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  1. Technology
February 25, 1999


By CBR Staff Writer

By Dan Jones in Washington

The government put forward evidence that Microsoft Corp used its operating systems monopoly to force Gateway Inc into dropping its support for Netscape Navigator on its PCs, just one of a stream of allegations about Microsoft’s treatment of its OEM partners presented at the anti-trust trail yesterday. Lead government attorney David Boies used a Gateway response to a Department of Justice request for information, dated September 17, 1997, to lay a devastating series of claims before Microsoft witness Joachim Kempin. The Gateway document alleged that Microsoft had told the PC manufacturer that continued support for Netscape Communications Corp was a serious issue that could affect our working relationship. The court was told that Microsoft had strongly represented to Gateway the importance of removing the Netscape icon and replacing it with Internet Explorer and that Gateway’s NT agreement was contingent on it not using competitive operating systems on certain server lines. In addition, Microsoft was said to have threatened Gateway with an internal audit of Microsoft software, and that Redmond would charge a royalty for each one – contrary to a verbal agreement it held with Gateway. Responding to the allegations in a way that echoed the entire day’s cross-examination, Kempin at first said he was totally confused by the accusations then repeatedly told Boies that he had no knowledge of the claims and then said that the events described could not have happened because he would have been told about them. Finally, Judge Jackson intervened and asked Kempin, You don’t think these things ever happened because you would have been contacted by your opposite number at Gateway? Kempin agreed. Earlier, the courtroom had heard that Gateway pays a significantly higher price for its Windows license than Compaq Computer Corp and Dell Computer Corp and that Dell received this preferential treatment because it turned Netscape down. Kempin derided the claims as ridiculous but then agreed that Dell does pay a significantly lower price for its agreement but said that this was not because of its refusal of Netscape. It was revealed that Hewlett-Packard Co had also tried to negotiate a change to the standard Windows 95 boot up sequence in the spring of 1997. HP had put its own boot sequence and auto-start module onto its Pavilion range of PCs and had been mandated to remove them by Microsoft. John Romano, HP’s R&D manager had written to Microsoft, making clear his frustration at their actions, If we had a choice of another supplier, based on your actions in this area, I assure you you would not be our first choice of supplier. Kempin brushed this off, saying, we basically told them to stick to the license agreement, I’m not sure what the issue is. Boies laid out the government contention that Microsoft was abusing its operating system monopoly. Kempin was shown a 1996 OEM sales chart that he had a hand in preparing. The chart showed that other operating systems made up less than 5% of sales on x86 architecture-based PCs – what Boies called Intel machines – in the OEM space. Kempin admitted that was accurate then and probably today, however, he claimed that Windows 98 lives in a competitive environment. He denied that Microsoft had used this monopoly power to force OEMs not to boot up custom shells over Windows, which obscured IE and possibly promoted Navigator. Kempin claimed that the development team at Microsoft didn’t like OEMs to butcher the Windows operating system. He claimed that putting custom boot sequences over the boot-up of Windows was akin to ripping the first chapter out of ‘Moby Dick’ – saying that OEMs didn’t have the right to change the operating system the way that users did. Microsoft’s Mark Murray backed the intellectual property argument claiming that Windows was Microsoft’s crown jewels.

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