I think MSFT's case is starting to look bad. Despite claims made on this thread sometime ago about the ineptitude of the government, Justice is making is a very strong case against MSFT. Boies is a first class lawyer who is only charging 1/10 of what he normally does just to get the opportunity to hammer MSFT (and do some PR for his Boies&..practice). Part of the restructuring that MSFT is currently planning must also be looked at in the context of this trial and the possible consequences MSFT could face should they loose..
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NYTimes:
February 11, 1999
U.S. Hammers at Microsoft's Browser Deals
By JOEL BRINKLEY
ASHINGTON -- A senior Microsoft official acknowledged in federal court Wednesday
that the company's contracts had prohibited Internet service providers from offering its
browser on the same Web page as its main competition because Microsoft executives "thought we
would lose in a side-by-side choice."
The admission clearly pleased David Boies, the government lawyer
who elicited it from the witness, Cameron Myhrvold, a vice president
in the Microsoft Corp.'s Internet Customer Unit division -- so much
so that Boies asked the same question four different ways and got
the same answer each time.
"Was it true you were trying to prevent Internet service providers
from presenting Netscape and Internet Explorer side by side so
users could choose?" he asked at one point. Internet Explorer is the
name of Microsoft's browser; Netscape Communications Corp.'s Navigator is its principal rival.
"We thought we would lose in a side-by-side choice," Myhrvold answered, because Netscape was
already so firmly established in the market.
In all, it was another bad day in court for Microsoft in its antitrust battle with the Justice
Department, which charges that the software giant used a monopoly in personal computer operating
systems to achieve a dominant position in Internet software. Hour after hour, Boies chiseled away at
Myhrvold's testimony, forcing him to acknowledge incorrect assertions, misleading omissions and
deceptive statements.
Myhrvold repeatedly acknowledged that he made misstatements in e-mail memos. He also testified
that he disagreed with Microsoft employees whose memos contradicted his own assertions.
As he completed his testimony Wednesday evening it was clear that Myhrvold's appearance had not
helped Microsoft's case. In fact, as Microsoft's defense reached its midpoint on Wednesday
evening, none of its first five witnesses had proved particularly effective advocates of the company's
position.
Myhrvold, a brother of Nathan Myhrvold, Microsoft's chief technology officer, is in charge of the
Microsoft division that negotiates agreements with Internet service providers, the companies that
give computer users access to the Internet. The government charges that Microsoft's restrictive
contracts with these companies are anticompetitive and illegal. Myhrvold tried to make the case that
the contracts were largely ineffective or benign.
Many of these companies have agreements to be listed in the Internet Referral Service in
Microsoft's Windows operating system, which enables users to subscribe to an Internet service
posted there. On Tuesday, Myhrvold insisted that the government's assertion that these companies
had to favor Explorer over Navigator to be included in the service was "absolutely wrong."
But under further cross-examination by Boies on Wednesday, Myhrvold admitted that in most cases
the companies had been required to ship Explorer to at least 75 percent of their customers.
Myhrvold added that they were free to stop shipping the Microsoft product if they wanted, in which
case they could be dropped from the Windows referral service.
"It's a fairly subtle point," Myhrvold acknowledged.
Similarly, in his written direct testimony, Myhrvold pointedly noted that several Internet service
providers in the referral service were not shipping Explorer as required, and yet the company had
decided not to enforce the contracts.
For example, he wrote, "of the copies of Web browsing software shipped by Concentric," a
reference to Concentric Networks, a small Internet service provider, "only 17 percent were Internet
Explorer."
But those figures were for 1997. Boies entered into evidence a Microsoft document showing that
by the first quarter of 1998, 100 percent of Concentric's browser shipments were Internet Explorer.
Myhrvold repeatedly noted that Netcom, a Internet service unit of ICG Communications Inc. that
has a contract with Microsoft, made no real effort to switch customers to Internet Explorer,
testifying that one point in 1997 -- when 10 percent of Netcom's customers were getting the
Microsoft product -- was "the high-water mark."
But Boies then displayed a Microsoft document showing that in early 1998 the percentage had
risen to 40 percent. Then Boies offered another Microsoft document showing that Netcom was
actually able to control the browser choice of only a small percentage of the people who signed up
for its service; most customers were handed to Netcom by computer makers, or by Netscape. That
same document showed that Microsoft won an agreement with Netcom that 90 percent of the
customers Netcom did control would switch to Internet Explorer.
To that, Myhrvold said only that the author of the Microsoft document "was a pretty good
salesman."
Later, in response to a question from a Microsoft lawyer, Myhrvold denied a government assertion
that his staff had offered a British division of Uunet, an Internet service owned by MCI Worldcom,
$500,000 to switch to Internet Explorer. He said he told his staff that "it would not be appropriate to
tie payments to shipments of Internet Explorer."
Moments later, Boies displayed still another e-mail that Myhrvold had written to a subordinate in
Britain in which he said, "I think tying the payment to their shipping of IE is a great idea, though I
would not do this formally." Myhrvold explained that the message had not meant what it said, and he
had called the subordinate later to tell him not to tie the two. There was no record of that call, he
conceded.
On Thursday, Brad Chase, another Microsoft executive, takes the stand. In his written direct
testimony, which was made public Wednesday, he defends Microsoft's contract requiring America
Online to switch its customers to Internet Explorer.
Chase writes that "nothing in the license requires AOL's subscribers to choose Internet Explorer."
But a Microsoft memo introduced Wednesday suggests the cross-examination Chase is likely to
face.
In it, a Microsoft executive writes that "the typical AOL user is a novice." And as a result, AOL
uses "the force-feed approach. They force feed the upgrade at log off," meaning that America Online
automatically downloaded Internet Explorer to users when they logged off the service.
An America Online executive testified earlier in the trial that very few users bothered to switch from
Internet Explorer to Navigator, even though they were allowed to, because finding and installing the
Netscape browser was too difficult.
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