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February 11, 1999


By CBR Staff Writer

By Nick Patience in Washington

The US Department of Justice legal team at the antitrust trial in Washington must get a warm feeling inside every time they hear that Microsoft is going to show the court a video, because lately there have been major gaps in the videos for lead government attorney, David Boies to exploit. It happened twice last week with Jim Allchin’s video nasties and has already happened this week with Will Poole’s efforts. But unperturbed, Microsoft showed another one yesterday, and once again, Boies found his niche to exploit. And on Tuesday morning when the court reconvenes, Boies will show a video of his own, presumably devoid of such niches and glitches. Microsoft showed a 20 minute video showing, among others things, how Internet Explorer starts up within the AOL client – and how it can be replaced with Netscape Navigator; how AOL promotes Navigator on its service and how the pair cross-promote AOL’s Instant Messenger, and how easy it is to download Navigator from the web. During the video, Microsoft product manager Dave Fester skipped past the download of Navigator from AOL, saying it would take too long to show in full. Chase said later he thought it would have take about 10 minutes to complete. The rest of the morning was taken up with discussions of downloads, as the government tried to show that despite Netscape’s access to web users via download, its market share has not increased in recent years, and had in fact fallen, whereas Microsoft’s has risen. After apparently proving that there were restrictions on Netscape using the ISP and content provider distribution channels, the government is now trying to tie up the big one as well. In theory, there is no restriction on anyone downloading any free browser from the web. But whether or not they do so and why they might not is open to question in this case. The government contends that users have chosen IE over Navigator because Microsoft has foreclosed on Netscape’s ability to promote its browser through its deals with ISPs and online service providers – notably AOL (see separate story). Microsoft is trying to show that Netscape can easily gain new users and retain old ones through free web downloads. Microsoft’s general counsel Bill Neukom said outside the court at lunchtime that it is a quite remarkable thing to spend a whole morning on downloads. But that’s what Boies did and he eventually got his point across with help from Microsoft’s own figures and some of his homespun charts – actually crude tables hastily scrawled on a yellow legal pad. Chase, under probing, eventually produced numbers showing the number of people in the US who acquired their primary browser through a download from the web. The periods measured were the first and third quarters in 1998, periods for which Microsoft had the data. It showed that both companies’ installed bases remained static at 6.7 million users in the first quarter and the third quarter, for Netscape, while Microsoft’s fell slightly from 2.8 million in the first quarter to 2.7 million in the third quarter. But – and this goes to the heart of the government’s case – Netscape’s overall share of the US browser market, regardless of how users acquired the browser, only rose two million to 29 million in the third quarter, while Microsoft’s total user base rose from 13.5 million in the first quarter of 1998, to 20 million in the third quarter. In other words, Microsoft’s share rose rapidly, but it did not come as the result of web downloads.

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