Originally created 04/11/98

Microsoft revises disputed rules



NEW YORK -- Microsoft Corp., struggling to spruce up its image, scaled back some of its most criticized practices even as it proposed a new public relations campaign that drew fresh outcries on Friday.

Microsoft announced it was ending controversial provisions in agreements with its Internet content providers that prohibited them from promoting rivals' products, such as Netscape's Navigator browser.

Those alleged exclusionary provisions were one area that the Justice Department is investigating in its antitrust suit against the software titan.

But the pullback came as Microsoft acknowledged that it may try to drum up public support by urging sympathetic software customers and its own staff to contact the press in a campaign orchestrated by its public relations agencies.

The Los Angeles Times, in an article Friday, disclosed plans for a media strategy that includes opinion pieces and letters to the editor that appear to be local testimonials but are written by Microsoft's publicity machine.

Microsoft spokesman Greg Shaw confirmed the company was considering encouraging supporters to contact the media but said no decision had been made.

But he said paying "to have a letter or Op Ed piece is not something we have done or something we plan to do."

Michigan Attorney General Frank J. Kelley, among those investigating Microsoft, criticized the public relations campaign.

"They have the right to do it but it's kind of arrogant. I don't think it will have much impact," Kelley said.

The disclosure came as attorneys for Microsoft met privately for more than three hours Friday with the Justice Department's top antitrust lawyer. While neither side would say what was discussed, the meeting came as a crucial court hearing approached and as a dozen states renewed pressure for the government to press its case against Microsoft.

The Justice Department lawsuit against Microsoft alleges that the company was using its dominance with the Windows 95 operating system software to gain an unfair market share for its Internet Explorer over competitors, a charge the Redmond, Wash.-based company denies.

The Justice Department also is considering a new antitrust case against Microsoft involving the operating system software's latest upgrade -- Windows 98, which is scheduled for public release June 25.

Microsoft's long-standing public relations firm, Edelman Public Relations, was organizing its proposed media effort through up to 10 smaller public relations agencies throughout the United States.

At least some of the public relations firms were in the states that are investigating Microsoft for allegedly abusing its dominance of operating software to control other technology.

The documents reported by the Los Angeles Times, some labeled as draft copies and carrying Shaw's name, stated that the media blitz was "geared to generating leverageable tools for the company's state-based lobbyists" and positive press clippings that "state political consultants can use to bolster the case."