InformationWeek.com

Welcome Guest. | Log In| Register | Membership Benefits

October 26, 1998

Microsoft Plots Defense

Antitrust trial reveals Netscape message; judge orders access to sales database

By Stuart J. Johnston

icrosoft's antitrust trial began last week in Washington, and Microsoft spent much of the time cross-examining the government's lead witness, Netscape president and CEO James Barksdale.

Microsoft attorneys revealed a December 1994 E-mail from Netscape chairman Jim Clark to a Microsoft VP, assuring him Netscape had no intention of competing with Microsoft and seeking an equity stake by the software giant in the Web startup. Microsoft also introduced Internet postings and E-mail from Netscape co-founder Marc Andreessen in which he said version 1.0 of Netscape's browser would be free to individual users, as well as documents indicating Netscape may have given the browser to business users as part of a larger deal for server software.

Judge Thomas Penfield Jackson also ordered Microsoft to provide access to its sales databases to government attorneys, a move Microsoft attorneys had strongly resisted.

Throughout the week, the courtroom was dominated by Microsoft lead attorney John Warden, who relentlessly probed Barksdale for weak spots in order to discredit his written testimony. Barksdale will be back on the stand this week.

Microsoft's stock sank on news from the case early in the week, then rebounded strongly after the company announced better than expected financial results. But the outcome of the trial may turn on how economists for both sides define competition in today's rapidly changing markets, according to one antitrust expert. Given the pace of change in the software industry, in which a product is superseded before it wears out, previous economic theories of how markets work may not hold.

"Microsoft's argument is that markets change very quickly and [products] morph from one thing into another," says Gerry Elman, CEO of Elman & Associates, a law firm in Media, Pa. "One day a browser is an application, and the next day it's part of an operating system."

Meanwhile, preliminary hearings have been held in recent weeks for three other lawsuits against Microsoft, brought by Bristol Technologies, Caldera Software, and Sun Microsystems.

Illustration by William Hennessy Jr.