MS/DOJ: DOJ tries to rehabilitate Barksdale

The US government has sought in court to reverse Microsoft's credibility attack on one of its key witnesses, former Netscape Communications CEO James Barksdale. The government's leading economic witness, had previously told the court that Barksdale may have 'exaggerated' the company's difficulties in distributing its browser through OEM and ISP channels.

The US government has sought in court to reverse Microsoft's credibility attack on one of its key witnesses, former Netscape Communications CEO James Barksdale.

Franklin Fisher, a Massachusetts Institute of Technology economics professor and the government's leading economic witness, had previously told the court that Barksdale may have "exaggerated" the company's difficulties in distributing its browser through OEM (original equipment manufacturer) and ISP (Internet Service Providers) channels.

"We're basically out of that," Barksdale testified last October.

Fisher's comment came after Microsoft attorney Michael Lacovara presented him with documents prepared by investment bank Goldman Sachs just prior to America Online's acquisition last year of Netscape. They showed Navigator was being distributed by 22% of the PC makers, and 24% of the top Internet service providers (ISPs).

But David Boies, the lead government attorney, took a harder look at what Barksdale offered the court in his written testimony, which included company-by-company summary of Netscape's OEM distribution agreements. In it, Barksdale complained that none of OEM agreements included an icon on the desktop. In some cases, Navigator was included on a separate CD-ROM for the user to install.

After reviewing that, Fisher reversed his earlier statement on Barksdale's testimony, and said what Microsoft had done was to force Netscape to distribute its browser through "less effective" and "more costly" distribution channels.

During Fisher's weeklong testimony, Microsoft argued repeatedly that Netscape wasn't cut off from distributing its browser, and cited a Goldman Sachs study that reported that there were 160 million downloads of the Netscape Navigator browser via the Internet -- a figure the government has scoffed at as being implausible. There are only 100 million or so users of the World Wide Web, and market studies continue to show Netscape losing market share to Internet Explorer.

To further back up Barksdale's point that the OEM channel, in particular, was the most important distribution channel, Boies cited Microsoft's own reports. The biggest reasons users pick Internet Explorer is, "It came with my computer," said one Microsoft document.

"Once Microsoft had produced a satisfactory browser there was little reason for people who got Internet Explorer with their computer to bother acquiring Netscape," said Fisher.

Boies also attacked Microsoft's assertions that AOL was planning to stop using Internet Explorer technology in its proprietary interface and switch to Netscape with the goal of developing it into a rival platform.

"I think there is considerable evidence that they (AOL) don't think that is a winning game and they are afraid of doing it," said Fisher.

Fisher's assessment was based after reviewing a series of documents, which were introduced in court but kept under seal or from public disclosure. The documents, offered by the government, were from AOL.

Boies also ran sections of the videotaped deposition of AOL Chairman Steve Case, where he asserted: "We did not buy Netscape because of the browser business. Indeed, we bought Netscape some extent despite the browser business, because we were interested in being a portal business and ... e-commerce business and having their brand name and having their team."

Boies finished his re-direct examination of Fisher by introducing a series of e-mail messages written by Microsoft public relations employees on January 5 this year seeking data that put Netscape in a favorable light.

"What data can we find right away that shows Netscape browser share is still healthy?" wrote Microsoft corporate public relations spokesman Greg Shaw. "The government is introducing a bunch of data showing NS (Netscape) headed down big time and Msft (Microsoft) way up."

A Microsoft official wrote back: "All the analysts have pretty much come to the same conclusion, which is that NSCP (Netscape) share is declining and IE is gaining."

Fisher said the Microsoft e-mail exchange "speaks for itself, rather louder than most."

Fisher's testimony was due to wrap up today. On Monday IBM executive Garry Norris, the company's lead Windows licensing negotiator from 1995 to 1997, will take the witness stand.

The U.S. Department of Justice and 19 state attorneys general last year sued Microsoft in federal court, alleging that the software giant has engaged in illegal business practices, including anticompetitive behavior in the Internet browser market. Microsoft has denied all charges.

(Patrick Thibodeau is a senior writer for Computerworld.)

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