Microsoft Fights to Recoup After Courtroom Disaster
By JASON FRY and TIMOTHY HANRAHAN
THE WALL STREET JOURNAL INTERACTIVE EDITION
YOU NEVER want to hear an exasperated judge question to veracity of evidence that you've just introduced in an important court case. You never want to hear him call your presentation of it "very troubling." And you never want him to note that your opponent has done "a very professional job" of discrediting you.
Pity then, if you can, Microsoft Corp. -- if not its legal team. For the software giant heard all three of those things during a week that can only be summed up as an unqualified disaster.
The trouble began Tuesday, as Jim Allchin, the well-regarded head of Microsoft's Windows team, was discussing a videotaped demonstration aimed at showing that an attempt by a government witness to modify Windows 98 caused severe performance problems with the operating system.
Back in December, Princeton computer-science professor Edward Felten said he'd written a 600-line program that strips Internet Explorer out of Windows 98 and leaves the operating system intact -- a claim that, if true, would damage Microsoft's contention that the two can't be separated. So Mr. Allchin tested Dr. Felten's claims in Microsoft's labs and said he found otherwise. Microsoft prepared a demonstration showing what Mr. Allchin had done, and played it in the courtroom Monday. A day later, all hell broke loose.
Justice Department lawyer David Boies stopped the video demonstration to note that a software title bar had suddenly changed in the middle of the test. That, he charged, indicated the test was completed using a version of Windows that hadn't included the program -- that hadn't been "Feltenized," to use a term coined of late.
Mr. Allchin had to concede that was apparently correct, which set Mr. Boies off.
"How in the world could your people have run this program?" he asked. "You do understand you came in here and swore this was accurate?"
"They probably filmed it, grabbed the wrong screen shot," Mr. Allchin answered, adding that "obviously, there were mistakes done there."
The fireworks woke up the bored reporters and sent a Microsoft spokesman rushing out with cell phone in hand, as Mr. Allchin insisted that "I personally tested this, and I know the problem exists."
But the bizarre saga was just beginning.
Microsoft scrambled a trio of engineers to grab the PC at the center of the furor and fly it to Washington. On Wednesday, Mr. Allchin was explaining that software from Prodigy had caused the title bar to change, and that the PC had, in fact, been "Feltenized." Mr. Boies then pointed out that the number of icons on the Windows desktop kept changing during the demonstration. After that, Mr. Allchin finally admitted that "multiple machines" had been used.
That left U.S. District Judge Thomas Penfield Jackson shaking his head and asking Mr. Allchin, "How can I rely on [this video] if you can't tell me it's the same machine?"
It's "very troubling," the judge said, adding that it would have been much better if Mr. Allchin had conducted the tests and been there during the taping himself.
The day ended with a private meeting between the judge and both sides' lawyers: Judge Jackson said he didn't believe Mr. Allchin had deliberately falsified the tests, but added that "it does cast doubt on reliability of that exhibit altogether" and that Mr. Boies had done "a very professional job of discrediting those tapes."
The final chapter of Tapegate would follow Thursday. Judge Jackson allowed Microsoft to redo the tests and make a new videotape, sending the software giant scrambling again. Six new laptops (IBMs, by the way) were bought, a video crew flew in from New York, and the test was conducted by Mr. Allchin.
In the new videotape, Mr. Allchin ran the Felten program and showed that he could browse the Web (he went to Amazon.com, by the way) -- but couldn't reach a Microsoft Windows update Web site. He demonstrated that Microsoft's Money 99 and Microsoft Plus Deluxe CD no longer worked as advertised with their Internet access cut, and he was able to recreate the Prodigy bug that changed the Windows title bar. One test that couldn't be recreated was the slow performance issue -- since the new test wasn't done in a lab, the different laptops could connect to the Internet at different connection speeds, making comparisons unfair.
Microsoft, in a brave bit of spin, called the videotape controversy a sideshow to the main thrust of Mr. Allchin's testimony, which it said was largely unchallenged by Mr. Boies. But that missed the point. The idea of this week was that Microsoft would show that the integration of Windows 98 and Internet Explorer offers consumers clear benefits over the mere combination of the operating system and the browser, a key point in the trial. Mr. Boies wrecked that strategy, forcing Microsoft into a desperate struggle just to get back to even -- and seriously undermining its credibility before the only person whose opinion matters in the antitrust case.
Microsoft has finally got a chance to play offense and have its witnesses tell its side of the story. So far, it's getting eviscerated. Mr. Boies destroyed its first witness (MIT's ineffectual Richard Schmalensee, who was reduced to saying "What could I have been thinking?" about one of his own papers), fought the second (Microsoft's Mr. Maritz) to a draw, and then forced the third (Mr. Allchin) into three days of damage control. (Rational Software's Michael Devlin should consider himself lucky -- he escaped from the stand after only an hour's cross-examination during the whole Tapegate mess.)
Mr. Boies is very, very good at what he does -- but Microsoft has made him even better. The affair with the videotape was simply mind-boggling: Since the test evidently wasn't rigged, why try to pass off different machines as the same one? Did anybody in Redmond bother reviewing at the videotape before sending it off to Washington? Did it occur to anyone in Redmond that the slightest inconsistency in the tape would be seized upon? If it didn't occur to anybody, why on earth didn't it? What, exactly, does Microsoft think is going on in that courtroom in Washington?
Microsoft is a software company that generates so much cash it can't figure out what to do with it all. Apparently it's never occurred to it that in the real world, where antitrust proceedings are taken seriously, companies can exchange money for competent legal help. They can hire lawyers who suggest that the company's chief executive officer won't help himself with a surly deposition in which he can't remember anything about key strategy memos and argues about the definition of "compete." They can hire lawyers who review the writings of the company's own witnesses so they don't get Pearl-Harbored with their own work. And they can hire lawyers who count the icons on the desktop before the other side does.
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