MICROSOFT TO JUSTICE: WHO CARES?; AS COMPETITORS CIRCLE, ONLINE NET SETS 1-MONTH COUNTDOWN TO LAUNCH

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Among the 2,800 interactive industry players invited last week to Microsoft Corp.'s Interactive Media Conference, one topic was virtually ignored: What if the Justice Department tries to halt the Aug. 24 launch of Microsoft Network?

"Not a single person I talked to even brought it up," said George Meng, MSN's lead product manager.

In a Long Beach, Calif., conference where hundreds of online content developers were making a big bet on the success of MSN, an informal Advertising Age survey found no one concerned that Justice will do anything to stop Microsoft's online assault.

"This freight train is leaving," said Larry Smith, president of Mastersmith, a New York online services consultancy. "If Justice gets involved, it's a six-month pain in the butt" with no lasting effect on MSN.

Today, as Microsoft begins a one-month countdown to introduction of the Windows 95 operating system and MSN, the software giant and Justice are expected to square off in court. Microsoft wants a U.S. District Court in New York to throw out Justice's request for information relating to its software and online maneuvers.

If it decides to act, Justice could do serious damage to Microsoft's marketing plans for Windows 95 and MSN. The software is already being manufactured, and millions of boxes, instruction manuals and store displays would have to be changed.

The Justice Department, egged on by MSN rivals America Online, CompuServe and Prodigy Services Co., contends MSN may have an unfair advantage because access software is included in Windows 95, generally considered the new PC operating system standard.

The rival services last week called on Congress to support the Justice investigation. The group also released a survey of 1,000 home PC users in which 82% said it's "very" or "somewhat" likely MSN will become the dominant service if the access software is included with Windows 95.

"I won't say that we won't have some advantage, and it's a legitimate advantage," said MSN General Manager Russell Siegelman.

Microsoft Chairman Bill Gates said at the conference that the first five magazines he picked up recently in a Seattle grocery store all came with AOL software discs.

"There have probably been more copies made of that access software than any other piece of software out there, so it's very easy to get those things," he said.

The rival services, extrapolating from their poll, claim MSN will grab 11 million to 19 million subscribers in the first year. Microsoft contends "a more down-to-earth perspective" comes from Dataquest, a San Jose, Calif., market researcher that projects MSN will have between 1.8 million and 3.5 million subscribers at the end of 1996. AOL, the leading service, today claims 3 million subscribers.

While Microsoft fights antitrust challenges, it's also focusing hard on getting a big piece of the ultimate online market: the Internet.

When Microsoft announced MSN last November, it mentioned the Internet in passing. Last week, Microsoft publicly repositioned MSN as "just part of the Internet," in the words of Mr. Meng.

"Think of the Microsoft Network as an Internet community," Mr. Gates said. Given that the Internet is one of the few technology phenomena growing faster than Microsoft, it could prove smart for Microsoft to closely associate its service with the 'net.

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