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February 16, 1999

MSOFT ACCUSED OF CHANGING PLANS BECAUSE OF HEARINGS

By CBR Staff Writer

By Dan Jones in Washington

The Department of Justice claimed at the antitrust trial yesterday that Microsoft Corp changed its business plans because of concerns about Senator Hatch’s congressional hearings. The DoJ’s accusations centered on a February 24 1998 email detailing plans for ISP participation in the Windows 98 referral servers. New requirements listed in the document included ISPs maintaining more than 75% overall penetration of Internet Explorer in their overall customer base and ISPs using the IE Start page as their home page. Lead government attorney, David Boies highlighted a concern over these requirements outlined by Microsoft’s Laura Jennings. She wrote that there may be issues about making the IE Start page a requirement for being in the referral server because of the upcoming Senator Hatch hearings. Boies claimed that Microsoft revised its business plans because of these ‘issues’. In reply, Microsoft witness Brad Chase claimed that the congressional hearings weren’t an issue of any substance. Microsoft was revising its plans all the time and in this case simply found that the business model did not work. However, he admitted under questioning that he did have a vague recollection of concerns about the hearings influencing Microsoft’s attitude to the requirements on the ISPs. Maybe it was a PR related thing, Chase mused. Boies had already tried to establish that as far back as 1990 Microsoft was concerned about antitrust issues with a Microsoft email in which the company’s Mike Slade appears to knowingly describe a market split proposal he made to Intuit Corp over its Quicken application. In the document, Slade describes how he told Intuit, We’d rather not compete with you guys…So how about this? You guys continue to do a great a great job on DOS and Mac. We’re investing in a line of Windows biz/home products anyway. Further down the document, Slade comments, so if they were listening carefully, this could have been interpreted as a chance to avoid competition with us. In the court room, Chase tried to put the proposal in context, pointing out that in 1990 Windows 3.0 had not yet shipped and its success was far from assured. On the question of whether there was a document that outlined Redmond’s approach to antitrust issues, Chase said that he wasn’t aware of one, but noted that Microsoft did not really have a culture of manuals. Microsoft’s senior VP for law and corporate affairs, William Neukom, said that the Intuit evidence showed that the government was clutching at straws. Antitrust issues were not as focal to Microsoft as they are now, but the company’s team of lawyers always worked closely with executives on legal issues, said Neukom.

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