From John Rogers at the trial in Washington.

Microsoft Corp began its defense against sweeping antitrust charges by the Justice Department and 20 states with an opening statement Tuesday morning in which lead attorney John Warden lashed out at the government’s portrayal of the company.

After opining that the trial was wholly unnecessary Warden described the government’s case as long on rhetoric, but short on subject and said its attempt to demonize chief executive Bill Gates was emblematic of this approach. It is an approach that Warden described as typical of the government’s general misinterpretation of antitrust law – that it wrongly characterizes evidence of tough competition as proof of anti- competitive conduct.

Warden, who spoke in a relaxed and familiar manner that sometimes had even reserved Judge Thomas Penfield Jackson breaking into a wide grin, asserted that antitrust law is not a code of civility in business and was designed to protect competition, not specific competitors.

He spent much of the morning offering proof that rival Netscape Communications Corp has had, and still does have, ample access to distribution channels for its Navigator browser – contrary to the government’s contention that Microsoft has effectively closed off such channels as PC manufacturers and internet service providers through allegedly exclusive and illegal arrangements with the major players in those areas.

Warden cited Netscape internal documents that outlined plans for the distribution of more than 100 million copies of its browser through a marketing blitz called Netscape Everywhere, and to enlist the help of roughly 11,000 partners in distribution initiatives.

The opening statement stayed close to the original basis for the case; the issues of Microsoft illegally tying its Internet Explorer browser to the Windows operating system, as well as the nature of its deals with OEMs and ISPs. Warden reiterated Microsoft’s party line that the IE code in Windows 98 is an integral part of the operating system and that its removal would prove both technologically catastrophic and a disappointment to consumers.

He offered as evidence a March 1998 letter from Netscape’s counsel to Assistant Attorney General Joel Klein, in which he states it is simply not possible to delete any portion of IE or of the browser functionality, from Windows 98 as presently configured without severely interfering with the operating system.

Microsoft contends that it was publicly talking about the concept of browsing functionality in the operating system before anyone had even heard of Netscape. Microsoft also intends to offer testimony from software developers that indicates they have come to depend on the browsing functionality in Windows to make their own products better.

As for its exclusive deals with industry partners, Warden asserted that they were being made when Microsoft had a single-digit share of the browser market and thus should have been seen as pro-competitive. He said that the company’s arrangements with ISPs left them free to provide Netscape’s browser if consumers wanted it and denied that Microsoft ever ended a relationship with an ISP for failure to distribute enough copies of IE.

Concerning the much-scrutinized deal with America Online Inc, Warden said that Microsoft and Netscape competed head-to-head for a customer and that Microsoft won because its ‘componentized’ design for IE was easier to integrate into AOL’s proprietary client software. AOL chief executive Steve Case has been quoted as saying the deal was sealed with the promise of promotional considerations for his company’s service within the Windows desktop, while Justice’s chief prosecutor David Boies contends that Microsoft offered AOL money to screw Netscape. The AOL deal could end as soon as January 1.

Warden also asserted that Microsoft’s OEM licensing agreements never attempted to limit software that could be shipped with new PCs or preclude non-Microsoft icons from the desktop. On the issue of the infamous market division meeting with Netscape, Warden insisted that Netscape’s account was fantastical, either having been blown out of proportion or outright concocted. The meeting, according to Microsoft, was carried out to explore the possibility of a mutually beneficial relationship. Warden said that the company’s claims of threats against it by Microsoft are baseless.

What Warden did not do in his opening statement, curiously, was spend any meaningful amount of time expanding on what he himself described as the crazy quilt of email fragments that form the core of the government’s case. Microsoft had been insistent that the snippets of information released by Boies in Monday’s opening statement could be largely dismissed as insignificant and misleading when seen in context. Warden did offer two brief examples, one of which was intended to dismiss claims of a threat it made to Intel Corp, as fictional, but went no further than that.

Speaking to reporters outside the courthouse, Boies admitted he was surprised that Microsoft chose not to deal more closely with the evidence presented as the basis of the government’s complaint. He said the company had its chance to put the information in context but simply didn’t.