[Federal Register Volume 66, Number 69 (Tuesday, April 10, 2001)]
[Notices]
[Pages 18639-18640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8709]


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FEDERAL TRADE COMMISSION

[File No. 002 3331]


Microsoft Corporation; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the complaint that 
accompanies the consent agreement and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before May 3, 2001.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Michael Ostheimer, FTC/S-4002, 600 
Pennsylvania Ave., NW., Washington, DC 20580 (202) 326-2699.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the above-captioned consent agreement containing a consent 
order to cease and desist, having been filed with and accepted by the 
Commission, has been placed on the public record for a period of thirty 
(30) days. The following Analysis to Aid Public Comment describes the 
terms of the consent agreement, and the

[[Page 18640]]

allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for April 3, 2001), on the World Wide Web, http://www.ftc.gov/os/2001/04/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW., 
Washington, DC 20580. Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. Such comments or views 
will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a consent order from Microsoft 
Corporation (``Microsoft'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    This matter involves alleged misleading representations about 
Pocket PC handheld computers (``Pocket PCs'')--personal digital 
assistants (``PDAs'') which feature Microsoft's Windows CE operating 
system, including Hewlett-Packard Company's Jornada Pocket PC and 
Compaq Computer Corp.'s Pocket PC. This matter concerns allegedly false 
and deceptive advertising claims made in advertisements regarding the 
ability of Pocket PCs to access the Internet and email accounts.
    According to the FTC complaint, Microsoft falsely claimed that 
Pocket PCs contain everything that consumers need to access the 
Internet and their email accounts, at anytime and from anywhere. In 
fact, in order to access the Internet and their email accounts using 
Pocket PCs, when away from their computers (``remotely''), consumers 
must purchase and carry a separate modem or similar device that in most 
cases must be connected to a land telephone line or a mobile telephone; 
and moreover, many mobile telephones currently in use in the United 
States are not compatible with Pocket PCs. The complaint also alleges 
that in representing that consumers can use Pocket PCs to access the 
Internet and their email accounts, at anytime and from anywhere, 
Microsoft failed to disclose or failed to disclose adequately that in 
order to access remotely the Internet and their email accounts, 
consumers must purchase and carry a separate modem or similar device. 
The complaint alleges that the failure to disclose this material fact 
is a deceptive practice.
    The proposed consent order contains provisions designed to prevent 
Microsoft from engaging in similar acts and practices in the future. 
Specifically, Parts I and II address representations regrading any PDA 
or handheld Internet or email access device that requires the use of an 
additional device or connection to a telephone land line in order to 
access the Internet or email accounts remotely (``covered devices'').
    Part I of the proposed order prohibits Microsoft from making any 
misrepresentations about the ability of any covered device to access 
the Internet or email accounts, or about any performance characteristic 
of any covered device affecting access to the Internet or email 
accounts.
    Part II of the proposed order prohibits Microsoft from making any 
representation about the ability of any covered device to access the 
Internet or email accounts unless Microsoft discloses, clearly and 
conspicuously, any other products (such as a modem, mobile telephone, 
or adapter) or Internet or email access services (other than general-
purpose ISP service, as defined in the order) that consumers must 
purchase in order to access the Internet or email accounts.
    Parts III through VI of the order require Microsoft to keep copies 
of relevant advertisements and materials substantiating claims made in 
the advertisements, to provide copies of the order to certain of its 
personnel, to notify the commission of changes in corporate structure, 
and to file compliance reports with the Commission. Part VII provides 
that the order will terminate after twenty (20) years under certain 
circumstances.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.

Concurring Statement of Commissioner Orson Swindle

    I voted to accept both of these consent agreements for public 
comment, because the proposed consent orders are adequate relief for 
the violations alleged in the complaint. Nonetheless, I have strong 
reservations about the use of unenforceable ``voluntary'' consumer 
education. In each of these cases, staff negotiated with the proposed 
respondent to achieve a consumer education campaign that is being 
undertaken wholly outside the confines of the order. Consumer education 
remedies sometimes pose difficult issues and Commissioners may disagree 
as to whether a particular consumer education remedy is appropriate and 
reasonably related to the complaint allegations. Yet the solution for 
such disagreements is not simply to excise such remedies from the 
legally enforceable obligations that respondents are undertaking in 
settlement. If consumer education is important enough to include in 
negotiations, there likely is some impact on what is achieved in 
negotiating the terms of the consent order itself. Moreover, to the 
extent that the FTC promotes such ``voluntary'' consumer education 
initiatives in our efforts to publicize the consent agreements, we may 
see many more deep-pocketed respondents seeking to add a bit of 
``voluntary'' and unenforceable consumer education to a broader 
promotional campaign in exchange for a weaker order than might 
otherwise be negotiated.

[FR Doc. 01-8709 Filed 4-9-01; 8:45 am]
BILLING CODE 6750-01-M