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February 9, 1999

MICROSOFT’S VIDEO EFFORTS BACKFIRE AGAIN

By CBR Staff Writer

By Nick Patience

Once again Microsoft Corp made a bad impression on the court with a video demonstration at the antitrust trial in Washington. As his first act on the witness stand, Microsoft VP Cameron Myhrvold showed a video, of which he supervised the production last September, purporting to show how easy it is to get connected to the internet through the connection wizard in Windows 98, versus the process users had to go through with Windows 3.1, which had no such wizard. But again, all was not what it appeared, although yesterday’s video trickery was nothing on the scale seen last week with VP Jim Allchin on the stand. Lead government attorney, David Boies asked Myhrvold what the speed of the modem was and he said he did not know – despite having apparently supervised the demonstration. That was the first of a string of denials that does not make for a very effective time on the witness stand. This time, all Microsoft was forced to admit was that it had used a slightly slower modem in the Windows 3.1 than with the Windows 98 demonstration. The machines were of the same type – Compaq Armada 7800 laptops with 266Mhz processors – but the Windows 3.1 machine had a 28.8kbps modem and the Windows 98 was using a 33.6kbps modem. Minor, but enough to divert attention from what Microsoft was trying to prove, namely that the integration of the connection wizard and its referral server set of partnerships with ISPs made it easier for users to connect to the net and therefore was a good thing.

Red herring

By using the Windows 98 connection wizard and ISP referrals, the process took about five minutes. But by using the Windows 3.1 method it took about 17 minutes, as the connection software had to be loaded on to the machine separately. Even though the slower modem added only about 22 seconds to the process, according to Microsoft later, many were left wondering why Microsoft chose Windows 3.1 and not the more relevant Windows 95, which in its first incarnation also had no such wizard. Microsoft spokesperson Mark Murray said the modem speed was irrelevant and today’s demonstration was quite effective. Chief counsel Bill Neukom called the government’s raising of the issue academic; it’s meaningless, a red herring, he said outside the court. Boies was trying to prove that Microsoft’s intention, through its deals with ISPs and online service providers, was to increase its browser’s market share at Netscape’s expense. Boies and Myhrvold sparred over what market share meant – Myhrvold interpreted it to mean usage, whereas he said that he only dealt with distribution in that he made sure it got to users through ISPs, but was powerless to get them to actually use it. Myhrvold’s contention was that he used to think that ISPs and OSPs were going to be the major source of distribution leading to usage, but changed his mind last fall after hearing Netscape’s CEO Jim Barksdale testify at this trial some 12.4 million users had downloaded Netscape’s browser during July and August last year. But Boies reminded him that Barksdale said most of those were not new users, merely upgrades. But it was enough of a revelation to Myhrvold to convince him that he had been wrong to place so much emphasis on distribution through ISPs. Boies then produced a flurry of memos, emails and Myhrvold’s own deposition, taken in April 1998, in which he apparently said that the goal of ISP distribution was to increase market share. Then Myhrvold stopped the court in its tracks by suggesting that his deposition had been taken down wrong and he had a corrected version with that part deleted. Boies asked for a copy, but Microsoft lawyer Steven Holley did not have one; the only person who did was Myhrvold. His wife then retrieved it from his bag and handed it to Holley. Judge Jackson did not look too pleased with what was going on in his court. When asked if he said it or not, Myhrvold spluttered, I cannot tell you with complete certainty that I did not say that. Two other denials followed in quick succession. Myhrvold denied that his bonus was in anyway tied to Microsoft increasing his market share, despite Dan Rosen, general manager of new technology at Microsoft saying so in sworn deposition: Mr Rosen was wrong, said Myhrvold. And then Boies asked him if he was aware that online service providers – and America Online Inc in particular – had to guarantee that at least 85% of their customers used IE. That’s absolutely wrong, Myhrvold fired back with hitherto unheard-of certainty. Boies then produced a May 1996 contract that showed that it was in fact the case. Myhrvold protested that it was Brad Chase, not him who oversaw the AOL account and the ISPs that he dealt with were only restricted to 50% guarantees. Myhrvold claimed that he had misheard the question and Boies reminded him that once again, we’ve got a stenographer taking it all down. á

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