FOR IMMEDIATE RELEASE                                          AT
SATURDAY, JULY 16, 1994                            (202) 616-2771
                                               TDD (202) 514-1888
                                                                 

     MICROSOFT AGREES TO END UNFAIR MONOPOLISTIC PRACTICES       


     WASHINGTON, D.C. --  Microsoft, the world's largest and
dominant computer software company, agreed to end its illegal
monopolistic practices after the Department of Justice charged
that the company used unfair contracts that choked off
competition and preserved its monopoly position.

     The company agreed to settle the charges with a consent
decree that will prohibit Microsoft from engaging in these
monopolistic practices in the future.

     Microsoft, which makes the MS-DOS and Windows operating 
systems used in more than 120 million personal computers, was 
accused of building a barricade of exclusionary and unreasonably 
restrictive licensing agreements to deny others an opportunity to 
develop and market competing products. 

     Attorney General Janet Reno said, "Microsoft's unfair   
contracting practices have denied other U.S. companies a fair 
chance to compete, deprived consumers of an effective choice 
among competing PC operating systems, and slowed innovation. 
Today's settlement levels the playing field and opens the door 
for competition."   

     "Microsoft is an American success story but there is no 
excuse for any company to try to cement its success through 
unlawful means, as Microsoft has done with its contracting 
practices," said Anne K. Bingaman, Assistant Attorney General in 
charge of the Antitrust Division. 

     The settlement is the result of close coordination between 
the Department of Justice and the competition enforcement 
authorities of the European Commission, which has been 
investigating Microsoft since mid-1993, and which also initiated 
an undertaking containing essentially the same terms.  This 
complaint and settlement marks the first coordinated effort of 
the two enforcement bodies in initiating and settling an 
antitrust enforcement action.  

     Bingaman, praised the Commission, noting that, "This   
unprecedented, historic cooperative action sends a powerful  
message to firms around the world that the antitrust authorities 
of the United States and the European Commission are prepared to 
move decisively and promptly to pool resources to attack conduct 
by multinational firms that violate the antitrust laws of the two 
jurisdictions."  

     The civil complaint and consent decree were filed last 
night, July 15, in U.S. District Court in Washington, D.C.  The 
consent decree, if approved by the court, would settle the suit.  
Until approved, Microsoft has agreed in a stipulation filed with 
the court to abide by the terms of the decree.  

     The Department alleged that Microsoft used the following 
unfair practices: 

     Exclusionary Per Processor Licenses--Microsoft makes its 
MS-DOS and Windows technology available on a "per processor"  
basis, which requires PC manufacturers to pay a fee to Microsoft 
for each computer shipped, whether or not the computer contains 
Microsoft operating system software.  The complaint alleges that 
this arrangement gives Microsoft an unfair advantage by causing a 
manufacturer selling a non-Microsoft operating system to pay at 
least two royalties--one to Microsoft and one to its competitor-- 
thereby making a non-Microsoft unit more expensive. 

     "Microsoft has used its monopoly power, in effect, to levy a 
"tax" on PC manufacturers who would otherwise like to offer an 
alternative system," said Bingaman.  "As a result, the ability of 
rival operating systems to compete has been impeded, innovation 
has been slowed and consumer choices have been limited."  She 
noted that Microsoft has maintained the price of its operating 
systems while the price of other components has fallen 
dramatically.  Since 1988, Microsoft's share of the market has 
never dropped below 70 percent. 

     Unreasonably Long Licenses--The Department further alleged 
that Microsoft's contracts are unreasonably long.  By binding 
manufacturers to the purchase of Microsoft products for an 
excessive period of time, beyond the lifetime of most operating 
system products, the agreements foreclose new entrants from 
gaining a sufficient toe-hold in the market.       

     Restrictive Non-Disclosure Agreements--The Department also 
charged that Microsoft introduced overly restrictive non- 
disclosure agreements to unreasonably restrict the ability of 
independent software companies to work with developers of non- 
Microsoft operating systems.  Microsoft sought the agreements 
from companies participating in trial testing of the new version 
of Windows, to be released later this year.  The terms of these 
agreements preclude applications developers from working with  
Microsoft's competitors for an unreasonable amount of time.  

     The settlement ends these practices and will help to rectify 
the effects of Microsoft's past unlawful conduct.  In particular, 
the settlement prohibits Microsoft from: 

     --Obligating licensees (manufacturers of personal computers) 
to purchase any minimum number of Microsoft's operating systems; 

     --Entering into any licenses with terms longer than one year 
(although licensees may renew for another year on the same 
terms).

     --Requiring licensees to pay Microsoft on a "lump sum" 
basis. 

     --Requiring licensees to purchase any other Microsoft 
product as a condition for licensing a particular Microsoft  
operating system.        

     --Requiring developers of applications software to sign 
unlawfully restrictive non-disclosure agreements.  

     The settlement is effective immediately and will be in 
effect for six and a half years.   

     Bingaman said "this settlement resolves the competitive 
problems created by Microsoft's unlawful conduct quickly and 
effectively."

     Microsoft's main corporate office is in Redmond, Washington. 


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