John Warden, Microsoft Corp’s defense attorney, spent much of the morning’s testimony trying to establish the importance or otherwise of ‘icon on the desktop’ OEM deals to America Online Inc, in the hope of proving that AOL’s March 1996 deal with Redmond was not of the importance that AOL claims. Warden asked David Colburn of AOL: Is it a fact that for most of the time Microsoft was talking about licensing IE…AOL was already pre- installed on most consumer PCs? Colburn replied in the affirmative but said that AOL was faced with something very new meaning the Microsoft Network. He said, all of a sudden we had what we believed would be a very significant competitor. The deal with Microsoft, did not put the AOL icon directly on the desktop as the as the MSN icon is, and as AOL’s OEM deals did, but placed the symbol inside the Online Services Folder (OSF). Warden persisted with his line of questioning, asking the witness if AOL had still perused OEM deals after the Microsoft deal. Colburn agreed that the firm had, but countered that what we set up by being in the online services folder has led to a lot of marketing opportunities. Warden asked if marketing costs had gone down since fiscal 1997, Colburn said that he believed so but didn’t know if it was a steady trend. Later in the day, Warden asked Colburn for a comparison of the subscriber bases of AOL and MSN. Colburn said that AOL had 13 million subscriptions worldwide, while he believed MSN had 2 million, probably a little less. Warden pointed out that that this was despite MSN having an icon directly on the desktop, but Colburn retorted that, Microsoft clearly made the decision to …sacrifice…MSN, when they put AOL and others on the desktop.
