Judge stays schtum, case postponed in antitrust suit

The judge hearing the antitrust lawsuit filed against Microsoft by the US Department of Justice called lawyers for both sides into his chamber after hearing nearly three hours of argument on Microsoft motion for summary judgement - but he gave no indication of when he would rule or in whose favor. If the judge grants Microsoft's motion he will rule on the case without going to trial. According to one report the case, originally set to be heard next week, has already been postponed to October.

US District Court Judge Thomas Penfield Jackson heard arguments today in Microsoft's attempt to obtain summary judgment of an antitrust lawsuit filed against the software giant in May by the US Department of Justice and 20 states.

If the judge grants Microsoft's motion for summary judgment he will make a ruling on the case without going to trial, which has been scheduled to start September 23. But Microsoft and the DOJ have tentatively agreed to postpone their pending antitrust trial until Oct. 15, according to a report on the Dow Jones News Service, which cites one unidentified source close to case.

Jackson called lawyers for both sides into his chamber after hearing nearly three hours of arguments, but he gave no indication of when he would rule or in whose favor. Lawyers said they discussed only topics related to the management of the case with the judge and declined to say whether there might be a quick

ruling or a postponement, which Microsoft has requested.

After the hearing William H. Neukom, Microsoft's lead attorney, repeated Microsoft's long-standing contention that its Internet Explorer browser is fully integrated into the Windows 98 operating system. The company has done nothing to prohibit the distribution of software in the marketplace, he said.

"What you had here was a rambling attempt by government lawyers to shore up and inflate a feeble complaint against Microsoft Corporation," Neukom said.

But Justice Department lawyer David Boies told reporters after the hearing that the government presented a "clear and convincing story" showing that Microsoft has attempted to maintain and spread its monopoly in violation of the Sherman Antitrust Act.

"We can't allow a monopolist to eliminate all competitors," Boies said. "It's not an issue of innovation of straight forward product design."

Boies, who in the hearing cited many internal Microsoft memos including some written by Microsoft Chairman Bill Gates, said today's hearing was a preview of the trial.

Microsoft was so intent on wresting dominance of the browser market from Netscape Communications that it was willing to sacrifice other Internet-related services, Boies said. He cited a deposition that he said showed that Microsoft used its monopoly power to persuade America Online to choose Internet Explorer over Netscape Navigator as its default browser. According to Boies, AOL chose Internet Explorer even though it was an inferior product because Microsoft promised to give AOL a prominent spot on its Windows 95 desktop. In the deposition, a Microsoft executive likened the AOL-Microsoft deal to "a bullet through the head" of Microsoft Network (MSN), the company's former proprietary online service, Boies said.

During the hearing both sides relied on familiar arguments but chose some new metaphors in their attacks on each other.

Microsoft attorney John Warden said the government has treated Netscape as if it were a "commercial ward" of the state.

There is no evidence that Internet Explorer has hurt Netscape or any other competitor, Warden said, adding that documents submitted to the court showing that 12 million copies of Netscape Communicator were downloaded from the Internet in July and August prove there has been no "foreclosure" on its market share.

"These facts prove the dynamics and highly competitive nature of the marketplace," Warden said.

Warden further argued that the government's claim that Microsoft has illegally tied Internet Explorer to its operating system was undercut by a June appeals court ruling in a separate case concerning whether the company violated the terms of a 1995 consent decree. The ruling said that the integration of the Internet Explorer browser and Windows 95 operating system is not anti-competitive if the result benefits consumers, according to Microsoft officials.

Microsoft will not call Gates to the stand if there is a trial, according to Warden. Gates is not on the government's list of witnesses either, Boies said, adding that the Justice Department doesn't need him to make its case.

In his rebuttal, Boies said Microsoft has no basis for a summary judgment and the company is simply trying to avoid a public trial.

He said Warden failed to address the fact that charges against Microsoft are based on its monopoly

position in the operating system market, and said there is convincing evidence that Microsoft's competitors were hurt when it began giving away Internet Explorer.

"You cannot have a clearer case of predatory pricing," Boies said. There has been a very dramatic shift to Internet Explorer in terms of usage, with the Microsoft product grabbing 50% of the market in the short time it's been out, he added.

In addition, the Court of Appeals ruling on the consent decree was not based on a finding of fact, which will be done in the upcoming trial, Boies said. "The Appeals Court makes it clear that it's not deciding an antitrust case."

In citing several memos either to or from Gates, Boies said the language used reveals that the motivation for Microsoft's business decisions is "based on doing away with Netscape."

"The case will be born out by memos from Gates," Boies said.

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