The U.S. Department of Justice alleged yesterday that Microsoft Corp. attempted to divide the personal finance software market with Intuit Corp., according to evidence presented at the company's antitrust trial yesterday.
A Microsoft memorandum introduced in court outlined in strikingly blunt terms a plan to avoid competition with Intuit. But the memorandum, which is as close to a "smoking gun" as this trial has seen, is nearly a decade old and may ultimately have little direct bearing on a case that has largely focused on the browser market.
Microsoft attorney John Warden objected strongly to the government's use of the memorandum, saying it was "totally beyond" the direct testimony of Microsoft Vice President Brad Chase, who was on the witness stand yesterday.
But government attorney David Boies said the memorandum "shows a pattern of anticompetitive behavior" by Microsoft "and something the witness (Chase) was aware of at the time."
Chase, along with Microsoft Chairman and Chief Executive Officer Bill Gates, received a copy of the March 1990 memorandum written by a former Microsoft executive, Mike Slade, summarizing a meeting with Intuit executives.
The memo says: "We'd rather not compete with you. Instead of growing the market we'd just both spend a lot of $ fighting each other for share. So how about this? You guys continue to do a great job on DOS and Mac. We're investing in a line of Windows biz/home products anyway, so we'll just round out the line and together we'll grow the business."
In its antitrust case against Microsoft the government has alleged that the software giant attempted to divide the browser market with Netscape Communications Corp. in 1995. Specifically, it's claimed that Microsoft had proposed to Netscape that it stay out of the soon-to-arrive Windows 95 market in exchange for having control of other areas.
Boies asked Chase a series of question about the Intuit memorandum, but Chase said he couldn't recall any proposal like that ever being made.
Judge Thomas Penfield Jackson, who seemed reluctant to admit the memorandum into evidence, cut off Boies from that line of questioning after it appeared he was making little headway with Chase.
Outside of court, Bill Neukom, Microsoft vice president and head of the company's legal affairs department, defended Microsoft's antitrust compliance practices but also said that things have changed over the decade.
"In 1990 I think it was fair to say that this company was spending less time advising its clients about antitrust issues then it has since then," said Neukom.
In court earlier yesterday, the government challenged a Microsoft video that purported to illustrate the speed and ease of downloading a browser with a video of its own.
The government video, played in court this morning, covered the installation process involved with downloading a copy of the Netscape Navigator browser that had been customized for America Online Inc.
Microsoft's videotape skipped over the installation process.
The government video pointed out a discrepancy in the Microsoft version. Chase, in early testimony, said that once the browser was downloaded a Navigator icon immediately appeared on the Windows desktop. The government video showed otherwise.
Chase said that his earlier testimony was "incorrect and I apologize for that."
In other matters, Boies responded to questions from reporters yesterday about potential remedies that the government might seek if it wins the antitrust case. For the most part, Boies said it would be "premature" to discuss remedies until the court issues a verdict.
However, he did rule out any regulatory remedies -- remedies that involve some level of governmental control such as those faced by an electric utility.
"I don't think anybody is advocating a regulatory remedy," said Boies. He did not elaborate.