By Jo Maitland in Washington
Lead government attorney David Boies crushed the testimony of Microsoft’s chief economic witness, Dean Schmalensee in a one- hour session yesterday morning that not only destroyed the professor’s credibility as a witness but also his professional status as an MIT economist. In his cross-examination, Boies set about proving that Microsoft had paid Richard Schmalensee vast amounts of money to tow the Microsoft line regardless of the fact that he had done little or no research to support the company’s case. In an embarrassing twenty minutes of questioning, Boies established that Dean Schmalensee receives $800 per hour plus a bonus of between $100,000 and $200,000 a year from Microsoft and then he went on to show that Schmalensee had done little or no research on the evidence Microsoft was using to support it case.
Boies referred the court to Tuesday’s session when Microsoft attempted to establish that web-based applications that only require a browser to run are a considerable threat to the company’s Windows operating system. The judge asked, Why aren’t ISV’s writing these applications in droves then? To which Schmalensee replied, They are, your honor. But when the judge asked him to name some, Schmalensee came up with only one – Quicken, a web-based financial package owned by Intuit (a company Microsoft attempted to buy last year but was prevented by antitrust laws). Michael Lacovara, Microsoft’s attorney, followed up on the judge’s interest in this area and yesterday primed Schmalensee with a series of press releases on web-based applications that require only the browser to run. He included Inergy, that offers an email service, word processor and a web writer among other basic applications; appsOnline, an AOL and 3Com press release detailing access to email via the Palm; and Netcenter and its various web-based services. Lacovara also offered a press releases from Sun Microsystem Inc’s JavaOne conference in San Francisco last week which stated the Sun developer program is now the fastest-growing development community in the industry with over one million members.
In his cross-examination, David Boies completely tore apart all this material and its relevance to the real world today issues concerned in this case. Boies asked Schmalensee, Do you usually rely on this type of material for your economic analysis on the state of development of web-based applications available in this market? To which Schmalensee replied, No but it reinforces a large amount of other information. Boies asked him what other sources he used for this number of web-based apps. I don’t have a source for this number, as I sit here I don’t know, said Schmalensee. Boies asked him again and again if he had done any research or analysis on the number of web-based applications in the market. Schmalensee replied, It is not relevant Mr Boies. What about analysis on a year or two from now? Boies asked. It’s not relevant to the issues being addressed here, said Schmalensee. On the Java development community, Boies reminded the court of Microsoft’s Java virtual machine (JVM), which runs applications written only for it and does not work on the original Sun pure Java JVM. Schmalensee admitted, At the JavaOne conference it is difficult to see who is doing what.
The discussion then turned to Microsoft’s market development agreements (MDA) with OEMs. In his testimony, Schmalensee said that companies like IBM and Dell were shipping computers without an operating system pre-installed so that users could load on whichever OS they wanted and that they were also now shipping Linux boxes. When pushed on the point of how many machines IBM shipped without Windows, or how many it shipped with Linux pre- installed, Schmalensee hit trouble. I can’t be sure what are they are doing, he said. Boies asked Schmalensee if he was aware that if IBM shipped a thousand naked machines (machines without operating systems) Microsoft would penalize the company by taking away its discount on the millions of machines it ships with Windows. He asked Schmalensee, in your expert opinion – is this anti-competitive? The economist replied: Microsoft is opposed to companies shipping machines without an operating system because of the threat of piracy. He said it had nothing to do with anti-competitive practice. Outside on the courtroom steps, Mr Boies told ComputerWire, It is clear Microsoft’s chief economic witness does not know what he is talking about.
Today, David Boies plans to wrap-up his cross-examination, concluding this rebuttal stage of the trial. Next, both sides will prepare documents summarizing their arguments, which are handed over to the judge. He reads these while each side then draws up a second document on how their arguments pertain to the law. When the judge has feasted his eyes on all this he will then call the court back into session to make his decision. It is unclear what the time scale for this will be, but officials close to the case believe it may not be until late summer or early fall.
