Microsoft Got Into Bed With AT&T, Prodigy, and CompuServe: The Details of the Relationship

ii. Other Online Services

305. In the summer and fall of 1996, Microsoft entered into agreements with three other OLSs, namely, AT&T WorldNet, Prodigy, and AOL’s subsidiary, CompuServe. The provisions of these agreements were substantially the same as those contained in the March 1996 agreement between Microsoft and AOL.

     
     

     As with the AOL agreement, Microsoft did not deign to waive the restrictive terms in these OLS agreements when it waived similar terms in the Referral Server agreements in the spring of 1998. The OLSs were discontented with the provisions that limited their ability to distribute and promote non-Microsoft browsing software.

     
     

     Prodigy, for one, found those provisions objectionable and tried, unsuccessfully, to convince Microsoft to make the terms less restrictive. AT&T WorldNet’s negotiator also told his Microsoft counterpart, Brad Silverberg, that AT&T wanted to remain neutral as to browsing software.

     
     

     Despite their reservations, the OLSs accepted Microsoft’s terms because they saw placement in the OLS folder as crucial, and Microsoft made clear that it would only accord such placement to OLSs that agreed to give Internet Explorer exclusive, or at least extremely preferential, treatment. As one Microsoft negotiator reported to Chase about AT&T WorldNet, “It’s very clear that they really really want to be in the Windows box.”

     
     

     The OLSs became even more desperate for inclusion in the OLS folder once it was announced that their largest competitor, AOL, had already won placement there. One Prodigy executive wrote to another two weeks after his company signed the agreement with Microsoft, “it was absolutely critical to Prodigy’s business” and “essential in order to remain competitive” that Prodigy obtain Microsoft’s agreement to include the Prodigy Internet service icon in the OLS folder.

306. Although none of these OLSs possessed subscriber bases approaching AOL’s, they comprised, along with MSN, the most significant OLSs other than AOL. By making arrangements with them similar to the one it enjoyed with AOL, Microsoft ensured that, for as long as the agreements remained in effect, the overwhelming majority of OLS subscribers would use Internet Explorer whenever they accessed the Internet.

     
     

     Since AOL owns CompuServe, the acquisition of Netscape may affect CompuServe’s arrangement with Microsoft in the future; however, the acquisition does not alter the incentives for the other OLSs to enter new agreements with Microsoft similar to the ones signed in 1996.

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This court case Civil Action No. 98-1232 (TPJ) retrieved on 2-10-2023, from justice.gov is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.