June 4, 2003 4:00 AM PDT

Microsoft's browser play

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Purveyors and consumers of Web content and software, already unsettled by the pact between archrivals Microsoft and AOL Time Warner, may be in store for an even more radical upset: the end of Microsoft's standalone Internet Explorer browser.

Brian Countryman, IE program manager, said in a May 7 Web chat posted to Microsoft's Web site that the software maker is phasing out standalone versions of its Web browser.

Since then, Microsoft has struggled to reconcile Countryman's remarks with promises that current users of the standalone version of IE will be provided with upgrades. Countryman did not return calls. A Microsoft representative pressed for clarification of Countryman's comments acknowledged that the company did not, in fact, know what it was going to do.

"We don't know what's happening," said the representative. "There are a lot of different options, and it's too early to talk about any of them...Nothing has been decided yet."

That ambiguity leaves an array of possible outcomes, including forced upgrades to the next client version of Windows, code-named Longhorn, for users of older versions of the operating systems who want to patch security holes or other bugs in IE.

"Lack of updates for older Windows operating systems such as XP or 2000 would...require customers to upgrade to Longhorn to gain the latest browser functionality," wrote Jupiter analyst Michael Gartenberg in an instant message interview.

Many business users and consumers will no doubt move to Longhorn in the future, since it will be installed on the majority of new PCs. And licensed users of Windows can access Windows Update, Microsoft's online service for automatically updating Windows, to obtain any patches or bug fixes for IE.

But having pushed its Web browser software with the help of its OS monopoly, Microsoft now has the opportunity to reverse the process, using its dominance in browsers to prod other customers to upgrade to new versions of Windows.

The apparent move to discontinue standalone IE also makes Microsoft competitors Apple Computer and America Online appear prescient in their recent maneuvers to secure long-term access to browser technology. Apple in January launched its own browser, based on the open-source KHTML development project, and analysts at the time attributed the move to Apple's desire to maximize its independence from Microsoft and IE.

The timing may have been just right, if the elimination of a standalone IE leads to the discontinuation of a version of the browser for the Macintosh OS.

AOL Time Warner, for its part, has just ended its browser-related legal claims against Microsoft as part of a $750 million settlement that included a seven-year free license for IE. The decision to secure that license has many at AOL Time Warner breathing a sigh of relief now that Microsoft has announced the discontinuation of standalone IE. Without the deal, the move could have threatened the company's long-term access to a usable version of the Web's most popular browser in its proprietary service.

AOL Time Warner declined to comment.

From a legal and strategic perspective, Web users now face a situation in which the dominant browser, which achieved that dominance in large part by being offered free of charge, will now only be available as part of an operating system that costs $199 for the "Home" edition and $299 for the "Professional" edition. Upgrades for Windows XP Home and Professional cost $99 and $199, respectively.

IE is everywhere
The removal of IE as a free, downloadable software application could have a profound effect on the Web and the development of Web standards.

One possibility is that its removal could benefit makers of standalone browsers, such as Norwegian software company Opera Software (which charges for one version of its browser and gives away an ad-supported one) or Netscape Communications, a unit of AOL Time Warner.

"My take is that not distributing IE without Windows is good news for us," said Jon von Tetzchner, chief executive of Opera. "This means that a lot of companies are left with the choice between using Opera and paying Microsoft a hefty fee for a Windows upgrade that (makes obsolete) their computers. In the current market, many companies are trying to cut their costs, and a lot of them have no compelling reason to upgrade Windows."

But the future of Netscape, as well as the AOL Time Warner-funded Mozilla open-source project, appear clouded, after the media giant's rapprochement with Microsoft, in which AOL threw the weight of its subscriber base behind IE. Many speculate that Netscape's days as an AOL unit are now numbered.

Chart: Commonly used browsers A second possibility is that IE has gained such an overwhelming share of the market, as the de facto browsing standard, that Web surfers will be compelled to buy Windows--or upgrade Windows--in order to satisfactorily access important Web sites.

Despite the efforts of standards groups such as the World Wide Web Consortium (W3C), of which Microsoft is an active member, many Web sites are still coded to work with IE, rather than the standards that IE and other browsers support.

Some sites explicitly state that their tools and applications work "best" or "only" with IE. And Microsoft's heavily trafficked MSN Web site has been locked in a high-profile battle with Opera over oddities in the way MSN renders in the Norwegian browser.

Microsoft declined to answer most specific questions on this story, but the company representative said Microsoft would "ensure that all current IE users will have access to updates in the future."

Microsoft would not clarify whether that meant there would be continued updates to IE for Windows on a standalone basis, or for the Mac, and if so, what it meant when it promised to end production of standalone IE.

Microsoft did seem to suggest that however it plans to take care of existing users of standalone IE, their options would be even less certain once the company's next version of Windows comes out.

"If you're using IE now, for Mac or Windows, you will have access to any appropriate updates," said the Microsoft representative. "There will be continued innovation and improvement. For the near and immediate future, customers will have access to IE. It's not going anywhere as a product. What happens in the Longhorn timeframe--it's too early to discuss."

The antitrust angle
The degree to which Microsoft's browser and operating system were linked became a central point of contention in the government's antitrust lawsuit against the company.

The government sued Microsoft in 1998, alleging that the software giant had used its monopoly power in desktop operating systems to develop a chokehold on browser software. A federal judge agreed and ordered the company to be broken up into separate application and operating system companies to prevent future abuses. That order was later overturned on appeal, and Microsoft eventually worked out a settlement that leaves it free to develop the OS as it sees fit.

In its defense against the charge it illegally tied the browser to its monopoly operating system, Microsoft argued that the operating system could not function properly without the Web browser.

Chart: Commonly used operating systems Now Microsoft has flipped its argument around, claiming that future versions of the browser won't be able to function properly without the OS.

"Legacy OSes have reached their zenith with the addition of IE 6 SP1 (Service Pack 1, a collection of bug fixes and updates to the browser)," Countryman said in the May 7 chat. "Further improvements to IE will require enhancements to the underlying OS."

Antitrust experts said that because the appeals court had found, on a technicality, that the government had failed to prove IE commanded a monopoly, Microsoft's move to remove standalone IE from the market wouldn't run afoul of any restrictions placed on the company by the courts.

The courts forbade Microsoft from refusing to offer a version of Windows without IE, antitrust lawyers pointed out. But the company remains free to offer IE only bundled with a $199 copy of Windows.

"They have to let OEM licensees, HP or whoever, put Netscape or another browser on the other computer and have it work with Windows," said Richard Liebeskind, a partner with Pillsbury Winthrop in Washington, D.C., who worked for both the Federal Trade Commission and the U.S. Department of Justice on antitrust issues. "I don't know that there's any obligation to make (Internet) Explorer, because it's not the product Microsoft has been found to have monopolized. The government lost that part of the case--Microsoft got off on a technicality."

Perhaps paradoxically, the removal from the market of IE as a separate product makes reality conform with Microsoft's longtime defense against charges that it tied the browser and the OS.

"Obviously, having a separate product out there prolonged the argument that there were two products that would form the basis of an unlawful tie," said Mark Ostrau, antitrust chair at the technology law firm Fenwick & West. "This gets rid of one pesky aspect of the case. It brings to the inevitable conclusion what Microsoft had in mind all along. And it won't be the last time that this occurs. Windows is like Los Angeles--it likes to annex a lot of outlying areas over time."

Asked where another standalone Microsoft application might disappear from the market, Ostrau advised, "Watch what happens with the media player."

 

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