MS/DOJ: Defence fires back at Intuit CEO

The chief executive of personal finance software maker Intuit has come under fire from Microsoft's lead attorney for his written testimony stating that Microsoft should be regulated to ensure that all users and developers have equal access to the Windows operating system. As the government's antitrust case against Microsoft resumed after aholiday recess, Intuit's William Harris was confronted about his testimony that Microsoft should be forced to ensure access to Windows -- something he called 'the principle of operating system neutrality.'

The chief executive of personal finance software maker Intuit has come under fire from Microsoft's lead attorney for his written testimony stating that Microsoft should be regulated to ensure that all users and developers have equal access to the Windows operating system.

As the government's antitrust case against Microsoft resumed after a two-week holiday recess, Intuit President and CEO William Harris was confronted about his testimony that Microsoft should be forced to ensure access to Windows -- something he called "the principle of operating system neutrality."

"I believe there is a role for someone, perhaps the court, to make a distinction between the operating system and applications," Harris said in court. "To the extent that the operating system is an essential service and does not have a competitive substitute, under my understanding of antitrust law such market power should not be used as leverage in other markets."

Microsoft attorney John Warden pointed out to Harris, who is not trained as a lawyer, that the government dismissed its allegation that Microsoft illegally used a monopoly in the operating system market to gain leverage in other markets. Then Warden pressed Harris on what he meant by his suggestion of "remedies" for Microsoft.

"Are you suggesting that the Interstate Commerce Commission be reconfigured into the National Operating System Commission?" Warden asked. "Are you suggesting a National Operating System Commission should be created?"

"I'm not proposing any such thing," Harris responded.

In a 47-page written statement, Harris testified that Windows has become a "choke point" that software application makers and Internet content providers must use in order to reach customers and through which computer users access products and services. In addition to testifying about the importance of the operating system, Harris also detailed the behind-the-scenes negotiations leading up to Intuit's decision to promote Microsoft's Internet Explorer browser in its products and to exclude Netscape Communications' Navigator browser. He testified that promotion of Intuit's Internet content on the Windows desktop was conditioned on Intuit's agreement to discontinue arrangements to distribute and promote Navigator.

Under cross-examination today, Microsoft's attorney continued the company's practice of pointing out how the companies testifying against Microsoft often engage in some of the same corporate behaviors of which Microsoft is being accused. In Intuit's case, Warden quizzed Harris on the market share of the Quicken personal finance software, which Harris agreed was about 80-85%. Harris also testified that Quicken's share of the market has not dropped below 70 percent since 1991, despite competition from Microsoft Money. In addition, QuickBooks has more than an 84%share of retail revenue. Another of the company's personal tax products, TurboTax, has 80% of that market.

"Are they monopoly products?" Warden asked.

"No, sir," Harris replied. "All of those products have effective competition as there are easy substitutes." He said the market is "hotly competitive" and those market shares "bounce back and forth."

"Should Quicken be treated as a common carrier?" Warden asked.

"The difference is that Quicken is not an essential service for which there is no effective substitute," Harris replied.

Harris is the government's 11th witness in the broad antitrust case against Microsoft, which alleges the Redmond, Washington-based software manufacturer has engaged in a variety of illegal and anti-competitive behaviors. Each side is limited to 12 witnesses, with two rebuttal witnesses, and Microsoft is expected to begin calling its first witnesses late next week. The trial opened in October and is expected to last several more weeks.

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

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