Microsoft Corp. Chairman Bill Gates is about to play his gold card in a high-stakes game of bluff with Assistant Attorney General Anne Bingaman.
Bingaman, the nation's top antitrust enforcer, is investigating whether Gates would violate the law by making Microsoft Network, the Seattle-based company's entree to the online world, part of the Windows 95 operating system.Now Gates has reached the point where he must soon decide whether to back down and remove the automatic sign-on feature for the online service or call Bingaman's bluff.
Jason Pontin, an editor at the trade newspaper InfoWorld, based in San Mateo, Calif., said Microsoft is on the verge of pronouncing Windows 95 ready to be mass-produced. Industry insiders call this "going gold."
"My sources are telling me they have a build (a version of the software) that will meet the grade," Pontin said.
Art Amolsch of the newsletter FTC:WATCH, based in Washington, D.C., said Bingaman might feel pressured to seek an injunction to halt shipments of Windows 95 before Gates goes gold - if it appears the automatic sign-on for the Microsoft Network is part of the final version of Windows 95.
"If Justice thinks it has a case, the earlier they can get an injunction the better," Amolsch said. "If it reaches the point where Micro- soft is beginning to stamp these (disks) out, then the company would be able to go into court and plead with a judge that it would cost them money to stop.
"If I had to bet, I'd bet that Bingaman files for an injunction sooner rather than later," Amolsch said. "I won't make any bets about whether she'll get one."
Due out Aug. 24, Windows 95 is more than the latest operating system from the world's largest software company. It's a technological tidal wave that could lift the fortunes of companies from Seattle to Silicon Valley - or drown the industry in hype.
"Windows 95 is affecting everything that's going on," said Michael Murphy of the California Technology Stock Letter.
Bingaman threw Windows 95 for a loop last month by asking whether Microsoft might gain an unfair advantage over rivals like Prodigy, America On-Line and CompuServe if the Microsoft Network were automatically offered to the 30 million people who are expected to buy Windows 95 by the end of the year.
For its part, Microsoft insists it will ship Windows 95 on schedule and with Microsoft Network as an automatic option. A spokeswoman brushed aside an InfoWorld report that the company was considering removing the Microsoft Network's automatic sign-on rather than risk a court fight that could affect the Windows 95 launch.
"We've gotten a lot of calls this week about how we would remove the code," said Microsoft spokeswoman Catherine Merten. "Microsoft is a responsible company and as such is thinking through various options, but there is nothing decided and nothing we want to speculate about."
Practical considerations put Microsoft under the same time constraints as Justice. Industry sources say July 27 is the last day Microsoft can go gold with Windows 95 and still get the software into manufacturing in time to meet the Aug. 24 launch date. A Microsoft spokeswoman called Aug. 3 "the drop dead date."
Microsoft and the Justice Department are scheduled to appear together in U.S. District Court in New York on July 24 to debate whether government antitrust attorneys requested too much information from Microsoft in the course their June investigation of the Microsoft Network.
Although that hearing is not directly related to Justice's decision on whether to seek an injunction against the release of Windows 95, the confluence of court dates and manufacturing deadlines adds to the pressure on both sides to reach some accommodation.
The financial stakes surrounding Windows 95 are big enough to give even the world's richest man a headache. Dataquest has estimated that Microsoft will sell 30 million copies of Windows 95 before the end of the year, giving Microsoft a huge year-end revenue boost.
Excitement about the new operating system is also being counted on to fuel a new round of computer buying in the Christmas season.
"A lot of inventory accumulation is being based on Windows 95, and this goes back to the disk drive and chip makers," said Murphy of the California Stock Letter. "Everybody is counting on Windows 95 to make a real, real strong Christmas, and if that doesn't materialize it could be pretty much a problem for the whole industry."
Other players, notably Apple Computer Inc. in Cupertino, Calif., are bracing for the shock of competing against a Microsoft operating system that arguably narrows many of the ease-of-use advantages that had sustained the Macintosh against the vast majority of computers running Microsoft operating systems on Intel Corp. microprocessors.
Given the importance of getting Windows 95 off to a smooth start, will Microsoft risk a battle to ensure that its on-line network is an automatic choice? Gates and other spokesmen insist Microsoft has no intention of uncoupling the network from Windows 95.
But Microsoft sounded similarly tough about fighting a Justice antitrust challenge to its proposed merger with Intuit Inc. right up until it dropped the deal in May.
And InfoWorld's Pontin said Microsoft could easily unhook the automatic sign-on option from Windows 95, leaving the Microsoft Network code imbedded in the operating system while simply disabling the sign-up box.
"They could do it up to 10 minutes before they go gold," he said.
Last year, a federal judge ordered Microsoft to stop selling its DOS 6.21 operating system because it contained a software utility that packed more information on hard disks. The injunction was issued because Microsoft had infringed on a patent held by Los Angeles-based Stac Electronics Inc.