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  1. Technology
February 10, 1999


By CBR Staff Writer

By Nick Patience

test Microsoft Corp witness Cameron Myhrvold admitted under questioning at the antitrust trial in Washington yesterday that Microsoft forced its ISP to ship Internet Explorer on its own because if it was offered alongside any other browser – notably Netscape’s – it was afraid users would pick the non-Microsoft browser. In a very candid exchange with lead government attorney David Boies, Myhrvold, who is in charge of Microsoft’s distribution of IE through the ISP channel, said that Microsoft would lose out to Netscape because at the time in question, the first half of 1996, Netscape had higher market share and mindshare and users would pick its browser because of that. We were nowhere, we were the Johnny-come-lately of the internet, said Myhrvold. Boies asked Myhrvold to confirm that users who were signing up with these ISPs would not be presented with the option of Netscape Navigator, and the ISPs were not even to mention the existence of other browsers under the contract, because if they did, users would pick Netscape. Yes, that’s right, said Myhrvold. Boies said at lunchtime outside the court that the ISP contracts are a very strong part of the government’s case, adding that unlike the content provider contracts brought up earlier this week, these were pervasive and very critical. The ISPs were free to supply other browsers – but only if users requested them. Under gentle redirect probing from Microsoft attorney Stephen Holley, Myhrvold explained that preferred browser meant just that; put it ahead of all others. That caused Judge Jackson to jump in and ask Myrvold, but you’re not saying [to the ISPs], ‘please make it your preferred browser’. They are arguably in violation of the contract if they don’t? he asked. Myrvold agreed. However, Microsoft’s defense is that it never actually enforced that aspect of its contracts with ISPs and the restrictions were abandoned in April 1998 because of all the negative PR the company was getting from them, according to Myhrvold. By January 1998, Microsoft had 14 of the top 15 US ISPs in its referral server or online services folder on the Windows 95 desktop and recommending IE as their preferred browser. The referral server enables users to dial in to an access point at Microsoft headquarters before they get on to the internet, and if they do not have an account with an ISP already, to establish one with one of Microsoft’s ISP partners. The online services folder serves a similar function for the likes of AOL, CompuServe and Prodigy. Not only were these ISPs and OSPs compelled to offer IE to the exclusion of all others, they had to meet minimum levels of IE distribution under the terms of their contracts. Most ISPs in the program had to ensure that at least 75% of their new users used IE and if they slipped below that for two consecutive quarters, Microsoft had the right under the contract to remove them from the desktop folders. Microsoft never actually enforced that with any of the ISPs, but it did contact them to remind them of their obligations from time to time, said Myhrvold. However, like so many grand strategies concerning IE, this one did not work either, Microsoft would have us believe. Of the 14 companies that signed up, only 12 actually implement it, though AOL joined the online folder very recently, making it 13. GTE Corp signed the contract, but never actually joined the referral server program. Myhrvold estimated in his written testimony that the high point came in the first quarter of 1998 when Microsoft’s partner ISPs got on average 4.4% of new users though its programs. However, right at the end of his questioning, Boies produced a Microsoft document that showed Netcom getting around 40% of its users from the program. But Myhrvold claimed not to recognize the document, but said that it may have been prepared by someone in his group. Despite having 14 of the top 15 ISPs distributing IE – the rebel was Erols Internet – Microsoft could not make any headway with the five regional Bell operating companies (RBOCs). They all shipped

Netscape exclusively, claimed Microsoft. Late yesterday, Microsoft’s produced screen shots from Netscape’s own referral program, called ISP Select. It showed the five RBOCs listed first, then four other ISPs. Myhrvold said he had never seen Netscape’s contracts with the ISPs, but understood them to include a clause that ensured the RBOCs got mentioned ahead of the likes of Earthlink, Netcom and Sprint. He then pointed out that there appeared to be no mention of a rival browser on any of the web pages, beyond Bell Atlantic offering users the option to get connected with no browser. But Microsoft, once again, had not prepared properly and in stepped David Boies to point out that SBC Communications does in fact offer users the chance to register using a browser other than its modified version of Netscape’s browser. Yes, said Myhrvold, but it certainly doesn’t make it look very attractive. Boies then finished off the job by pointing out that the only reason the five RBOCs are positioned ahead of the other ISPs is because of the restrictions placed upon AT&T WorldNet by Microsoft, forcing it explicitly to offer IE only. The RBOCs were afraid that if they didn’t insist on that, AT&T would go to Netscape and gain customers at their expense, so they tied Netscape hands, said Boies. Myhrvold said he had no reason to disbelieve Boies, but had never seen the contract.

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