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EDITIONS
Saturday, 21 November, 1998, 17:13 GMT
USA versus Microsoft: The fifth week
Microsoft stands accused of exploiting its operating systems dominance
By independent computer industry analyst Graham Lea

If the fourth week of the Microsoft trial was a bad one for Microsoft, the fifth was a disaster.

During the week, Microsoft:

  • Was told to remove its own version of Java from Windows.

  • The Japanese Fair Trade Commission found that Microsoft had violated anti-monopoly laws.

  • Serious evidence about Microsoft's business practices and monopolisation was heard in the court in Washington.

  • And there were two more installments of the videotaped deposition of Bill Gates.

Microsoft
Sun Microsystems has been granted a preliminary injunction to prevent Microsoft corrupting the Java standard so that it would only work with Windows, rather than across all platforms.

Federal Judge Ronald Whyte of the San Jose district court said that Sun was "likely to prevail" at trial and that Microsoft must make its Java offering compliant with Sun's specification within 90 days.

Microsoft has 15 days to tell the court how it intends to do this - and it means changing Windows 98 and Internet Explorer, but not a recall.

Microsoft spokesman Greg Shaw said that Microsoft plans to appeal. No date has been set for the main trial, but it will not be before the current Microsoft trial in Washington ends.

The ruling is highly relevant to the case in Washington because it is further evidence that Microsoft has attempted to monopolise the market.

The Japanese Fair Trade Commission (JFTC) found, after raiding Microsoft's offices in Tokyo in January to seek evidence, that Microsoft had violated the law concerning monopolies.

After Microsoft agreed to change some business practices, including Internet contracts and Excel licensing to Japanese PC makers, the JFTC issued a warning and said it would take no further action.

The evidence from Glenn Weadock, a computer consultant, and John Soyring, previously in charge of IBM's OS/2 development, was concluded and evidence from Frederick Warren-Boulton, a consultant economist, will continue next week.

'Not all users like forced integration of browsers'

Mr Weadock said that there were disadvantages in integrating a browser with an operating system. He presented some views from some major computer users that showed that not all users liked the forced integration of Windows with Internet Explorer, and that it did not necessarily represent a benefit for consumers.

Microsoft hotly contested this, and claimed Mr Weadock's sampling was biased. Mr Weadock replied that his sample was not scientifically determined, and said: "No-one outside Microsoft has ever viewed a Web browser as being part of an operating system".

Mr Soyring had an unhappy role to play as the representative of a company humbled by Microsoft's business practices. His written testimony contained a gloomy history of the rise and fall of IBM's OS/2 - down to 6% of sales in 1996, compared with Microsoft's 92%, according to market researcher IDC.

Mr Soyring's testimony pointed out that "many of the agreements under which Microsoft licenses tools to software developers restrict use of the tools to developing for Windows", with the consequence that developers often could not use the same tools to develop for OS/2.

Microsoft swiftly pointed out that IBM did exactly the same thing, but failed in its marketing efforts with PC makers when it had the opportunity - and of course it did not help when IBM's PC Company adopted Windows rather than OS/2.

The Department of Justice is now presenting powerful evidence by Mr Warren-Boulton that Microsoft is a monopolist (not illegal in itself, but still denied by Microsoft), and that Microsoft monopolises markets (which would be illegal) by exploiting its operating systems dominance.

Mr Warren-Boulton's expert opinion is that Microsoft does have a monopoly in the x86/Pentium market in excess of 90%.

Furthermore, the market share is protected by "substantial" barriers to entry. Although this is well-understood by those at the coal face, it does require rigorous legal proof, based on economics.

Mr Warren-Boulton's second broad conclusion is that Microsoft has engaged in a number of illegal, exclusionary practices that make it difficult for other browser developers, and limit user choice. Mr Warren-Boulton concludes that Microsoft's practices are not justifiable on efficiency grounds.

Gates video fails to convince

The two video extracts from Mr Gates's deposition did not help Microsoft's case.

Gates: "I answered truthfully"
Microsoft's lawyers sought to minimise the impact by asking Judge Jackson, in his chambers, to rule against the showing of extracts. John Warden, the lead Microsoft lawyer, said the Department of Justice was using the video for "creating news stories day after day after day".

But the judge said he "found it very effective to have Mr Gates's testimony on the subject as to which the next witness is going to testify before me immediately in advance of that testimony" and overruled the objection.

Judge Jackson added: "If anything, I think the problem is with your witness, not with the way in which his testimony is being presented. I think it's evident to every spectator that, for whatever reasons, in many respects Mr Gates has not been particularly responsive to his deposition interrogation."

Microsoft was also active on the public relations front.

Mr Gates gave an interview to Associated Press in which he said that the Department of Justice (DoJ) was trying "to put words in my mouth", which was somewhat ironic as it was Mr Gates's reticence in answering questions that had drawn so much attention to the videotaped deposition.

There was renewed speculation in the last week that Microsoft may similarly agree to another consent decree before the current case in Washington is finished.


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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