Monday October 19 4:17 PM EDT
dailynews.yahoo.com
Government slams Gates at start of Microsoft case
By David Lawsky
WASHINGTON (Reuters) - The government opened its landmark antitrust lawsuit against Microsoft Corp. (MSFT - news) Monday with a direct attack on the credibility of the company's billionaire founder Bill Gates.
The first day of the landmark antitrust trial against Microsoft Corp. ended with the software giant due to make its opening defense statements Tuesday.
The government opened with a direct attack on the credibility of the company's chairman and founder Bill Gates by comparing the billionaire's recently videotaped deposition with memos he wrote in 1995.
Lawyers for the government used their opening arguments to contrast sworn statements Gates made on videotape in August with e-mail and memos written by Gates several years earlier, noting what they described as inconsistencies and contradictions.
The dramatic Gates video testimony, played on monitors around the court room, demonstrated that the software giant had illegally abused its dominant position selling software running personal computers to muscle out competitors and grab control of the market for Internet browsers, the government lawyers said.
''Clearly, these are the types of things the antitrust laws were designed to prevent,'' Justice Department outside counsel David Boies said. ''Indeed, they are criminalized.''
Microsoft has consistently denied abusing its strong market position. The company's operating system software, such as Windows 98 and Windows NT, runs over 90 percent of personal computers.
Entering the courthouse on Monday, the company's general counsel William Neukom told reporters that the government's evidence was being cited out of context and was not relevant to the case.
''The relevant evidence, the admissible evidence, will show that Microsoft is a vigorous but a very fair competitor,'' Neukom told reporters.
The trial is rated by antitrust experts as one of the most important in recent times -- comparable to the U.S. government suit against telephone titan AT&T Corp. (T - news) in 1974.
The U.S. Justice Department and 20 states filed suit in May charging Microsoft had used its dominance in personal computer operating systems to stamp out competitors and capture other software business.
Monopolies are legal if gained by offering better products or services but U.S. law forbids the use of monopoly power to maintain market share or gain monopolies in other areas.
A key allegation by the government is that Microsoft went to extraordinary and illegal efforts to stifle the rapid expansion of Netscape Communications Corp. (NSCP - news) because it felt threatened by the fledgling Internet browser maker.
On Monday, Justice Department attorney David Boies played in court excerpts of Gates' Aug. 27 videotaped deposition and contrasted the chairman's statements with internal memos sent in 1995 by Gates about Netscape, then a fledgling Internet browser maker.
In the videotape, Gates said he did not know of Netscape's plans and was not involved in preparation for a pivotal June 21, 1995, meeting between Microsoft and Netscape.
''At this time I had no sense of what Netscape was doing,'' Gates, wearing a green olive suit, said in the deposition taken at the company's Redmond, Wash., headquarters.
But Boies asked the court to look at a May 1995 memo from Gates which said: ''A new competitor born on the Internet is Netscape.'' Another memo that month from Gates said: ''I think there is a very powerful deal of some kind we can do with Netscape.''
Boies then played an excerpt of the tape where Gates was asked if Microsoft had considered investing in Netscape.
Pausing to scratch his head, Gates squinted and replied:''I said that didn't make sense.''
But before the 1995 meeting, Gates appeared to raise the possibility of investing. ''Of course...we could even pay them money as part of the deal, buying some piece of them or something,'' Gates wrote in a May 31, 1995 memo presented by Boies.
Gates also raised a variety of other possibilities for working with Netscape, including convincing Netscape not to compete in the Windows 95 browser market. ''I would really like to see something like this happen!!'', Gates wrote in the memo.
Boies also presented evidence that Microsoft had sought to enlist other companies in its efforts to quash Netscape's browser and a perceived threat from Sun Microsystems' computer language Java. Boies argued that Gates saw the combination of Java and Netscape as a threat to displace Microsoft's monopoly position.
A Feb. 20, 1997 memo by Gates recounted the possibility of offering a tit-for-tat to leading chip maker Intel Corp. (INTC - news) Gates said Microsoft would agree to reject overtures for assistance from Intel rival AMD if Intel would refuse to help Sun make Java run better.
District Judge Thomas Penfield Jackson told the court he had an event to attend later in the afternoon and offered Microsoft the option of beginning its remarks Tuesday.
The trial is expected to last six to eight weeks.
(Reuters/Wired)
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