In the midst of cross examination last week, a Microsoft Corp. attorney defending the software company against federal antitrust charges asked Netscape Communications Corp. Chief Executive James Barksdale about a company initiative called Netscape Everywhere.
Barksdale replied that Netscape Everywhere is a promotion for the company’s Navigator Internet browser. But that label also would serve as an apt description for Microsoft’s strategy in the opening days of the landmark case.
Microsoft attorney John Warden kept Barksdale glued to the witness stand for 14 1/2 hours of often contentious cross-examination, trying to cast doubt on key elements of the suit. And perhaps equally important, Warden was framing the case narrowly, as just a continuation of the so-called browser wars between the two companies.
In his opening statement, Warden portrayed “the government as Netscape’s protector in its competitive battle with Microsoft,” and he returned repeatedly to that theme as he interrogated Barksdale about the number and duration of his meetings with U.S. Justice Department officials over the past three years.
The government–the Justice Department and 20 states–prefers to work on a broader canvas. It is trying to paint a picture of the world’s largest software company employing illegal smash mouth tactics against a whole raft of competitors and customers to dry up Navigator’s revenue stream.
Much of what Barksdale is testifying about are predatory actions against Netscape orchestrated by his opposite number at Microsoft, Bill Gates, according to government prosecutors.
In its opening statement, lead government lawyer David Boies laid responsibility for a host of antitrust violations at Gates’ feet and he emphasized that discrepancies between Gates videotaped deposition taken this summer and the billionaire CEO’s e-mails in 1994 and 1995 will support the government’s assertions.
The government is slated to play portions of Gates’ deposition in court and release it to the public on Tuesday.
The trial is the first application of century-old antitrust laws–devised to control business with tangible assets like railroads and oil–to software.
Since Windows runs about 90 percent of the world’s desktop computers, many observers think the outcome could influence the price and variety of software available to consumers.
Both sides in the suit claim to be acting to improve the climate for innovation and expand choice.
Microsoft is pushing hard “to reduce this case into a couple of competitors disagreeing,” observed Shane Greenstein, a business professor at Northwestern University’s J.L. Kellogg Graduate School of Management, in Evanston, Ill.
By the end of the week, executives of the Redmond, Wash.-based firm,said they had succeeded in establishing key points in their defense, among them that:
– Netscape had adequate means of distributing its products, despite government contentions that Microsoft bullied computer-makers, Internet service providers and other browser distributors to stop featuring Navigator.
– In the first half of 1995, Microsoft had a cooperative, business-like relationship with Netscape, at odds with the behavior of a company which, in the next half year, according to the government case, set out to destroy Netscape.
Greenstein said he isn’t sure how effective Microsoft’s damage control has been, especially since there appears to be considerable evidence, mentioned but not yet entered into the record by the government, that the company “did everything in their power to slow down Netscape.”
Microsoft stoutly denies a central allegation: that it made an illegal offer to divide the market for browsers with Netscape at a June 21, 1995, meeting at Netscape’s Mountain View, Calif., headquarters, and began a campaign to destroy its rival after the offer was rebuffed.
The main evidence for the alleged offer are Barksdale’s testimony and notes of the meeting by Netscape co-founder Marc Andreessen, which refer to the “threat that MS (Microsoft) will own the Win95 (browser) market and Netscape should stay away.”
Under questioning by Warden, Barksdale asserted that a Microsoft executive proposed that “a line be drawn” between a browser for the Windows 95 operating system , to be built by Microsoft, and browsers for the far smaller markets for other operating systems, to be built by Netscape.
To sweeten the offer, Microsoft dangled a possible investment in Netscape, Barksdale said.
“The line implied dividing the markets between their products and our products,” Barksdale said, adding that he was stunned by the proposal.
Warden accused Netscape of concocting the market division offer to get back at Microsoft for planning to combine the browser into its operating system, which gave the company an automatic presence on the lion’s share of the world’s PCs.
But a Microsoft account of the meeting appears to support the government’s position.
The June 22, 1995, e-mail to Gates from one of his executives attending the meeting states that the company’s primary goal at the gathering was to “establish Microsoft ownership of the Internet client (browser) platform for Win 95.”
Warden may have scored points when he asked why an account of the market division scheme was not included in a memo about Microsoft’s high-handed market practices sent the following month to the Justice Department by a Netscape-retained attorney.
In comments outside of court, Netscape lawyers attempted to explain away the omission by saying that the memo pertained to a federal investigation of Microsoft that had nothing to do with Netscape.
But in the ultra-competitive environment of Silicon Valley, where interest in Microsoft’s behavior is an obsession, such a legalistic explanation seems far-fetched.
“If it was such a big deal, why wasn’t it in the memo?” asked Richard Gray, a San Jose-based antitrust attorney. “The government needs to come up with an explanation.”
Barksdale likely won’t be off the stand until Tuesday morning, meaning he will have been giving testimony for a full week in what is supposed to be only an eight-week trial.
The angular, folksy 55-year-old Southerner several times offered combative responses, irritating the 57-year-old Warden, a veteran litigator with a booming voice that one courtroom observer likened to “the voice of God.”
Barksdale is such an important witness that “any lawyer that didn’t conduct a scorched-earth cross-examination would be guilty of malpractice,” Gray said.
Nevertheless, the plodding pace of Warden’s questioning prompted U.S. District Court Judge Jackson last Wednesday to set a Monday deadline for the Microsoft lawyer to finish his cross examination.
All told, up to 28 witnesses may testify in the trial, which Judge Jackson is hearing without a jury.
But the outcome of the trial may hinge on the believability of two men, Gates and Barksdale.
Government lawyers are counting heavily on the variance between the content of Gates’ e-mail correspondence with top aides and the responses he gave in his recent deposition to bolster a central theme: That Gates masterminded a plan to crush Netscape and now wants to distance himself from it.
And with only inconclusive written evidence of a market-division plan, Barksdale’s account could weigh heavily.
“At the end of the day,” said Gray, “do you believe Barksdale when he looks you in the eye and says what happened?”
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ON THE INTERNET: Get previous coverage of the Microsoft case, find links to court documents and send questions to a cyberlaw expert at chicagotribune.com/go/microsoft
