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Tuesday, June 1, 1999 Published at 17:49 GMT 18:49 UK

Business: The Company File

Microsoft 'basically bribed' companies

Internet Explorer is at the heart of proceedings

Microsoft had "basically bribed" companies to take its Internet Explorer browser to preserve its monopoly in operating systems, the resumed anti-trust trial was told on Tuesday.

The claim came from Franklin Fisher, of the Massachusetts Institute of Technology, who was the first witness recalled by the US government as the trial got going again after a 13 week break.

The software giant is accused of engaging in anti-competitive business practices and abusing its dominant position in the market for personal computer operating systems.

The US Justice Department has focused especially closely on claims that Microsoft attempted to destroy competition in the browser market.

The government said this was done by integrating its Explorer browser technology into Windows, its operating system which is found in nine out of ten of all personal computers.

But during the course of the trial America Online bought Netscape, leading Microsoft to argue that the anti-trust case has become irrelevant.

IBM witness

The combination of top online service provider AOL with Netscape poses a new competitive threat, said Microsoft.

But Mr Fisher said on Tuesday that by giving away Explorer, Microsoft "basically bribed people to take it and spent hundreds of millions of dollars on research and development".

"These are not profitable actions, except to protect its operating system market monopoly," he added.

He said Microsoft maintains a monopoly position in the market for computer operating systems because of its "substantial ability" to alter the price of Windows, as consumers have little other choice.

Microsoft insists that "bundling" browser technology into Windows responded to a desire on the part of consumers for easier use and represented legitimate innovation.

Microsoft is due to recall its own economist Richard Schmalensee, dean of Massachusetts Institute of Technology's Sloan School of Management, to counter Mr Fisher's fresh evidence.

Mr Schmalensee has argued in the proceedings that Microsoft faces a large array of competitors beyond those that compete with its operating system and is therefore not a monopolist.

Each side can call one new witness and recall two others during the resumed phase of the trial which is expected to be completed by July 4.

The key Justice Department witness in the next few weeks will be Garry Norris, an IBM executive.


In written evidence he said Microsoft had charged his company higher prices for Windows because it had refused to stop selling a rival operating system OS/2.

Proceedings in the trial began in October 1998. Once the current phase of witnesses is completed there will be a 30 day recess to give Microsoft and the US government time to put together their interpretations of the facts.

A verdict from judge Thomas Penfield Jackson is not likely to come before September at the earliest.

The third Justice Department witness is expected to be Princeton University computer science professor Edward Felten.

Microsoft plans to calls David Colburn, vice president of America Online and Gordon Eubanks, head of corporate software maker Oblix.

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