Byline: Cynthia L. Webb

Just when Bill Gates thought Microsoft Corp. was close to resolving the last major regulatory probe into its business practices, up pops yet another antitrust agency to investigate charges that the software goliath improperly used its might to force concessions from key customers.

Officials from Japan's Fair Trade Commission raided Microsoft's Japanese unit in Tokyo today to investigate potential violations of the country's antitrust laws, various media outlets reported. "The commission said Thursday that it believed Microsoft imposed unfair conditions on computer manufacturers wanting to license its Windows XP operating system software," Reuters said, adding that "the investigation is only the latest for Redmond, Wash.-based Microsoft, which is plagued by accusations that it has abused its monopoly on PC operating systems to push prices higher or harm rivals." The Times of London noted that the probe "follows a series of accusations that the company has abused its dominance in the market for computer operating systems." * Reuters via CNET's News.com: Microsoft Faces Antitrust Probe In Japan * Various press agencies via Times of London: Japanese Officials Raid Microsoft Offices

The Financial Times said the Japan action "opens a new front in anti-trust battles being waged against Microsoft across the world. In Europe, the US group is trying to settle an anti-trust lawsuit brought by the European Commission , whose preliminary findings concluded that the company violated European competition law by refusing to give rivals information that would allow their servers to work better with Window-driven PCs. The licensing agreement under question in Japan requires domestic PC makers to agree not to demand licensing fees from Microsoft even if the US group's Windows XP operating software contains intellectual property owned by those manufacturers."

"It seems to me that Japanese manufacturers are becoming more concerned about Microsoft's dominance because of fears of its ability to dominate the software for the downloading of applications from the internet, which is becoming increasingly critical to the competitiveness of their products," Yoshihiro Shimada , a Tokyo-based ING analyst, told The Financial Times. Take that in for a second. Are Japanese regulators simply trying to help out their domestic technology giants? * The Financial Times: Microsoft Probed By Japan's Anti-trust Agency

More details on what prompted the Japanese antitrust agency to take action: "Sources close to the action said Microsoft has allegedly forced Japanese PC makers to accept a contractual clause stipulating that they will not bring a case to court even if the software giant's technologies are very similar to those developed by Japanese firms," Japan's Kyodo News further explained. An FTC official told the Australian Associated Press that the Japanese firms included NEC , Fujitsu , Matsushita , Hitachi and Sony . "According to the sources, the FTC suspects Microsoft demanded such a clause that puts Japanese PC makers at a disadvantage by capitalizing on its dominant position in the PC operating software market. The antimonopoly watchdog intends to issue an order requiring Microsoft to get rid of the clause if its probes confirm the company's conduct is violating the Antimonopoly Law," Kyodo News said. * Kyodo News via Japan Today: FTC Raids Microsoft's Tokyo Office Over Windows XP Contracts * Mainichi Shimbun: Microsoft Japan Investigated Over XP Licensing

The Australian AP provides additional background on Microsoft's run-ins with Japan's antitrust officials: "In 1998, the FTC, after 11 months of investigation, issued a pro forma warning for Microsoft's Japanese unit because of the way it had bundled its popular Office programs. Microsoft provided Office programs to Japanese computer makers with a small bundle comprising only word processing program Microsoft Word and spreadsheet maker Excel," the news service said, noting this triggered a raid on Microsoft's Tokyo office in 1998. "Along with the warning, the FTC issued a recommendation that Microsoft should give Japanese computer makers a choice in which software to install." * The Australian Associated Press via The Melbourne Age: Microsoft Japan Offices Raided

So far, Microsoft has said little about the event in Japan. "Eight people from the FTC came here at 9:30 a.m. to investigate our contract related to patents on our software with PC makers," said Masashi Shinbo , a spokesman for Microsoft's Japanese unit, according to unspecified wire service sources picked up by a Seattle Post-Intelligencer article. "We believe our contract is legal but will do our best to help FTC investigate." * News Services via The Seattle Post-Intelligencer: Microsoft Offices In Tokyo Raided By Japan Trade Officials

Meanwhile, Back in Europe...

