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EDITIONS
Wednesday, 2 June, 1999, 14:50 GMT 15:50 UK
Microsoft trial resumes
Bill Gates
Microsoft chief Bill Gates is not expected to testify
By independent computer industry analyst Graham Lea.

The Microsoft trial resumes on Tuesday 1 June.

It was recessed at the end of February because Judge Jackson had to try an unrelated case, but much has been happening outside the courtroom.

A favourite pursuit has been for pundits to give their views as to what the remedies should be in the event that Microsoft is found to have transgressed the antitrust (fair competition) laws.

Judge Jackson sent the contestants away in February with the suggestion that they should use the recess wisely - a strong hint that they should try to reach a settlement.

Although there have been meetings, it seems that an impasse has been reached.

Apparently Microsoft had been willing to concede exclusionary behaviour, such as allowing partners like Internet service providers, content providers and software developers to use competitive products, but this does not go far enough for the Department of Justice.

Political pressure

Assistant attorney general Joel Klein, in charge of antitrust for the justice department, said recently that "One of the things I committed to when I took on this job was to go back to court, to not take 60 cents on the dollar to settle for a consent decree."

He was referring to a previous case against Microsoft was settled with a weak and ambiguous consent decree that proved unenforceable when the DOJ took action against Microsoft for breaking its terms.

Bill Gates insisted that the "integrity" of Windows must be preserved, and if that were possible, "it would be nice if a settlement could be reached."

The consumer activist Ralph Nader held a conference to examine possible remedies.

A pro-Microsoft economist, Professor Stan Lebowitz, was not at all in favour of breaking up Microsoft and believed it would be very expensive for software developers to need to port software to other platforms if there were fragmentation of operating systems.

This argument was not accepted by other economists present.

Mr Nader concluded the meeting by suggesting that if the outcome of the trial were not satisfactory, there would be a move towards bringing political pressure for new legislation.

Windows auction

Scott McNealy, chief executive of Sun Microsystems, has been forthright in his public statements about what should happen.

"I think break-up is the wrong remedy to do up front. If it's a last resort, yes, if there are no other competitors, then break them up.

"But we're still there, Oracle's still there, Novell's still there. If you only have Ma Bell, then create Baby Bells.

"If you have other competitors you shouldn't be creating Baby Bells."

Mr McNealy wanted Microsoft to be prevented from making investments in other companies to obtain intellectual property.

Netscape screen
Internet Exporer's battle with Netscape forms part of the evidence
"If they hadn't been able to go out and buy Internet Explorer (from Mosaic) and had to develop their own browser technology, maybe they wouldn't have been able to take Netscape out," was one of the examples he gave.

A leaked report from the 19 states that have a parallel action against Microsoft, apparently written by Wisconsin attorney general Kevin O'Connor, suggested that Microsoft should be forced to auction Windows and its trademarks.

Specific terms mentioned included the prohibition of exclusionary contracts and predatory conduct. Threats by Microsoft to withhold products would not be allowed; acquisitions would require approval; and modifying software, such as Java, would not be allowed.

The states also want Microsoft to disclose prices, and to stop discriminating in its prices to PC makers.

Microsoft has been busily taking depositions about the acquisition of Netscape by AOL, in a complex deal involving Sun Microsystems.

Rebuttal evidence

It evidently hopes to show that the acquisition demonstrates that the software industry is alive and well, and that Microsoft is just one player amongst many.

Nearly 100 depositions from earlier in the case have been released following a successful legal action by media organisations to have access to them under the first amendment to the American constitution that refers to "abridging the freedom of speech, or of the press ".

They contain a wealth of detail, much of it highly embarassing to Microsoft.

The court will now hear evidence from six rebuttal witnesses - three from each side.

For the justice department there will be a reappearance by Professor Edward Felten, who wrote a prototype program to show that IE could be disabled in Windows 9x, and a new witness, Garry Norris, previously of IBM, who has already provided a very revealing deposition.

As expected, Bill Gates will not appear to defend Microsoft, but the company will call Gordon Eubanks, former chief executive of Symantec, who has been generally pro-Microsoft, despite the open warfare he experienced in the utilities market.

Microsoft is boldly calling David Colburn, AOL senior vice president for business affairs, as a hostile witness. Both sides will also call again their economists.

The rebuttal evidence will take several weeks, after which each side will have approximately a month to prepare findings of fact - essentially a summary of key evidence from each side's perspective.

The judge will also present his own findings of fact, which would amount to a number of decisions about contentious issues.

The next stage would be for both sides to present its proposed "findings of law".

The final step would then be for Judge Jackson to issue his own findings of law, in effect his Opinion on the case. This would happen some weeks or even months later - and possibly even next year.

Fair play or foul

The case is not particularly legally complex, but it is a broad one with a considerable amount of evidence, and is therefore likely to require closer legal analysis to block as many grounds for appeal as possible.

No judge likes to be overturned on appeal.

At stake for users, as well as the software industry, is whether there will be competition in the future.

It is feared that if a monopolist gains complete control, prices will go up and innovation will suffer.

Microsoft is an ultra competitive company, but it will be for Judge Jackson to decide, at least initially, whether it has stepped over the boundary between fair play and foul play.

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

See also:

22 Feb 99 | Microsoft
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