MS/DOJ: Once again, e-mail steals spotlight

Former Symantec chairman Gordon Eubanks has testified that competition is alive and well in the software industry at Microsoft's antitrust trial - but reporters were more interested in a raft of internal e-mail messages detailing how Microsoft leaked a story to the press regarding the merger of America Online and Netscape Communications.

Former Symantec chairman Gordon Eubanks has testified that competition is alive and well in the software industry at Microsoft's antitrust trial, as he did at his deposition weeks ago.

But reporters were more interested in a raft of internal e-mail messages detailing how Microsoft leaked a story to the press several months ago regarding the merger of America Online and Netscape Communications.

The e-mail messages between Microsoft Chairman and Chief Executive Officer Bill Gates and his corporate public relations executive, Greg Shaw, involve a memo Gates wrote to his staff on Dec. 1, 1998, about the merger, how it would have an impact on browser prices, and questioning why Netscape was worth $US4 billion despite making its browser free.

A Microsoft lawyer tried to admit the original Gates e-mail to his staff as evidence Monday during the questioning of AOL Vice President David Colburn. David Boies, the government's lead attorney, objected that the document was self-serving, that it was written after the trial, and that Gates was not subjected to cross-examination on the subject. US District Court Judge Thomas Penfield Jackson refused to admit the document as evidence.

The e-mail came to light today in a motion filed by the USDepartment of Justice and 19 states, which are suing Microsoft for illegal use of monopoly power in the desktop PC operating system market. The government is seeking to force Microsoft to turn over additional exchanges.

In portions of the e-mail exchange that were turned over to the government, Shaw writes to staff members that the Gates memo was provided to Associated Press reporter Ted Bridis. "Reporters will likely be upset that we just gave it to AP," Shaw writes, then advising his staff to explain to others "that it's an internal e-mail not intended for broad distribution."

In a follow-up exchange two days later, Gates writes to Shaw and others, "I am really surprised we restricted the distribution of this so much. My comments are the best tool we have to shift the dialog and get people to understand who gave consumers the fair price for browsing. Just putting in AP doesn't have much impact I don't think. At least we should give it to MAGAZINE people also."

The government filed the motion because an earlier piece of mail from Shaw to Gates was redacted, citing "Privileged Material," according to court papers. The motion was made public while Gates continued his visit to Washington, D.C., appearing at a Boys and Girls Club event with basketball star Shaquille O'Neal. At that event, Gates was asked whether his company was resigned to losing the antitrust case and what the company's next steps would be.

"What Microsoft has done in terms of making Windows better for us on the Internet is a fantastic thing and I'm surprised we have to defend that at all," Gates said. "What we do is great. The competition is great. This is an industry that works very well."

That message coincided with what Eubanks had to say on the witness stand today. While Symantec was both a partner and competitor of Microsoft, Eubanks, who was company chief executive for 15 years before resigning in April, maintained that companies like Microsoft need to keep innovating in their software products because the market changes so fast. "This is an industry that changes so rapidly," Eubanks said. "You either have to be aggressively looking toward the future or the future will overtake you ... You don't have time to rest on your laurels and rake in the gold."

Eubanks also held up his Palm Pilot at one point to illustrate where competition for PC operating systems is coming from. "This is a very powerful computer," Eubanks said. "This type of stuff is changing how we use computers."

(Elizabeth Wasserman is the Washington bureau chief for The Industry Standard.)

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