on which numerous ISVs rely. As a result, the only software code with any relation to web browsing functionality that could be removed from Windows 98 without incapacitating the operating system or injuring ISVs is the relatively few lines of code that provide some of the means by which users can access that functionality. It is those few lines of software code, and those few lines only, that plaintiffs and their expert witness, Dr. Edward Felten, propose be removed from Windows 98.

As an initial matter, removing those few lines of software code would accomplish both too little and too much: it would not eliminate all of the means by which users of Windows 98 can access the Internet, yet it would impair features of the operating system unrelated to web browsing. However, even if it were possible to hide user access to the web browsing functionality provided by Windows 98 by removing those few lines of code, and doing so would not damage other features of the operating system, it would serve no useful purpose under the antitrust laws to permit OEMs to remove that software code.

As the Court of Appeals explained, the few lines of code that provide user access to web browsing functionality are analogous to "a key to opening IE." Id. at 952 n.17. If an OEM removed that software code, its customers would then acquire an operating system that includes all of the code needed to browse the World Wide Web—that code would already be present in the operating system because it is needed to perform other functions such as displaying the user interface—but the user would be unable to take advantage of the web browsing functionality provided by that code without acquiring the key needed to access that functionality. Similarly, because web browsing functionality has been integrated into the design of Windows 98, if Microsoft made the few lines of code that provide user access to that functionality separately available to OEMs, and an OEM elected to install those few lines of code, that OEM would merely be inserting the key into Windows 98 that unlocks the full functionality provided by the integrated design of the operating system. The OEM would not itself be "integrating" anything in a way that creates technological benefits.

The Court of Appeals reached the same conclusion in the Consent Decree case, holding that Windows 95 is an integrated product:

Id. at 952 (footnote and citation omitted). The Court of Appeals thus concluded that the act of integration that produces the technological benefits resulting from the inclusion of web browsing functionality in the operating system is not the installation of that technology onto the computer—which either OEMs or end users can do—but rather "the creation of the design that knits the two [functionalities] together," which OEMs and end users cannot do. Id. (emphasis added). That analysis applies with greater force to the integrated design of Windows 98. Plaintiffs cannot dispute that Internet Explorer technologies are even more deeply integrated into Windows 98 than they were in Windows 95.

These facts, as well as the legal analysis set out in the Court of Appeals’ opinion, are dispositive of plaintiffs’ tying claims under Sections 1 and 2 of the Sherman Act. For these reasons, as well those previously set forth by Microsoft in connection with its summary judgment motion, this Court should grant Microsoft’s motion and dismiss those claims in their entirety.

Dated: New York, New York

September 14, 1998

Respectfully submitted,

[signatures omitted]

[Certificate of Service omitted]