Microsoft-DOJ trial hits turning point

The Microsoft antitrust trial, recessed for the holidays, could see more delays because of Judge Thomas Penfield Jackson's decision to add the AOL-Netscape merger to the mix. When the trial resumes on January 4, the US Department of Justice will have only two more witnesses to help make its case. Then Microsoft will begin mounting its defense. The first job for Microsoft's legal team, says a Washington antitrust lawyer, is to offer credible explanations for its behavior, including the 'vivid e-mail and spoken statements' presented by the government.

The Microsoft antitrust trial, recessed for the holidays, could see more delays because of US District Court Judge Thomas Penfield Jackson's decision to add the America Online-Netscape Communications merger to the mix.

When the trial resumes on January 4, the US Department of Justice will have only two more witnesses to help make its case. Then Microsoft will begin mounting its defense.

At that time, Microsoft's legal team will need to address three key areas, according to William Kovacic, a Washington-based antitrust lawyer. First, Microsoft must offer credible explanations for its behavior, including the "vivid e-mail and spoken statements" that have been key to the government's attempt to cast the company in a negative light.

"[Microsoft's] job is to supply the context they say is missing" in what the government has presented, Kovacic said.

Microsoft will attempt to do that by putting nine employees on the stand to tell their side of events covered by government witnesses.

"We will dig down and talk to the people involved, and present factual representations of the events," said Adam Sohn, a Microsoft representative.

Second, Microsoft must prove that consumers benefit from its design and business choices, Kovacic continued. And lastly it must reinforce the contention that the high-tech industry is "extraordinarily dynamic," and therefore Microsoft must move fast or lose ground.

That is where the $US4.2 billion AOL-Netscape deal comes in.

Saying the merger "could have an immediate effect on the definition of the market," Jackson last week urged attorneys for the Justice Department and Microsoft to agree on which merger-related documents Microsoft attorneys may review.

"We are all aware that there has been what might be a significant change in the playing field, as far as the industry is concerned," Jackson said. "In order for the AOL-Netscape deal to be brought to fruition, government approval is required. It seems the Department of Justice will be in possession of the operative documents and that Microsoft may have the right to review them."

Microsoft jumped on the proposed deal, pointing out that representatives from AOL and Netscape testified for the government.

"The [Justice Department's] case has so many facets that it is easy for Microsoft to raise the AOL-Netscape deal as an all-encompassing proof point that Justice's case has no relevance in reality," said Dwight Davis, an analyst at Summit Strategies, in Kirkland, Washington.

Microsoft and Justice Department negotiations over the documents -- and the logistics of both legal teams poring over them -- could delay the already much-delayed trial, Kovacic said.

"It could take a while to collect and distill that information. This could set things back by a few weeks," Kovacic said.

In court last week, the government played a videotaped deposition from Jon Kies, a senior product manager at Packard Bell NEC, which earlier this year was the first company to offer Windows 95 without Internet Explorer 4.0.

"Corporate users, who are particular about the applications they preload and represent the majority of our sales, would prefer not to have a browser preloaded," Kies said.

Elizabeth Wasserman, Washington bureau chief for The Industry Standard, an InfoWorld affiliate, contributed to this article.

Can I get a witness?

The following are scheduled witnesses in the Microsoft antitrust case, when it reconvenes.

U.S. Department of Justice

-- William Harris: president and CEO, Intuit

-- Franklin Fisher: MIT economics professor

Microsoft

-- Bob Muglia: senior vice president, applications and tools

-- Eric Engstrom: multimedia general manager

-- Paul Maritz: group vice president, platforms and applications

-- James Allchin: senior vice president, personal and business systems

-- Joachim Kempin: senior vice president, OEM sales

-- Brad Chase: vice president, Windows marketing

-- Cameron Myhrvold: vice president, Internet customer unit

-- William Poole: senior director of business development

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