Microsoft Trial Update: AOL's Colburn Ends Week Two Of Microsoft Trial - InformationWeek

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Microsoft Trial Update: AOL's Colburn Ends Week Two Of Microsoft Trial

WASHINGTON, D.C. -- The second week of the landmark Microsoft Corp. antitrust trial ended Thursday with Microsoft and the government both claiming victories over the week's events.

The day ended without the showing of the much anticipated videotape deposition of Microsoft Chairman Bill Gates. Attorneys for both sides said the questioning of David Colburn, senior vice president of business development at America Online Services Inc., took longer than expected.

Colburn completed his testimony under cross-examination by John Warden, Microsoft's lead attorney in the case. Warden hammered Colburn on questions relating to what Colburn refers to as the "virtually exclusive" deal AOL has with Microsoft to use Internet Explorer as its default browser.

Warden's line of questioning appeared targeted at showing that AOL selected Microsoft's browser over Netscape Communications Inc.'s Navigator browser because the product was technologically superior.

Warden also tried to show that AOL and Netscape had entered into an exclusive deal regarding AOL's Instant Messaging technology, which precluded AOL from promoting or advertising a competitive browser, namely Microsoft's IE.

Warden also charged that Netscape and AOL declined to participate in an attempt to promote open standards in the messaging arena because they sought to protect AOL's dominance in the area.

Warden asked why AOL did not participate in the Internet Engineering Task Force's attempt to establish a standard for instant messaging, an effort that had the support of 30 companies, including Microsoft.

"AOL chose not to because AOL had a dominant business" and wanted to remain proprietary rather than open," Warden asked Colburn.

"No," replied Colburn. "We invested significant resources in building a product that had user following. It was our sense that Microsoft might use the standards process to devalue" the AOL offering. AOL viewed it as Microsoft's "attempt to get access to our product or our audience," he said.

"In other words, Microsoft might be able to compete with you," Warden asked.

"No, they can compete today," Colburn said. "My understanding is what Microsoft was trying to do was get inside access" to AOL's technology and AOL's customers, he said.

In addition, Warden made a point of trying to establish that Microsoft's deal with AOL did not foreclose the market from Netscape.

"Isn't it true that all AOL subscribers have a free and unfettered choice to get the Netscape browser [from AOL's online service] if they so choose," he asked.

"Yes, if they can find how to get to it. . . . It's not trivial . . ." Colburn said.

On re-direct, David Boies, the government's lead attorney in the case took 35 minutes to bring Colburn's testimony back to the issues the government has laid out. Boies focused on Microsoft's alleged use of its Windows monopoly to sway AOL to select IE over Navigator, and that during negotiations leading to the March 1996 deal between the two companies, Microsoft continued to sweeten its offer to AOL until finally agreeing to place AOL in its Online Services folder on the Windows 95 desktop.

Boies reintroduced an E-mail from an AOL executive that attended a meeting with Microsoft's Gates. The E-mail, which is an interpretation of what occurred at the meeting, read: "Gates delivered a characteristically blunt query: How much do we need to pay you to screw NS [this is your lucky day.]"

Outside the courthouse following Thursday's proceedings, Bill Neukom, Microsoft's general counsel and senior vice president of law and corporate affairs, said Microsoft was successful in "undermining the government's allegations" against Microsoft.

He said Microsoft was able to show that the tying issue is moot because Windows and Internet Explorer are seamlessly integrated. Neukom also said the government's claims that the company foreclosed Netscape from the market were shown to be groundless because Netscape does "carpet bombing" to get its browser in the hands of millions of users, and the company has enjoyed "very effective deals with high-value OEMs" to distribute Netscape software.

Neukom also ridiculed the government's claims about the notorious June 21, 1995, meeting where Microsoft is alleged to have proposed dividing the browser market. Neukom called it a "coincidence of facts" that Netscape co-founder, Marc Andreessen, was asked to take detailed notes about the meeting and that those notes found their way to an outside attorney for Netscape and the U.S. Department of Justice issued a civil investigative demand to the company within days.

Meanwhile, the trial resumes on Monday with Avie Tevanian, Apple Computer Inc.'s senior vice president, software engineering, taking the witness stand as the government's third witness.

Boies said if there is time for two witnesses next week, the government will call Glenn Weadock, president of Independent Software. The following week, Boies said the government plans to call Steven McGeady, vice president of content group and health technology initiative, Intel Corp.

The trial was originally projected to run for 6 to 8 weeks. However, Boies said he doubts that it will end in that time frame. Asked if the trial would be done by Christmas, he said: "I hope so, if not I'll have a very unhappy family."

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