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Texas May Be Next To Sue Microsoft

May 11, 1998

FORT WORTH, Texas (AP) _ An antitrust lawsuit that threatens to delay the release of Microsoft’s Windows 98 operating system for personal computers is expected to be filed this week by the Texas Attorney General’s office, according to a published report.

Several other states are expected to join Texas, and the Justice Department is also expected to launch its own legal assault soon against Microsoft, the Fort Worth Star-Telegram reported today.

The battles are likely to be the largest antitrust actions taken since the forced breakup of AT&T a decade ago.

Government regulators will be seeking to define when a major corporation has become too dominant in an industry, even in a new era of global competition and rapid technological change.

Staff members in Attorney General Dan Morales’ office say the state is a leader among the states seeking to keep the software giant from tightening its hold on the emerging Internet market.

Antitrust officials fear that Microsoft is using its dominance in the operating system market to force out rivals in other software businesses.

Some of the larger companies in the computer industry in Texas say the action could hamper growth in one of the state’s fastest-growing industries.

``Texas is the PC capital of the world,″ said James Halpin, chief executive of Dallas-based retailer CompUSA. ``For our attorney general to be involved in this is totally inappropriate.″

Microsoft is scheduled to begin shipping Windows 98 on Friday and the operating system is scheduled to hit store shelves in late June.

Government lawyers at federal and state levels are unusually quiet about their plans, but speculation is rising that lawsuits against Microsoft could be filed within days.

``We’ve been investigating for close to 18 months,″ said Ward Tisdale, a Morales spokesman. ``If we take any action, we’ll make an announcement on the day we take that action, not beforehand.″

While government investigators have been mum about their plans for lawsuits, Microsoft has seized the public-relations agenda.

The company held a computer-industry pep rally in New York with top executives from several companies, including CompUSA and Compaq. Last week, Microsoft issued the results of a survey of 602 Texans. The survey, conducted for the company by Hart-Teeter, a Washington polling firm, found that 72 percent believe that Morales should not bring a lawsuit.

The poll will not influence the attorney general’s plans, Tisdale said.

``When we conduct an investigation, we review the law and we take action when the law is broken,″ Tisdale said. ``We don’t take into account opinion polls.″

The complaint against Windows 98 is that it has a more tightly integrated browser for the World Wide Web than the current operating system, Windows 95.

The browser, which opens the door to the Internet, was originally a separate software championed by another software company, Netscape.

``This is not about consumers,″ said Mark Uland, president of Elsinore Technologies in Houston. Rather, he said, it’s about kicking large corporations.

Uland and CompUSA’s Halpin have signed a letter to Morales asking his office to leave Microsoft alone. They were joined in that by Eckhard Pfeiffer, Compaq’s chief executive, and Nathan Morton, co-chairman and chief executive of Computer City in Fort Worth.

The executives warned that delaying Windows 98 could be harmful because the Texas economy has become increasingly tied to high-tech businesses.

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