JUDGE REJECTS MICROSOFT BUNDLING; RULING AWAITED ON COMPETITION ISSUES.

Byline: Rob Wells Associated Press 

A federal judge on Thursday ordered Microsoft Corp. to stop forcing computer makers to install its Internet-browsing program on PCs as a condition for buying its popular Windows program.

U.S. District Judge Thomas Penfield Jackson, however, rejected a Justice Department request to fine the software giant $1 million a day for alleged violations of a 1995 court order aimed at preventing anti-competitive practices in the software market.

Jackson issued the decision in response to a Justice Department lawsuit that charged Microsoft violated the 1995 order by unfairly leveraging its market dominance in Windows software to gain market share in the Internet browser market.

Browsers, such as Microsoft's Internet Explorer and Netscape Communication Corp.'s Navigator, enable computer users to find and retrieve information on the Internet.

In his decision, Jackson argued that forcing Microsoft not to bundle the Internet browser with the Windows 95 ``will not cause a significant hardship'' for the company since it already sells the product separately.

``Microsoft will remain free to market and promote (Internet Explorer) just as it presently does - or in any other manner it sees fit - so long as (computer manufacturers) are given the choice of whether or not to accept the product,'' he wrote.

Joel I. Klein, assistant attorney general and head of the Justice Department's antitrust division, welcomed the ruling even though the judge didn't fine Microsoft.

``What is most important is that choice will be restored to the market,'' Klein said. ``They were taking their monopoly in Windows 95 and saying you can only get that if you take our Explorer.''

``It sends a clear signal to competitors that they are free to develop, innovate and compete on a very level playing field,'' Klein said.

Jackson appointed Harvard Law School professor Lawrence Lessig, a leading national expert in technology law, to be a ``special master'' and rule by May 31 on the legal issues raised in the case.

In the interim, he said Microsoft ``shall cease and desist . . . from the practice of licensing the use of any Microsoft personal computer operating software . . . on the condition, express or implied, that the licensee also license and pre-install any Microsoft Internet browser software . . .''

Microsoft spokesman Greg Shaw said in Redmond, Wash., that the company was pleased that the judge didn't hold it in contempt.

``This is clearly a preliminary decision, and the court agrees with our position that more facts are needed,'' he said. ``We remain confident that what we are doing is good for the software industry and good for consumers.''

Shaw said the decision ``refers to licensing agreements going forward'' and does not void any licensing agreements Microsoft already has. But he said its impact on Windows 98 - a new software product due out next year and expected to fully integrate the World Wide Web browser with the operating system - ``is a little unclear.''

Netscape welcomed Jackson's ruling.

``What we've been after is a level playing field, and we believe this is an important step in establishing this,'' said Lori Mirek, Netscape's senior vice president for marketing. ``This is an interim step, but we hope they take long-term action on this.''

The judge ruled that part of the 1995 court order ``does reach Microsoft's controversial licensing practices in some respect'' but said the ultimate question of whether Microsoft was violating the agreement ``remains to be decided.''

The 1995 court order and consent decree resolved an earlier Justice Department suit accusing Microsoft of engaging in anti-competitive practices.