Lawyers from Microsoft attended the first hearing of the U.S. Justice Department's case against the company Monday. Microsoft is basing its defense around the notion that the case raises issues that do not fall under the scope of the 1995 consent decree. Microsoft lawyers said that the issue cannot be solved by agreement and requested pre-trial proceedings. U.S. District Judge Thomas Penfield Jackson gave Microsoft ten days to file an official response to the Justice Department petition and gave Justice another ten days to reply to that response.
Interestingly, there is very little in the consent decree that deals with bundling. However, one clause mentions that "Microsoft shall not enter into any License Agreement in which the terms of that agreement are expressly or impliedly conditioned upon: (1) the licensing of any other Covered Product, Operating System Software product or other product (provided, however, that this provision in and of itself shall not be construed to prohibit Microsoft from developing integrated products)."
From the Justice standpoint, then, IE 4.0 is not an "integrated product" and Microsoft is in violation of this agreement. Microsoft contends that since IE 4.0 is "integrated" with Windows 95, they are not in violation. The case may come down to whose interpretation of the word is accepted in court. Justice anticipated this, however, and filed the following arguments contending that IE 4.0 is not integrated:
- "Substantial OEM and end-user demand exists" for Web browsers that is quite separate from the demand for Windows 95.
- Microsoft's own actions--including its marketing and internal accounting procedures--demonstrates that it "recognizes and responds to the separate demand" for IE 4.0.
- Distributing the two products separately is "physically possible." It is also "the commercial norm and not necessary to enable Microsoft to 'develop' any 'integrated product'".
