Microsoft Corp. touts the ability of its software to meet the wide-ranging needs of consumers with the advertising slogan: “Where do you want to go today?”
If the question were posed to Microsoft lawyers, the answer might be: Straight to the court of appeals.
The end of the third week of its antitrust trial finds the Microsoft defense team nursing bruises from a rough handling by Judge Thomas Penfield Jackson. Jackson’s irritation with the plodding pace and what he termed the “misleading” questions of Microsoft lawyer Theodore Edelman blunted Edelman’s cross-examination of a government witness from Apple Computer Inc.
It also underscores the need for Microsoft to play to two audiences–Jackson and the District of Columbia Court of Appeals, which, in the event of an adverse decision, will almost certainly hear a Microsoft appeal.
Microsoft lawyers “are saying, `the likelihood is that we’re not going to win at the district court level. We’re going to try, but we recognize that it’s an uphill fight. We think we have a better chance at the D.C. Court of Appeals and we’re going to play to that audience in every way we can’,” said Stephen Axinn, a New York-based antitrust attorney.
That approach may mean more collisions with Jackson. Since appeals are not heard on new evidence but on scrutiny of the trial record, Microsoft needs to build the broadest possible basis for review, which could entail more of the lengthy, detailed questioning that has drawn Jackson’s ire.
The government, meanwhile, seems to have made headway in establishing a central thesis of its case–that Microsoft engaged in a lengthy pattern of heavy-handed conduct to maintain the dominance of its Windows operating system.
Last week, Apple senior vice president Avadis Tevanian offered testimony that echoed similar statements by earlier witnesses from Netscape Communications Corp. and America Online Inc.
Tevanian said Microsoft bullied and threatened Apple in order to neutralize software that could evolve into a rival to Windows.
“There’s evidence that repeats itself as a (Microsoft) strategy,” said Eleanor Fox, a professor of antitrust law at New York University. “There’s such a pattern on the part of Microsoft’s behavior.”
A still bigger, higher profile government witness waits in the wings. Steven D. McGeady, a vice president of Intel Corp., Microsoft’s most important partner, is expected to testify beginning Monday or Tuesday.
Intel is under Federal Trade Commission investigation for questionable practices in maintaining a market dominance in microprocessors–the brains of personal computers–roughly equivalent to Windows’ overwhelming position in operating systems.
Because of the shared dominance, Windows and Intel technology are sometimes referred to as Wintel. The sensitive nature of having one half of the so-called Wintel platform testifying against the other half is evident in the special arrangements for McGeady’s appearance.
Unlike the other witnesses, McGeady will not file written testimony before he takes the stand, according to government sources. That way, Intel can supply needed information without appearing to be an overly active participant in the case against Microsoft.
McGeady is expected to testify about Microsoft pressure on Intel to halt development of multimedia and Internet software.
Government lawyers plan to set up McGeady’s testimony by showing another portion of Microsoft CEO Bill Gates’ videotaped deposition.
Gates’ first video appearance in court, last Monday, was a public relations disaster. The world’s richest man came across as a sour, resentful figure offering testimony that at times contradicted his subpoenaed e-mail correspondence with other Microsoft executives regarding competition against Netscape, Apple and other rivals.
Microsoft’s broadest defense is that it plays no dirtier than its competitors, who, according to the Redmond, Wash., company, have enlisted the government to win in the courts what they could not win in the marketplace.
“Microsoft’s competitors have viewed the government as part of their overall strategy in competing with Microsoft,” said company spokesman Mark Murray.
Furthermore, says Microsoft, its hard-nosed tactics haven’t foreclosed competitors from the marketplace, nor harmed consumers, two key metrics in defining an illegal monopoly.
Microsoft lawyers elicited grudging agreement from both AOL and Netscape witnesses that their products are widely distributed.
In particular, Netscape CEO James Barksdale conceded that the Mountain View, Calif., company distributed millions of copies of its Navigator browser at the same time it claimed Microsoft was leaning on computer-makers to drop Navigator in favor of Microsoft’s Internet Explorer.
But government lawyers maintain that the numbers are misleading. They argue that Microsoft used the dependence of computer-makers on Windows–it runs 90 percent of all personal computers–to force them to give preferential treatment to Internet Explorer.
While Microsoft displays Internet Explorer prominently on the Windows desktop screen, Netscape’s Barksdale testified that he has been forced into more expensive and less effective means of distribution.
The government has presented internal Microsoft documents that recognize the edge. One refers to “the large chunk of customers who use whatever browser comes with/is integrated with their operating system.”
Another pillar of the Microsoft defense is that its approach has been good for consumers. Before the introduction of Internet Explorer, Microsoft argues, Netscape had 80 percent of the browser market.
Besides offering choice, Microsoft says it gave consumers the added benefit of making the browser free.
But the government has introduced evidence that Microsoft planned to charge for the browser and decided otherwise, not to benefit consumers but to dry up revenue for Netscape.
Since making the browser free and pairing it with Windows, Internet Explorer’s market share has shot up to about 50 percent and is still growing. That puts Microsoft on the verge of controlling consumer access to the Internet, government lawyers say.
A key element of Microsoft’s case is its insistence that weaving the browser inextricably into the operating system–turning two products into one–is good for consumers because is allows for smoother transition between desktop applications and the Internet.
The government says combining the two software products was done to force Internet Explorer onto Windows’ huge audience.
The court of appeals already has sided with Microsoft in a related case. Last June, the appeals panel ruled that a business is free to design products any way it wants, unless the design is done strictly to hurt a competitor.
Even then, the court said, competitive damage may be tolerated if there is a benefit to consumers.
Jackson signaled his interest in exploring this issue Thursday when he asked Apple executive Tevanian a series of questions about how Apple viewed the relationship between the browser and the operating system.
Tevanian said Apple experimented with a browser enmeshed in the operating system, but achieved a better result for consumers by keeping the Internet software separate.
Microsoft has had one clear success. The trial almost certainly will drag on into January or February or beyond, far longer than the eight or so weeks originally envisioned by Jackson.
