By Rachel Chalmers in Washington
The Microsoft antitrust trial took a sour turn today (Wednesday June 2 1999) as two old adversaries, government expert witness Franklin Fisher and Microsoft attorney Michael Lacovara, faced each other again. On their last meeting, Lacovara tripped Fisher into a comment which, stripped of its context, appeared to damage the government’s case (see separate story). But the rematch saw Lacovara win nothing comparable from a wary and stubborn Fisher. Rather than address the substance of Fisher’s testimony – which is that Microsoft does indeed hold a monopoly in the PC operating systems market, and has resorted to anti-competitive practices to defend it – Lacovara chose to snow Fisher with documents aimed at discrediting him on details. The trouble was, such details as Lacovara could call into question were virtually irrelevant to Fisher’s central points.
Lacovara began by attacking a set of numbers that Fisher had plucked from the air to show that a formula arrived at by Microsoft witness Richard Schmalensee can be interpreted in various ways. Fisher’s numbers were obviously very rough, but Lacovara’s exposure of his sources entirely missed the point of Fisher’s testimony, which was that the formula proved nothing much either way. Next Lacovara quoted from a book of essays by Fisher, in which Fisher said that defining a market was less important than thoughtful, serious analysis in considering monopoly power. Lacovara’s point was that Fisher has trenchantly criticized Schmalensee for failing to define a market. Fisher patiently explained that while analysis was important: It’s no excuse for failing to define a market at all.
Lacovara turned to Fisher’s position as chairman of the board of Charles River and Associates (CRA), a public company which is advising private companies on antitrust litigation against Microsoft. Lacovara pointed out that if Microsoft loses this case and is deemed a monopolist, those private companies will only have to prove damages, not liability. A very frosty Fisher made it clear that his affiliations were public, that he did not exchange any information at all with the CRA staff working on other Microsoft-related cases and that he had discussed his position at CRA at length with the DoJ before accepting this assignment as expert witness.
On it went. Fisher had mentioned a public statement of Bill Gates’ that supported one of his arguments. Weirdly, Lacovara asked Fisher whether he thought that Bill Gates really meant what he had said. The session broke for lunch, and a grinning David Boies addressed the press on the courthouse steps. Suggesting Fisher has a private agenda is really clutching at straws, he said, it’s difficult for Microsoft to attack his testimony on its merits. The Gates point also raised a Boies smile: Was Lacovara really suggesting that Gates was writing what he knew to be untrue? Microsoft officials were nowhere to be seen.
Back in court, Fisher had mentioned the testimony of Michael Devlin, president of Rational Software, to the effect that developers choose to develop for Windows because of its large market share. Lacovara crowed that 45% of Rational revenues come from its Unix ports, and asked whether Fisher believed user base was the only factor developers ever consider? I’m sure other factors do influence it, but sheer numbers really do matter, said Fisher, software developers, as I would think everyone understood, are influenced by economies of scale to write first for the most popular platform. That’s your theoretical view, said Lacovara. Oh, it’s not just theoretical, replied Fisher witheringly.
Lacovara abandoned that line of attack and tried another: did Fisher think ISVs benefit from a standard set of APIs to develop to? Absolutely! There’s nothing wrong with it! cried an exasperated Fisher. What’s being described are the benefits of economies of scale! That doesn’t prevent it from being the source of Microsoft’s power that it’s got this monopoly! There was much, much more in the same vein: Inergy Corp, Lotus Corp, Java applications, Goldman Sachs’ fairness opinion in the AOL-Netscape merger. Is this a good time to take a break? Or are you on a roll? asked the judge. That’s your call, not mine, said Lacovara. Let’s take a break, said the judge.
But Lacovara didn’t take the hint. When the session resumed, so did he, until Judge Jackson interrupted, something he very seldom does. I’m not sure what your point is, Jackson said. You are introducing a lot of documents with which he is not familiar and which he didn’t factor into his opinions. Some of these are ambiguous and cryptic. I’m not saying these documents shouldn’t be entered in, but I’m not sure his cross-examination is the place to introduce them. If your point is to show that there are documents which cast into doubt the accuracy of his forecast, your point is made. As Lacovara spluttered, Jackson added: These documents are all dated at the latest, last fall. I wonder, do they represent current thinking or wishful thinking? To which Lacovara had no reply at all.