Japan's antitrust action comes at a critical time for Microsoft, which is trying to bring to a close the European Union 's own long-running probe. Yesterday brought news that there will be yet another delay at the EU. "European regulators have pushed back the dates next month for final hearings in the antitrust case against Microsoft Corp. as settlement talks continue, sources familiar with the case said Wednesday. The closed-door hearings -- where the decision is presented to representatives of the 15 European Union governments -- will be held March 15 and 22 in Brussels, the sources said, speaking on condition of anonymity. The original dates were March 3 and 15," The Associated Press said. "It was not clear whether the delay was to accommodate last-minute negotiations or to give the national representatives more time to review the commission's extensive findings against the company. The draft ruling finds Microsoft abused its dominant position with Windows to gain market share in sales of media players and servers." * The Associated Press via washingtonpost.com: Europeans Postpone Microsoft Hearings (Registration required)

The New York Times reported the "commission has drafted a preliminary ruling that finds Microsoft guilty of abusing the dominant position of its Windows operating system -- a finding that is expected to be supported by the national regulators, the diplomat said. A second meeting will be convened within a week to discuss corrective measures to impose on Microsoft. The second gathering of the so-called advisory committee will also discuss how much to fine the company. The commission typically makes a final ruling a few days after the second meeting. This ruling may come on March 23 or 24." In an article yesterday, the Times said European regulators were weighing whether to require Microsoft to "sell two versions of Windows in Europe -- one with the music- and video-playing software stripped out -- should they find the company to be an abusive monopoly, people close to the case said Tuesday." * The New York Times: Europe Weighs Antitrust Steps For Microsoft (Registration required) * The New York Times: Europe May Tell Microsoft to Split Software (Registration required, article is from Feb. 25)

According to Dow Jones Newswires, Microsoft officials remain hopeful that the European case will be brought to a close soon. "'We are very focused on getting things settled and having a good relationship with the' European Union, Microsoft CFO John Connors said at an investor conference hosted by Goldman Sachs Group Inc. ," Dow Jones reported. "Right now, [the EU case] is the most important case for the company, shareholders and customers," Connors said. * Dow Jones Newswires via The Wall Street Journal: Microsoft Pushes for Settlement In EU Antitrust Investigation (Subscription required)

Microsoft Heading to Magic Mountain?

The Philadelphia Inquirer had an interesting article about Microsoft's potential role in Comcast Corp. 's bid to buy The Walt Disney Co. While it's not likely that Microsoft would make its own bid for Disney, the newspaper concluded the software company could add "a few billion dollars" to help Comcast sweeten its deal for Disney. "Few if any analysts and observers expect Microsoft to go after Disney directly. Rather, Microsoft is interested in cementing relationships in the cable and entertainment field as it works toward putting its software inside the digital cable boxes, television sets, and other entertainment gadgets of the future," the paper said, noting that Microsoft owns 7.4 percent of Comcast's stock -- the largest single shareholder in the cable firm. Comcast and Microsoft didn't comment, though the Inquirer reported that the "financial community has all but dismissed Microsoft as a stand-alone bidder for Disney. One reason is a matter of perception: Many people still associate Microsoft with the government's antitrust suit against the company in the 1990s." * The Philadelphia Inquirer via The San Jose Mercury News: Microsoft Role In Comcast-Disney: Partner?

A Little Good News for Microsoft

In what could amount to a boost for Microsoft's XBox gaming system, Sony Corp. says it is pushing back the release of a handheld version of its PlayStation gaming device in U.S. and European markets until spring of 2005, Reuters reported. PlayStation wants to tinker with the game more, the article said, and plans to release the PSP in Japan this year. "We'd be very surprised if it was ready at the end of the year," Hiroshi Kamide , an analyst at KBC Securities , told Reuters. "It will be a huge struggle to get something out by Christmas." * Reuters: Sony Delays U.S., Europe Launch of PSP To 2005

According to BBC News Online, Sony America spokeswoman Molly Smith said, "We want to ensure that the product launch is really well supported and that the development community will have time to optimise content." * BBC News Online: Sony Delays Playstation Release

