From John Rogers at the trial in Washington.
After months of legal wrangling on both sides, Microsoft Corp’s eagerly-anticipated antitrust trial began in Washington yesterday, and government lawyers came out swinging. Special prosecutor for the Justice Department David Boies wasted no time in attacking the software giant’s business practices and painted a picture of the company’s top management – especially chief executive Bill Gates – as having direct and pointed control over its efforts to stifle competition.
Boies presented a slew of memos, emails, and clips of videotaped testimony from Gates designed to prove the intent of the company’s management in protecting its alleged monopoly over personal computer operating systems. The government’s hired gun told the packed courthouse that Microsoft approached Netscape Communications Corp in 1995 with the intent of dividing up the market for internet software.
Special relationship
A memo from Gates himself outlined a plan to make a deal with Netscape for 24 months that would see it back off in the market for client software in return for Microsoft’s help with its server software business. The special relationship, as it was referred to in the memo, was also to include advance information on Windows programming interfaces and other things. Gates concluded the memo by saying, I would really like to see something like this happen!!
A separate memo also indicated that Microsoft wanted a seat on Netscape’s board as part of the deal and a third indicated that Microsoft essentially told Netscape to take the deal or it would crush the company. Netscape chief executive Jim Barksdale, who will be the first witness called by the government, has already given written testimony, made public late Monday, that the 1995 meeting with Microsoft did take place and that the deal in question was offered to the company.
Perhaps the most dramatic evidence introduced in the opening session were documents involving Microsoft’s relationship with America Online Inc that show an attempt to coerce the internet services company into choosing Microsoft’s Internet Explorer web browser over Netscape’s Navigator. Boies produced an internal AOL communication that detailed a meeting with Microsoft in which Gates reportedly asked How much do we need to pay you to screw Netscape? (This is your lucky day.) The 1996 meeting took place after Netscape had balked on Microsoft’s alleged offer of market allocation.
Threatened Apple
In more of the many documents produced by the government Monday, allegations were made that Microsoft strong-armed other ISPs, as well as Intel Corp, Intuit Inc and Apple Computer Inc into shunning competing technology from Netscape and Sun Microsystems Inc – namely the Java programming language.
Boies contends that Microsoft threatened to extend support for Intel rival Advanced Micro Devices Inc if the chip-making giant didn’t back off on its support of Java and that it threatened Apple with the abandonment of Office for Macintosh if that company didn’t embrace Internet Explorer as its standard browser. Government witness Avadis Tevanian, senior vice president of software engineering at Apple, is expected to testify later in the trial about the threat.
Boies took every opportunity Monday to present Gates as a liar, offering email from 1995 that discussed his views and concerns about Netscape’s multi-platform strategy and contrasting that evidence with videotaped testimony in which Gates insisted that at that time he had no sense of what Netscape was doing. He also highlighted a memo from Gates that said as part of a deal with Netscape, we can even pay them money, while in the pre- trial deposition Gates insisted that he wouldn’t ever have considered a financial investment in the start-up company, because it didn’t make sense.
Predatory behavior
The trial, which is being compared to landmark cases such as those involving AT&T, IBM and Standard Oil, has attracted massive attention since it was initially filed in May. Boies himself led IBM’s defense in the similar antitrust trial it faced in the 1970’s, which was ultimately dropped by the government. The Justice Department and the 20 states that are also involved in the suit have two things to prove; that Microsoft does hold a monopoly in the market for operating system software and that it has illegally acted to maintain that monopoly.
Stephen Houck, lead attorney for the states, will be in charge of proving that Microsoft is indeed a monopolist, while the charismatic Boies will handle the allegations of predatory behavior. Houck led off the proceedings Monday with a brief opening statement in which he asserted that Microsoft has held a more than 90% share of the operating system market for the past six years and said the last direct threat to Windows disappeared with the death of [IBM’s] OS/2.
Houck also pointed out that since 1990, hardware prices have effectively been cut in half while Microsoft’s revenue from operating systems had doubled as it has increased prices. Houck attacked Gates, saying that his reluctance to take the stand proves his lacked of intestinal fortitude, and that at a pre- trial deposition in August he repeatedly refused to respond to questions. Oddly, when later asked why Gates had not been included as one of the government’s 12 witnesses in the case, Houck would not comment.
Tuesday’s session will begin with the opening statement from Microsoft’s lead attorney John Warden, after which Barksdale will be called on to take the stand. The trial is expected to last six-to-eight weeks, while the outcome may not be known until several months later.
