USA versus Microsoft: the third week

Microsoft will be trying to claim that it has no monopoly

by independent computer industry analyst Graham Lea

Peter Hoddie [Apple]: "Are you really asking us to kill playback? Do you want us to knife the baby?" -- meaning QuickTime.

Christopher Phillips [Microsoft]: "Yes, we're talking about knifing the baby."

This dramatic exchange at a meeting in April 1997 was quoted by Dr Avadis Tevanian, Apple's senior Vice President for software, during the cross-examination by Microsoft attorney Theodore Edelman.
Microsoft wanted Apple to drop QuickTime product and leave the multimedia playback market to Microsoft, while Apple concentrated on software tools for Internet content.

The conversation was relayed by Dr Tevanian, who admitted he had not attended the meeting, but did attend another meeting with Microsoft executive Don Bradford who made a similar proposal to divide the multimedia market. They were discussing potential conflicts between Apple and Microsoft playback strategy.

Dividing up the market

Dr Tevanian said that Mr Bradford suggested to him that Bill (Gates) "wonders if the way to solve this is for us to take playback and you to take the authoring."

Dr Tevanian said he replied: "No, this is not acceptable."

The third week of the Microsoft trial saw a strengthening of Microsoft's arguments that other companies used similar business practices (although this was denied by Apple), so therefore Microsoft should not be singled out.

The defence

Microsoft's defence, which is increasingly looking like a tacit admission that it did carry out the practices described by the witnesses thus far, is invalid in the case of a company having a monopoly in a particular market.

Microsoft will be trying to claim that it has no such monopoly, but this will be a difficult argument to win as it flies in the face of market-share data.

Spectacular allegations

Dr Tevanian made some spectacular allegations against Microsoft in his written testimony.

He said that Microsoft had sabotaged Apple's QuickTime, so that it would not run properly under Windows, because Microsoft saw the product as a threat to its own Netshow and Media Player products, and perceived it as a potential threat to Windows.

QuickTime had the added advantage that it also operated in the non-Windows world.

Dr Tevanian was challenged for evidence, but was only able to give his expert opinion (he has a PhD in operating systems design).

However he produced no hard facts by way of evidence.

Patent dispute

Dr Tevanian said that Microsoft had sabotaged Apple's QuickTime

For its part, Microsoft claimed that Apple had tried to sue it for $1.2bn over a patent dispute.

Apple denied this. But details of the dispute, which was settled apparently by the payment of $100m to Apple, remain a mystery - probably because the terms of the settlement require secrecy on the issue.

Dr Tevanian accused Microsoft of threatening to stop the development - important for Apple's business viability - of a new version of Microsoft Office for the Mac.

A Microsoft e-mail confirming this was introduced during the questioning of Bill Gates on video last week.

Mr Edelman quizzed Dr Tevanian about Apple's Sherlock product, which is designed to help users find information on the Internet or on their disks.

Questions misfired

He asked whether Sherlock was "built in" to the operating system - an understandable line of questioning in view of Microsoft's "integration" of Internet Explorer into Windows - but it misfired badly.

Dr Tevanian said he considered it to be bundled, which is legally acceptable, whereas tying is not permitted if it is done by a company with dominant market power.

Mr Edelman pounced and produced a statement from Dr Tevanian in which he said that Sherlock was "an integrated find feature" and was built in to Apple's operating system.

Dr Tevanian said that there had been a big problem when he was asked the question, and that he should not have answered it, noting that "bundled" and "built into" are phrases that are often interchanged.

At this point, Judge Jackson took over the questioning: "Is there a distinction?"

Dr Tevanian said he thought so, and explained that bundled software was available separately and could be removed without destroying the operating system.

"Is that distinction recognised in the industry," Judge Jackson asked.

"Yes, that would be my opinion," Dr Tevanian replied.

Bad news for Microsoft

This exchange - and especially the judge's intervention - is a positive indicator that he still appears to believe that Microsoft did tie Internet Explorer to Windows, which does not bode well for Microsoft.

Judge Jackson has became increasingly irritated with the behaviour in his courtroom of Microsoft's legal team, and at one stage he admonished Mr Edelman.

His exasperation is not good for Microsoft since he decides the outcome, without a jury.

Microsoft is preparing grounds for an appeal which may be heard directly by the supreme court

It is too early to make any predictions, but it has become increasingly apparent that Microsoft is preparing grounds for an appeal with its many procedural objections.

Such an appeal may well be heard directly by the supreme court, bypassing the court of appeals, because of the importance of the issues involved and the need to resolve the case speedily.

Antitrust law enforcement is a political matter, with Republicans usually tending to favour less government regulation of business, and Democrats mostly wishing there to be fair competition.

Long trial

With barely three witnesses in three weeks - out of at least 24 - and possibly as many as 29 - the case is looking as though it will last well into the New Year, considerably longer then the anticipated six to eight weeks originally foreseen.

Department of Justice (DoJ) questions Dr Tevanian on Monday.

The next witness will be Steven McGeady of Intel.

He declined to provide written testimony, so will be examined first by the DoJ legal team. It is also believed that a further extract of Bill Gates' deposition will be shown this week.

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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.