Video Gaming 101

Gaming is a serious business -- so much so that academics are studying video gams and are planning a conference on subject. The March 6 conference at Princeton, The New York Times reported today, is "called, 'Form, Culture and Video Game Criticism,' the first of its kind at an Ivy League university. A lawyer, a journalist, a composer, two professors, two lecturers and six graduate students will present papers with titles like 'Musical Byproducts of Atari 2600 Games' and 'But Our Princess Is in Another Castle: Towards a 'Close-Playing' of Super Mario Brothers.'" Here's a link to more information on the conference. * The New York Times: The Ivy-Covered Console (Registration required)

Intel's Wireless Play

Chipmaker Intel Corp. plans to sell a new chip later this year that will run high-speed mobile phones, the company announced yesterday at the 3GSM World Congress conference in Cannes, France. The new chip is "an effort to win handset customers from Texas Instruments Inc. ," Bloomberg reported. "The chip, dubbed Hermon , will be used in mobile phones that use so-called wideband code-division multiple access, or WCDMA, technology and allows videoconferencing." * Bloomberg via The Los Angeles Times: Intel to Sell High-Speed Mobile-Phone Chip (Registration required)

The Associated press said while the chip giant is "the leading maker of personal computer processors, Intel has struggled to win over cell phone makers. Last year, it reorganized the business and took a $600 million fourth-quarter charge after the unit failed to meet expectations," the wire service said. Indeed, it hopes to turn a new leaf with the new wireless plan. "So far, Samsung and Motorola ship Intel-powered phones in limited quantities. On Wednesday, European phone company Orange said it would work with Intel on next-generation devices." * The Associated Press via washingtonpost.com: Intel Outlines Cell Phone Strategy (Registration required)

Black Mark For Chip-Makers

Big players in the microchip industry could be facing price-fixing charges, The Wall Street Journal reported today. "Newly disclosed e-mail and testimony from industry executives show what prosecutors believe was a global conspiracy among some of the world's largest memory-chip makers to cut production and raise prices before a sharp price spike two years ago. The evidence -- and new activity before a federal grand jury in San Francisco -- suggests a long-running antitrust investigation may be coming to an end. Prosecutors are expected to seek criminal price-fixing charges against some chip makers, while others are weighing whether to enter plea deals and risk heavy fines, lawyers close to the case said," the paper said. "Companies that have disclosed they are under investigation include the market leader, Samsung Electronics Co. , and Hynix Semiconductor Inc. , both of South Korea; Micron Technology Inc. , based in Boise, Idaho; and Infineon Technologies AG of Germany, among others." * The Wall Street Journal: Prosecutors Could Seek Charges Against Chip Makers (Subscription required)

Another Antitrust Probe

Antitrust officials are investigating the "push-to-talk" walkie-talkie cell phone market, Reuters, The Washington Post and others reported. "The Justice Department is requesting documents from Nextel Communications Inc. , Motorola Inc. and Verizon Wireless Inc. as part of an antitrust investigation related to Nextel's popular walkie-talkie service," The Washington Post said. "Nextel spokeswoman Audrey Schaefer confirmed that the Reston, Va.-based company had received a request for information from Justice, but would not provide details," Reuters reported. * The Washington Post: Justice Dept. Asks Rivals For Facts On 'Push-to-Talk'

* Reuters via The Los Angeles Times: 'Push-to-Talk' Wireless Competition Probe (Registration required)

The Wall Street Journal said the Justice Dept. "first started making inquiries after a flurry of lawsuits last summer between Verizon Wireless and Nextel relating to the 'push to talk' service. Those requests were repeated in the past few weeks. This wouldn't be the first time the Justice Department has examined Nextel and Motorola, which supplies most of the push-to-talk equipment to Nextel. In 1994, the Justice Department filed an antitrust case alleging an agreement between the two companies would have reduced competition. The following year the department settled its case through a consent decree." * The Wall Street Journal: U.S. Agency Probes Walkie-Talkie Services (Subscription required)

Filter is designed for hard-core techies, news junkies and technology professionals alike. Have suggestions, cool links or interesting tales to share? Send your tips and feedback to cindyDOTwebbATwashingtonpost.com .

COPYRIGHT 2004 Washingtonpost Newsweek Interactive
COPYRIGHT 2004 Gale Group