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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: t2 who wrote (24778)	6/24/1999 12:02:00 AM
From: taxman	Read Replies (1) \| Respond to of 74651

Microsoft Witness Says Company Paid Him Over $250,000 (Update1) Washington, June 23 (Bloomberg) -- An expert witness testifying in Microsoft's antitrust trial said today he had been paid more than $250,000 by the software giant in the past two years. Microsoft's economics expert, Richard Schmalensee, acknowledged under cross-examination by government attorney David Boies that he had been paid by Microsoft to testify on its behalf in this trial and plans to take the stand for the company in upcoming ones. Schmalensee, who contends that Microsoft does not have a monopoly because there is little to prevent challenges to the company's domination of personal computer operating systems, said he could not remember exactly how much Microsoft had paid him. ''It's been seven years. I haven't done that calculation,'' Schmalensee said. ''I have those receipts in a drawer, but I haven't looked at them.'' Schmalensee also said he had been paid $300,000 in bonuses from National Economic Research Associates, a private firm that employs him to provide expert trial testimony, give speeches and conduct research. The economist, dean of Massachusetts Institute of Technology's Sloan School of Management, is the final witness in the case brought by the U.S. Department of Justice and 19 states against Microsoft, the world's largest software company. The trial is expected to conclude tomorrow. Final Testimony After reviewing the evidence, U.S. District Judge Thomas Penfield Jackson will issue tentative findings of fact, including whether Microsoft has an effective monopoly for its Windows operating system. If he does find against the company on that point, he would then decide whether the company illegally protects its monopoly. Boies's effort to question the impartiality of Schmalensee parallels an attack by Microsoft attorney Michael Lacovara some weeks ago on the credibility of the government's economics expert, Franklin Fisher. Lacovara asked Fisher whether his testimony that Microsoft has a monopoly over operating system software would benefit clients of Charles River Associates Inc., the Boston-based consulting firm that Fisher heads. Fisher said he had been kept in the dark about other work the firm was doing. Schmalensee testified today there are increased software applications written in programming language such as Sun Microsystem Inc.'s Java, which enables software makers to design products that run on operating systems other than Windows. Also, he said, more programs are being written for use directly on the World Wide Web. That shows that Microsoft's dominance in operating systems and browsers is under challenge and Microsoft doesn't have a monopoly, he said. ''Java is a threat to Windows,'' Schmalensee testified. ''Java applications that are independent reduce the value of Windows.'' 'Only Alternative' Boies asked Schmalensee how many Web-based applications run through browsers on Windows. ''Since Windows is the most popular, it is reasonable to assume that a large fraction'' run on Windows, Schmalensee said. Schmalensee also acknowledged under questioning from Boies that for most computer makers, Windows is ''the only alternative'' if they include only one operating system on the PCs they sell. ''He admits there are no viable commercial alternatives to (computer sellers) but to load Windows,'' Boies told reporters after the end of the day's questioning. The government contends that Microsoft uses its Windows dominance to limit competition from other software companies. Schmalensee also said Microsoft's licensing agreements with computer makers allowed it to take away their discounts if they sold their computers without any operating systems. That approach is prompted by Microsoft's fear that selling machines without an operating system would create a bigger market for illegally pirated software that mimics Windows, Schmalensee said. ''I do not believe that the licensing agreement had an anti- competitive effect,'' he testified. ©1999 Bloomberg L.P. regards