How Microsoft backed down in the face of Japanese FTC

Last week we elaborated on Microsoft's interesting way of reporting how it had "won" its antitrust battle in Japan. (Earlier story) We now have the full text of the Japan Fair Trade Commission decision, which makes interesting reading. The JFTC found that since March 1995, Microsoft Japan "unjustly has tied its word processor software 'Word' to its spreadsheet 'Excel' and has tied personal information manager software 'Outlook' to 'Excel' and 'Word' when it licenses their software to PC manufacturers (Fujitsu Ltd, NEC Corporation, IBM Japan Ltd, Compaq Computer Co Ltd, etc) for the purpose of installing or bundling them to PCs." The JFTC issued a recommendation to Microsoft (to which Microsoft hastily agreed) that it should cease the breaches of the law concerned with tie-in sales. If Microsoft had not accepted the recommendation, the JFTC announced it would "commence hearing procedures". The JFTC also identified breaches of the Designation of Unfair Trade Practices (Dealing on Exclusive Terms). Of specific concern was that since April 1996, Microsoft offered to reduce its licence fees for Windows if OEMs "stopped installing a competing browser" on their PCs. The second concern was that Microsoft's contracts with ISPs in Japan "restrained them from dealing in competing browser software in exchange for offering referral services". Microsoft agreed to stop these practices in April, but the picture that now emerges is radically different from that presented in the Microsoft press release and statement from Microsoft general counsel, international, Brad Smith. That the JFTC decided that Microsoft had illegally tied its products and dealt on exclusive terms should give the DoJ some comfort. ®