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EDITIONS
Monday, 29 March, 1999, 17:10 GMT 18:10 UK
USA versus Microsoft: the 15th week
Bill Gates
Microsoft trial is likely to be delayed
by independent computer industry analyst Graham Lea

The interesting news last week in the Microsoft trial was being whispered in the Washington courtroom between the lawyers and Judge Jackson. It seems that the judge has to preside over a criminal trial shortly, and will have to interrupt his hearing of the Microsoft case, although this has not yet been announced.

Microsoft

This is not unwelcome news for David Boies, the Department of Justice's special trial counsel, who has been asked to represent Unisys in a trial in Philadelphia starting on 15 March.
It is also probable that Microsoft is not unhappy at any delay, in view of the difficulties it has encountered with its first six defence witnesses.

Judge Jackson has been urging both sides to ensure that Microsoft's witnesses have completed their evidence by the end of the month. At the moment, Microsoft is part way through its seventh witness, Brad Chase, and there are five to come. This could then give the possibility of adjourning for much of March, and make it possible for Mr Boies to go to Philadelphia.

The next step is the hearing of rebuttal witnesses. Initially two for each side were expected, but Microsoft successfully argued that because Bill Gates' video depositions have played such a prominent role, Microsoft should be allowed a third witness if it wished.

It is likely the rebuttals will take two weeks or so, with another week for closing arguments. Judge Jackson would then conclude the hearing, and it could be anything from a month to several months before he decides the case.

If the Department of Justice has substantially won, it is almost certain that Microsoft would immediately appeal, and that Judge Jackson would hold additional hearings on appropriate remedies, unless prevented by a stay from the Court of Appeals. Should Microsoft win, which seems less likely, the DoJ would probably appeal. There are no signs at present of Microsoft seeking a second consent decree.

In the courtroom, three witnesses presented evidence for Microsoft last week: William Poole, senior director of business development for Windows; Cameron Myhrvold, vice president of the Internet customer unit, strategic relationships; and Brad Chase, vice president of marketing, personal and business systems division.

Will Poole started his evidence on the 50th day of the trial. His job is to negotiate contracts with Internet content providers (ICPs). David Boies cross examined him for the DoJ, and obtained from him the admission that Microsoft had foregone potential revenues in the order of $100 million/year by not charging for ICPs on the channel bar of IE4. Mr Poole suggested that Microsoft was undertaking a branding exercise, but the suspicion was that Microsoft was building market share at Netscape's expense.

David Boies systematically exposed that Microsoft's contracts with ICPs tended to preclude a content provider from paying money to a Microsoft competitor (and Netscape was always the competitor that Microsoft had in mind).

A worrying feature of Microsoft contracts at the time was a requirement that ICPs had "differentiated content" that gave degraded output with the Netscape's browser. Microsoft claimed that it was introducing "some new technologies" that worked better with Internet Explorer. Microsoft also insisted on restrictions that forbade the mention of Netscape on the web sites of Microsoft's ICPs.

Cameron Myhrvold experienced some criticism when his videotaped demonstration of setting up an Internet connection with Windows 3.1 and Windows 98 was found to have used different modems on the two PCs, making the former connection even slower. The result was that Judge Jackson was confronted by a further flawed demonstration.
Mr Myhrvold proved evasive in his responses to cross examination by Mr Boies, and several times contradicted earlier depositions or testimony.

Some interesting details of a negotiation between UUNet Pipex and Microsoft emerged. In return for Pipex agreeing to change to Internet Explorer and set up Windows NT hosting, Microsoft agreed to pay a bounty of $500,000, although Pipex had initially asked for $3.3 million.
Pipex also received some training credits and help from Microsoft's product consultancy service. The deal suited Microsoft, since it had proved difficult to persuade Demon, Pipex's rival, to use NT for its successful web page hosting business. Microsoft's move was therefore equally intended to help Pipex compete with Demon.

Mr Boies produced Microsoft internal emails that showed how AOL had "force fed" the Internet Explorer browser to its subscriber base by updating the user's files automatically on sign off. The result was that more than 90 percent of active AOL users were said to be using IE by the end of 1997.

Mr Chase played very defensively and was not at all forthcoming in his response to questions. The highlights were that he claimed that Bill Gates did not say at a meeting with AOL "How much do we need to pay you to screw Netscape? [meaning to switch to IE from Netscape's browser]". He also had a different recollection as to whether AOL technically preferred IE to Navigator. His evidence will continue this week.


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.

Links to more Microsoft stories are at the foot of the page.


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