Gateway Gains Flexibility with Windows; Intel Faces Lawsuit.

Knight Ridder/Tribune Business News

DETROIT--May 28--Microsoft Corp., facing government antitrust lawsuits, is allowing computer maker Gateway Inc. to customize the screen that people see when they turn on their computers.

Microsoft agreed to allow Gateway to promote its own Internet-access service on desktop screens and to more easily enable users to choose a non-Microsoft Internet browser.

The Seattle software maker's new flexibility comes just 10 days after it was hit by an antitrust lawsuit. Gateway and Microsoft officials would not say whether the negotiations were spurred by the government's antitrust actions.

Meanwhile, federal regulators soon may file a similar antitrust lawsuit against Microsoft's longtime business partner, Intel Corp., the other half of the so-called Wintel alliance that dominates the PC industry. Government attorneys are preparing charges that Intel illegally abused its power to hurt rivals, Reuters reported.

Wednesday's announcement should boost Netscape Communications Corp., which pioneered the market for Internet browsers. Netscape still dominates the browser market, but has seen its market share drop sharply since Microsoft started giving away its latest version of Internet Explorer last year. The move forced Netscape to do the same with its Navigator product, triggering its first quarterly loss in January and 400 layoffs.

Starting next week, Gateway PC buyers can choose between browsers made by Netscape and Microsoft. Either product can be the default browser, which would automatically run after surfers connect to the Internet.

But to get this choice, consumers must use Gateway's Internet service provider -- Gateway.net -- to connect to the Web, Gateway Chief Executive Ted Waitt said in a telephone news conference.

"We have gained some flexibility in our negotiations with Microsoft," Waitt said. "As far as we know, we are the only PC maker that has made it as easy as possible" to choose the browser.

Previously, people who clicked on the Internet access icon were sent to Microsoft's online service. Microsoft has resisted attempts to allow PC makers to fully customize computer desktops.

This reluctance led to an impasse on May 18 that prompted the federal government and 20 state attorneys general to file antitrust suits against Microsoft. The trial is scheduled to start Sept. 8, far earlier than Microsoft had wanted.

Now Intel could be under government scrutiny. Within the next week, top staff at the Federal Trade Commission will review the proposed charges against Intel. The FTC may vote to approve narrow charges against Intel, according to Reuters. Those charges are likely to be broadened later.

"I can neither confirm nor deny that," said an FTC spokeswoman, adding that the agency never comments on pending decisions.

The FTC has studied other cases involving Intel, which have taken place outside of Washington, but which establish some of the broad outlines of the case.

Last month, a federal judge in Alabama ruled that Intel abused its market dominance by cutting off information and enabling technology that Huntsville, Ala., computer maker Intergraph Corp. needed to stay in business.

The judge issued a preliminary injunction ordering Intel to provide the same kind of service to Intergraph it provided to other customers. Intel followed the order but appealed.

The cases provide the factual basis for the FTC to make assertions similar to those Intergraph made in its private antitrust lawsuit: that Intel is violating the law by using its power to force others to give up their trade secrets or cooperate with Intel.

The FTC has studied that decision and Intel's actions since it brought charges against Intel in April for its actions against computer equipment maker Digital Equipment Corp.

"We have no comment about speculation about what may or may not happen," an Intel spokesman said. "It is a nonpublic investigation. But we continue to cooperate and meet with the staff of the commission."

Associated Press contributed to this story.

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