ANTITRUST LAWS MOVING INTO CYBERSPACE; MICROSOFT, GOVERNMENT GO HEAD TO HEAD.

Byline: Aaron Zitner The Boston Globe

Imagine that a private company runs a municipal bus system, but its buses stop only near stores that it also owns. Imagine that anyone making a phone call could not dial before hearing Bell Atlantic Corp., which owns the telephone network, advertise its own taxi service or travel agency.

Any competing store, taxi company, or travel agency would be at a big disadvantage - and could take a convincing antitrust case to a judge. Monopolies have to play by special rules and the law bars them from using their power to gain an edge in a new industry.

State and federal officials brought this long-held legal principle into the Digital Age by filing major antitrust actions Monday against Microsoft Corp., the world's dominant software company.

The governments' complaints, which reportedly are bolstered by internal company e-mails by Microsoft Chairman Bill Gates, are full of talk about computer operating systems and Internet browsers. But while the language may sound arcane to some, Microsoft's critics say the government has built a plain-vanilla antitrust case.

``The fundamental principles of antitrust law are pretty visible here,'' said Edward J. Black, president of the Computer & Communications Industry Association, a trade group that includes telephone and computer companies. ``We don't think this is fundamentally new or different.''

One law that Microsoft is accused of violating, the Sherman Antitrust Act, dates to 1890 and the days of the railway and oil barons. Along with the Clayton Act of 1914, the law bans mergers that unduly hinder competition, as well as predatory pricing and other behavior in which a company uses its market power to hurt competitors without helping consumers.

In Microsoft's case, the monopoly involves a type of software called an operating system, which controls such basic computer functions as storing and fetching files. Microsoft has pushed its operating system, called Windows, into 90 percent of the world's personal computers.

The government does not appear to be challenging Microsoft's right to hold the Windows monopoly. But the government says Microsoft is using its Windows monopoly illegally to stifle competition. According to published reports, the state and federal lawsuits will turn on a May 1995 meeting between Microsoft and a competitor, Netscape Communications Corp., in which Microsoft tried to carve up the market for Internet browsers, a type of software that allows users to navigate the text and graphics of the Internet.

Microsoft allegedly asked Netscape to forgo making a version of its browser to work with Windows 95. In return, Microsoft allegedly would leave Netscape unchallenged in making browsers that work with Apple and Unix computers, or with earlier versions of Windows. Microsoft has vigorously contested the accusation.

CAPTION(S):

2 Photos

PHOTO (1--Color) Microsoft CEO Bill Gates

(2--Color) Attorney General Janet Reno