MS/DOJ -- AOL: Microsoft "too strong"

Just prior to America Online's purchase of Netscape Communications last year, AOL chief Steve Case considered a go-for-broke strategy. As part of the deal, AOL could drop its use of Microsoft 's Internet Explorer and instead switch to Netscape Navigator, wrote Case, in an e-mail introduced by Microsoft at its antitrust trial.

Just prior to America Online's purchase of Netscape Communications last year, AOL chief Steve Case considered a go-for-broke strategy.

As part of the deal, AOL could drop its use of Microsoft 's Internet Explorer and instead switch to Netscape Navigator, wrote Case, in an e-mail introduced by Microsoft at its antitrust trial.

Such a move could cost AOL customer sign-ups via its desktop agreement with Microsoft, but it would also reverse Navigator's flagging usage share.

"Suddenly they would have more than two-thirds share again!" wrote Case, AOL's chairman and chief executive officer in an internal company e-mail dated Sept. 20, 1998.

But AOL never went through with the plan, and today on the witness stand David Colburn, senior vice president for business affairs at AOL, said AOL never intended to end its use of Internet Explorer. "We really had no plan to leave IE," Colburn said.

Colburn, who had testified as a government witness in the main part of the trial, returned to court today as a "hostile" witness for Microsoft.

Colburn's testimony ended today, and the court won't meet again until Wednesday, when Gordon Eubanks, president and chief executive officer of Oblix, in Mountain View, California, will testify as Microsoft's second rebuttal witness.

Judge Thomas Penfield Jackson seemed bored and impatient with most of today's testimony, and the long list of new documents Microsoft introduced.

At one point, Judge Jackson said of one piece of Microsoft evidence: "A free-floating document doesn't prove anything to me."

Microsoft has cited AOL's purchase of Netscape as a major reason why the government's antitrust case is wrongheaded, because, the company argues, the deal offers strong proof of competition in the software industry.

Colburn -- who described himself today as AOL's "deal guy" -- was called to testify on the "completeness and candor of prior testimony," concerning the Netscape purchase. Colburn testified in the trial several weeks before the purchase was announced, on Nov. 23, 1998.

But on the witness stand today, Colburn answered questions from Microsoft lead trial attorney John Warden in a deep but monotone voice.

There was little hostility between the two, and Warden didn't attack Colburn's credibility, as might have been expected. Instead, Warden took Colburn through a list of e-mail messages and other memoranda written prior to the Netscape purchase.

But although some of the memoranda, such as Case's Sept. 20 e-mail, discuss the possibility of dumping IE for Netscape, Colburn insisted throughout his testimony that "there was nothing with the acquisition" of Netscape that led AOL to believe that it would change its plan to use IE.

That view appeared to be backed up by AOL President Bob Pittman.

In response to Case's Sept. 20 memorandum, Pittman wrote that Microsoft "is too strong to throw them out of the tent -- they can hurt us if they think they have no other option."

In January, AOL signed a two-year contract with Microsoft to continue to use IE.

Microsoft also introduced documents that showed that AOL has been working on a version of Netscape that will work with its interface, but Colburn continued to insist that the company was not planning changes in the browser it used.

Microsoft also showed in court today that AOL is working with Sun Microsystems Inc. to develop Java-based systems that would allow AOL to be accessed anywhere, for example through devices such as pagers and cell phones.

But questioned about these developments, Colburn said, "I don't know what the future holds." The PC, he said, will remain the primary computing device "and that will not change in my view."

Colburn is the first of three rebuttal witnesses Microsoft is calling in the rebuttal phase of the trial. The U.S. Department of Justice and 19 states filed a broad antitrust lawsuit against Microsoft last year. Microsoft has denied all allegations of anticompetitive activities, including the charge that it used its power in the PC operating system market to stifle competition in the browser arena.

(Thibodeau is a senior writer for Computerworld.)

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