MICROSOFT ARGUES IT'S AGGRESSIVE BUT LEGAL STANCE IN ANTITRUST TRIAL DOESN'T SWAY GOVERNMENT
MICHAEL PAULSON P-I WASHINGTON CORRESPONDENT
10/21/98
Seattle Post-Intelligencer
Comparing government lawyers to "19th-century reactionaries who . . . went around smashing machines with sledgehammers to arrest the march of progress," Microsoft yesterday launched its counterattack on the government's sweeping antitrust case.
In an opening statement and during the cross-examination of a key government witness, Microsoft lead attorney John Warden argued that the company has done nothing illegal.
Warden derided various elements of the government's case as "ridiculous," "fantastical," and "pure unadulterated nonsense."
He questioned the motivation of government prosecutors, suggesting they were acting either because of the exigencies of "electoral politics," under the influence of "academics seeking new forms of social engineering," or because of "pressure from Microsoft's competitors."
Warden described the evidence against the company as "a crazy quilt of e-mail excerpts," some of the government's witnesses as "ignorant," and said "the government has clearly fallen down a rabbit hole."
The Justice Department was underwhelmed.
"Microsoft has very good counsel, but they can't change the law, they can't change the facts, and they really can't change the subject, and the subject matter is what Microsoft did that was anti- competitive," said Justice Department special trial counsel David Boies.
Microsoft stands accused, by the federal government and the attorneys general of 20 states and the District of Columbia, of violating the nation's antitrust laws by seeking to extend a monopoly on computer operating systems into the market for Internet browsers.
Arguing that "the antitrust laws are not a code of civility in business," Warden said that over the course of the trial he will show that Microsoft has been an aggressive competitor but has not done anything illegal.
He insisted that Microsoft does not have a monopoly on computer operating systems, because the market for computers should be defined to include not just Intel-based personal computers, which Microsoft dominates, but also work stations, hand-held computers, networked computers and Apple's Macintosh computers.
He said anyone with brains and venture capital can introduce a new operating system.
"Microsoft has not denied customer choice," Warden said. "Microsoft is customer choice."
Much of the government's case centers on Microsoft's alleged effort to avoid the competitive threat posed by Netscape Communications Corp., until recently the dominant manufacturer of Internet browsers. The government alleges that Microsoft illegally sought to divide the market for browsers with Netscape, and, failing that, sought to use illegal tactics to destroy Netscape.
But Warden said each of Microsoft's actions regarding Netscape were simply steps taken to benefit consumers. For example, Warden said the company's decision to integrate its Internet browser into the company's ubiquitous operating system was made because consumers want an operating system with more features.
"Ordinary consumers who buy personal computers at Wal-Mart have no interest in piecing together an operating system from a grab bag of separately marketed components," he said. "They want their new machine to come out of the box and just work. And Microsoft is fully entitled to provide those consumers with what they want."
Although Netscape has rapidly lost market share since Microsoft integrated its browser into its operating system, Warden cited statistics showing that Netscape's share of corporate usage has been rising and that the company continues to distribute millions of copies of its browser every month.
"The government apparently would have preferred Microsoft to leave Netscape in an unchallenged position as a potential collector of monopoly rents," Warden said. "The undisputed victor in the so-called browsing wars has been the consuming public."
During his cross-examination of Netscape President Jim Barksdale, Warden tried to show that the government is advocating not for consumers, but for Netscape, in this trial. (Barksdale was questioned by Microsoft before being questioned by the government under the unusual rules for this trial, which provide that witnesses submit their direct testimony in writing and begin their court appearances by being cross-examined.)
Warden led Barksdale through a series of questions designed to show that provoking a government lawsuit against Microsoft was part of Net-scape's business plan. He cited an undated Netscape strategy document offered as evidence by Microsoft that includes the words "DOJ and court actions create opportunity for Netscape."
Barksdale acknowledged he had met with Justice Department officials about six times before the government's filed its lawsuit, including hosting a breakfast at his house for the government's top antitrust official, Joel Klein. Barksdale also said he had urged the government to file a lawsuit against Microsoft, and at one point, explaining why he didn't simply sue Microsoft, said, "we asked our Department of Justice, for whom our tax dollars pay, to look into them."
Warden also led Barksdale through a series of questions to show that Netscape, even when it dominated the market for browsers, constantly added new features to its product. A Microsoft spokesman said that line of questioning was intended to illustrate that Microsoft has done nothing unusual by integrating new features into the Windows operating system.
Barksdale often appeared hostile and showed flashes of anger under questioning. He insisted that Microsoft has a monopoly on operating systems, because, he said, "there is no other operating system today, practically speaking," for retail consumers of personal computers.
And in one outburst provoked by Warden, Barksdale said Microsoft has conducted "a concerted public relations campaign against my company," and listed a series of threatening comments allegedly made about Netscape by Microsoft Chairman Bill Gates and President Steve Ballmer.
The hearing offered one new detail. The Justice Department acknowledged it has been advised by Robert Denham, who until last year was the chairman and chief executive officer of the investment bank Salomon Brothers Inc.
Denham, now a lawyer in Los Angeles, could not be reached to discuss his role in the case, but the Justice Department said he had been hired as a consultant to advise the government about business issues.
P-I reporter Michael Paulson
can be reached at 202-943-9229
Hei, my tax dollars is not used to save your a..! |
