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140. Even absent the strategic imperative to maximize its browser usage share at Netscape''s expense, Microsoft might still have set the price of an Internet Explorer consumer license at zero. It might also have spent something approaching the $100 million it has devoted each year to developing Internet Explorer and some part of the $30 million it has spent annually marketing it. After all, consumers in 1995 were already demanding software that enabled them to use the Web with ease, and IBM had announced in September 1994 its plan to include browsing capability in OS/2 Warp at no extra charge. Microsoft had reason to believe that other operating?system vendors would do the same.

141. Still, had Microsoft not viewed browser usage share as the key to preserving the applications barrier to entry, the company would not have taken its efforts beyond developing a competitive browser product, including it with Windows at no additional cost to consumers, and promoting it with advertising. Microsoft would not have absorbed the considerable additional costs associated with enlisting other firms in its campaign to increase Internet Explorer''s usage share at Navigator''s expense. This investment was only profitable to the extent that it protected the applications barrier to entry. Neither the desire to bolster demand for Windows, nor the prospect of ancillary revenues, explains the lengths to which Microsoft has gone. For one thing, loading Navigator makes Windows just as Internet?ready as including Internet Explorer does. Therefore, Microsoft''s costly efforts to limit the use of Navigator on Windows could not have stemmed from a desire to bolster consumer demand for Windows. Furthermore, there is no conceivable way that Microsoft''s costly efforts to induce Apple to pre?install Internet Explorer on Apple''s own PC systems could have increased consumer demand for Windows.

142. In pursuing its goal of maximizing Internet Explorer''s usage share, Microsoft actually has limited rather severely the number of profit centers from which it could otherwise derive income via Internet Explorer. For example, Microsoft allows the developers of browser shells built on Internet Explorer to collect ancillary revenues such as advertising fees; for another, Microsoft permits its browser licensees to change the browser''s start page, thus limiting the fees that advertisers are willing to pay for placement on that page by Microsoft. Even if Microsoft maximized its ancillary revenue, the amount of revenue realized would not come close to recouping the cost of its campaign to maximize Internet Explorer''s usage share at Navigator''s expense. The countless communications that Microsoft''s executives dispatched to each other about the company''s need to capture browser usage share indicate that the purpose of the effort had little to do with attracting ancillary revenues and everything to do with protecting the applications barrier from the threat posed by Netscape''s Navigator and Sun''s implementation of

Java. For example, Microsoft vice president Brad Chase told the company''s assembled sales and marketing executives in April 1996 that they should ``worry about your browser share[] as much as BillG'''' even though Internet Explorer was ``a no revenue product,'''' because ``we will lose [sic] the Internet platform battle if we do not have a significant user installed base.'''' He told them that ``if you let your customers deploy Netscape Navigator, you will loose [sic] leadership on the desktop.''''

F. Excluding Navigator from Important Distribution Channels

143. Decision?makers at Microsoft worried that simply developing its own attractive browser product, pricing it at zero, and promoting it vigorously would not divert enough browser usage from Navigator to neutralize it as a platform. They believed that a comparable browser product offered at no charge would still not be compelling enough to consumers to detract substantially from Navigator''s existing share of browser usage. This belief was due, at least in part, to the fact that Navigator already enjoyed a very large installed base and had become nearly synonymous with the Web in the public''s consciousness. If Microsoft was going to raise Internet Explorer''s share of browser usage and lower Navigator''s share, executives at Microsoft believed they needed to constrict Netscape''s access to the distribution channels that led most efficiently to browser usage.