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Monday, 29 March, 1999, 07:52 GMT 08:52 UK
USA versus Microsoft - Microsoft rests its defence
Bill Gates
Bill Gates: Videotaped deposition did not help Microsoft's case
by independent computer industry analyst Graham Lea

Microsoft concluded presenting evidence from its 12 witnesses last week in its trial on antitrust (competition law) charges in Washington DC.
The court is now in recess until Judge Jackson has finished a criminal case that he can no longer delay. David Boies, the Department of Justice's special trial counsel, also has another case.

When both have finished, probably in six weeks or so, the trial will resume and hear two witnesses from each side giving rebuttal evidence. This will be followed by closing arguments.

It has probably not yet been decided if Bill Gates will appear in person to give evidence, but it is certainly unusual for the chief executive of any company not to appear voluntarily. The videotaped extracts of Mr Gates' deposition that were shown in instalments by the DoJ proved disastrous for Microsoft, and did not project a good image of its leader.

Intel logo
Intel: Microsoft keen to stop it producing software
Last week, Eric Engstrom, a self-taught programmer and one of the designers of Microsoft's DirectX, gave evidence about Microsoft's relationship with Intel and Apple.

Unfortunately, Mr Enstrom's practice was to destroy the emails on his laptop that were older than two months, so there was very little that Microsoft was able to offer to support its account of how negotiations with Microsoft's partners was conducted.

Mr Engstrom was attributed with inventing the phrase that Microsoft wanted to own all the driver software (for devices attached to a PC) "down to the metal", because Microsoft had had a bad experience with drivers in Windows 95.

Microsoft was keen to stop Intel producing software, although Intel's main purpose in doing this was to show off the capabilities of its processors by means of some special effects - something that Microsoft was not able to offer at the time.
The sector most of interest to Intel was multimedia, but Microsoft's DirectX was late for Windows 95 and not included in the original versions.

Mr Engstrom denied the allegation by Dr Avie Tevanian of Apple that Microsoft had sabotaged the running of QuickTime, although Microsoft had been caught with some QuickTime code in its products. Microsoft initially took no action about Apple's claim of bugs in Microsoft software that caused problems for QuickTime.

When Microsoft did decide to help, it claimed Apple should rewrite QuickTime in ActiveX, and had not provided Microsoft with enough information.

Apple retorted that Microsoft had not called to ask for more. Microsoft did find some bugs in its own software, which it said it had fixed.
Microsoft wanted Apple to use DirectX Media instead of QuickTime, but Steve Jobs ( back again as Apple's leader) suggested Microsoft should use QuickTime.

Joachim Kempin is in charge of Microsoft's software licensing to PC makers. Much of his cross-examination focused on the ways in which PC makers could customise the start-up on new PCs, in order to persuade users to sign up with Internet service providers, and to differentiate PCs.

Microsoft does not normally allow Netscape Navigator to be offered as a default choice during this start-up sequence.

It was revealed that the best deal for Windows software was obtained by Compaq, followed by Dell and Gateway, because of their willingness to follow Microsoft's desires.

One of the court documents showed that Bill Gates had said that he thought it "a little strange" that Microsoft was shipping Internet Explorer 3 free of charge: a key issue in the trial is the allegation that Microsoft made IE free in order to reduce Netscape's revenue.

The last witness was Robert Muglia, who had been much concerned with Microsoft's stormy relationship with Sun and its Java programming language.
Microsoft regarded the cross-platform product as a dangerous competitor to the single-platform Windows. Consequently, Microsoft decided not to offer the latest 1.2 version of Java, in breach of its contract with Sun, and for which it was revealed it was paying $3.5m a year.

Sun was concerned that Microsoft was trying to produce a breakaway Windows-only version of Java. Mr Muglia claimed that fragmentation was a "super outcome" for Microsoft, because it gave the user more choice. This bold reinterpretation of what Microsoft was doing did not fit the facts at all well.

The opinion of most observers is that overall Microsoft's defence has been disastrous. The video demonstrations that Microsoft chose to show were most controversial, and ended up having the opposite effect to that desired.

There is a distinct impression that Microsoft has lost its grip on software development and is now focusing on survival. If Microsoft loses the case in the District Court (a result that should be known this summer), it is likely to take at least two years to go through appeals hearings. It could well be that any remedies would not be put into effect if the case were under appeal.

So far as remedies are concerned, the duty of the court is more to look to the future than to punish for any past actions (although there may well be a number of new private antitrust cases seeking substantial damages).

Splitting Microsoft into "Babysofts" is probably not very likely, but declaring Windows to be an essential facility is a definite possibility.
This could lead to the source code being put in the public domain, and possibly a published price list. Microsoft's relationships with competitors may also be controlled.

While the antitrust case continues, the marketplace is increasingly in flux as the open source software model becomes increasingly acceptable to business as well as home users. That could be the revolution that makes resolution by the courts inconsequential.

Graham Lea is a leading computer industry analyst specialising in Microsoft and who will be following the case for News Online - his views do not represent those of the BBC.

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