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Japan Issues Warning To Microsoft

Japan's fair-trade agency warned Microsoft Corp. Friday that some of its business practices had violated the country's anti-monopoly laws.

A Microsoft lawyer, however, said the Fair Trade Commission had closed its antitrust investigation into the company, and that its action amounted primarily to a caution over now-outdated contracts.

The company did agree to stop combining some software that is pre-installed on personal computers.

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More importantly, said Brad Smith, general counsel for international affairs at Microsoft, the Japanese agency decided not to pursue allegations over Microsoft's competition with Netscape Communications or Microsoft's current contracts with Internet service providers.

Both of those issues are central matters in the antitrust trial brought by the U.S. Justice Department against Microsoft and now under way in Washington, D.C., Smith noted.

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The Japanese ruling has no bearing on the U.S. case, in which the Justice Department and 20 states contend that Microsoft, the world's largest software maker, is using its dominance in personal computer operating systems to quash competition, especially in the market for Internet browsers.

But Smith said Microsoft was especially glad of the commission's decision because antitrust laws are tougher in Japan than in this country.

"We satisfied a tougher standard in Japan than exists" under U.S. antitrust law, he said.

In January, agents from the commission raided Microsoft's Tokyo offices, confiscating information about Microsoft's Windows operating system and Internet Explorer browser software. It also collected information about Microsoft's word-processing program Word and spreadsheet Excel.

In the months since, Smitsaid, the agency has reviewed more than 250,000 pages of documents.

"This case has shown that Microsoft's products and practices benefit consumers, and the proper role of antitrust law is to focus on consumers, not the narrow interests of a few competitors," Smith said.

"It's certainly ironic that the Japanese government has dropped all of the browser allegations, but our own government is continuing its attack on one of America's leading exporters," he said.

Smith said the Japanese decided against pursuing allegations that Microsoft took improper action to discourage computer manufacturers from installing Netscape's Navigator browser. The agency told Microsoft that the company's practices "cannot be immediately found to have tended to impede fair competition in Japan's distribution market for Web browsers," Microsoft said.

The commission noted in particular that Web browsing software is easily distributed to consumers by many avenues, which Smith said is a key point Microsoft has been trying to stress in the U.S. trial.

Microsoft had contracts to promote companies offering Internet access by putting a link in Windows so the buyer of a new computer could find a list of such companies. In return, the Internet service providers would agree to promote Microsoft's Internet Explorer browser. Those contracts were criticized for being exclusionary, and Microsoft modified them earlier this year, Smith said.

The Japanese commission issued a warning to Microsoft about those older contracts, which have now been superseded, but took no action on newer contracts reached with the service providers, Smith said.

On the matter of combining pre-installed software, Microsoft agreed to meet a commission objection over how it bundled its Word and Excel programs to be sold with new computers. In essence, Smith said, the problem was solved by agreeing to allow manufacturers to offer Excel by itself.

Microsoft had been marketing in Japan a bundle of Word and Excel, in competition with a similar bundle of word processing, spreadsheet, and other software distributed by a leading Japanese software publisher, JustSystem.

The Fair Trade Commission determined that practice put competitors at a disadvantage, agency spokesman Kanichiro Nakanishi said in Tokyo.

If Microsoft contests the finding, the commission may take legal action against the company to enforce the ruling, Nakanishi said.

Written By George Tibbits

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