US v Gates: Winning the war of the Web

Microsoft's aim for almost two years has been to use the dominance of its Windows operating system - a set of interlocking programs which enable a PC to run word-processing programs, spreadsheets or databases - to jump-start the market share of Internet Explorer (IE), its browsing program for viewing the World Wide Web, discussion areas and for sending e-mail.

Its chief rival, which was on the scene rather earlier, is Navigator, from Netscape Corporation of Mountain View, California. Netscape's lead of 18 months or so meant that by the time Microsoft had a usable browser, Netscape had an 80 per cent share of the small, but fast-growing market.

Why does a browser matter? First, it is the main tool for "surfing the Web" - moving between Web sites. If the Internet becomes the centre for electronic commerce that everyone claims it will, then it must be good if a browser is used to carry out that business.

Secondly, any software has "defaults" - the settings of parts of the program as it starts up. In a browser, a key one is the "Home page" - where the program takes you when it starts up. If lots of people visit your home page simply because they start the program, you can charge more to advertisers who buy space there. Many people never realise that they can change the default in seconds. So whenever they start the program, they are delivered to the site.

Navigator's default home page is the Netscape Web site; that of IE, the Microsoft site. So far, so fair.

But peoples' tendency to stick with defaults also extends to the software on their machine. If your machine already has a browser, would you bother to get another? So Microsoft began issuing a simple ultimatum to PC manufacturers: include IE as standard software on your machine, or you can't have Windows95. Without Windows95, their machines would have no operating system - and so would be useless to the average user. They agreed to Bill Gates's demands.

Netscape's market share began falling dramatically, and the number of "hits" on Microsoft's home page began rocketing. Netscape cried foul. Microsoft responded that IE was "part of the operating system". This seemed odd, since it doesn't sell or market any other part of its operating system separately. Microsoft's argument looked thin; its tactics, vicious. The decision means that some equality will now be restored.