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February 17, 1999


By CBR Staff Writer

By Dan Jones in Washington

Compaq Computer Corp vice president, John Rose said yesterday that a communications breakdown had caused his company to sign a deal with America Online Inc – which violated a verbal agreement made with Microsoft Corp two weeks earlier. Rose, the latest witness to the Microsoft antitrust case, caused stunned disbelief in the court room when he made his claim that some of the same people involved with the February 23 1995 AOL deal had not been aware that it transgressed the terms of Compaq’s Windows 95 agreement with Microsoft on the 8th of the same month. The Department of Justice’s (DoJ) lead attorney, David Boies pressed the Compaq general manager by asking if he had been aware that Compaq’s push into internet space with AOL broke an agreement with Microsoft by removing the MSN icon from the desktop. Rose said that the first time he had been aware of inconsistencies was when Redmond put Compaq on notice for violations of the Windows deal in May 1996. Boies then pointed to a May 8 1996 email from Compaq’s Lori Day, which seemed to show up some of the inconsistencies in Rose’s testimony. The email suggested that Microsoft was upset about Compaq’s recent server software deal with Netscape and internal use of its client software. One of the items in discussion in Microsoft was listed as: Compaq to display MSN icon on the desktop screen on all Windows 95 PCAEs. Rose had already agreed that Compaq’s Steve Flannigan and Gary Stimac had been involved with Windows 95 agreement, and that they both received copies of the email from Lori Day. Incredulously, Boies asked if no one had released the significance of the details of the verbal agreement with Microsoft. Boies’ earlier cross-examinations of Rose had lead to much legalistic kerfuffle and a 35 minute closed session in the court. The session was held to discuss how much extra Microsoft charged Compaq for the right to install Windows 98 on all its consumer PCs over its $750m Windows 95 deal. Rose had previously claimed that the increase was not significant. After the closed session, Boies read an intriguing snippet from a November 10 1998 Compaq and Microsoft document which ran: In the past Microsoft’s OEM business terms are indicative of what one would expect from a monopoly. Rose disagreed with the statement, said he had never seen document and that it may have been produced by any number of people in the company. Both the prosecution and defense approached the judge and after some discussion the line of questioning was dropped.

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