Microsoft Trial Update: Microsoft Says Barksdale Misinterpreted Meeting - InformationWeek

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Microsoft Trial Update: Microsoft Says Barksdale Misinterpreted Meeting

Microsoft Corp.'s attorney blasted Netscape Communications Corp.'s chief executive for misinterpreting the events at a 1995 meeting between the two companies that is a crucial part of the government's claim against Microsoft.

John Warden, Microsoft's lead attorney in the landmark antitrust case, portrayed Barksdale as nothing more than a frustrated executive that mischaracterized Microsoft's good intentions to share technology and work with Netscape as a threat to run the company out of business if Netscape did not cooperate with a proposal to divide the browser market.

Marc Andreessen, Netscape's co-founder and chief technologist, attended and took notes at the now notorious meeting at Netscape's headquarters in Mountain View, Calif. Andreessen's notes, which Microsoft entered into evidence in court Thursday, note that Chris Jones, then of Microsoft's systems division, said: "What MS needs is someone -- a partner -- who is going to take those core services and build on top of them. MS [has] some ideas about what these features are, where the line is, and who the partners should be. All of the relationship points revolve around critical fact of -- is Netscape the kind of company that's going to partner with MS on this or not? Will MS & NS be able to cooperate & agree on the line, where it's drawn, etc. If not, companies will compete. If so, then arrangement can be highly beneficial, with 'aligned interests'."

Andreessen's notes indicate that Barksdale took exception with the "line" that Jones brought up. Barksdale expresses "concern about what the line is, where it will move, who is to say where it will move, etc. We would like assurances as to who gets to move the line, who says the line will be moved, etc."

Then, according to Andreessen's notes, Microsoft's Dan Rosen's "basic assumption" is that together "we're going to make the market grow more quickly than we will separately. So if we can do what we're talking about, the market becomes bigger faster."

In court, pressed about what the "line" meant, Barksdale said "the line implied that above the browser on Windows 95 we could develop applications, and that they were going to take their browser and put it together with the operating system and we'd be foolish" for developing a Windows 95 browser."

Barksdale said he knew "Microsoft intended to build a browser and I thought we'd compete on the merits. I asked where is this line going to be drawn. It irritated me that they brought up this line," Barksdale said testily, acknowledging that he felt Microsoft's implication was to be a threat to Netscape.

Warden later asked Barksdale if there was any reference to a threat in Andreessen's notes of the meeting. "Marc didn't have the same interpretation I had," Barksdale responded.

Warden then entered a document prepared by Gary Reback, an attorney with Wilson Sonsini Goodrich & Rosati in Palo Alto, Calif., who had represented Netscape and had filed a document with the DOJ in response to a civil investigative demand from the government. Reback's document detailed many of Netscape's dealing with Microsoft, but did not include any mention of a perceived threat during the June 21 meeting. Nor did it include any reference to a June 2, 1995 meeting between the two companies, that Barksdale characterized as "friendly and non-threatening" in an E-mail.

"Why would you omit that meeting," asked Warden, continuing to comb through Reback's document. "The detailed chronology presented to the Justice department doesn't say anything about this stunning proposal to divide markets, does it?"

"No, sir," replied Barksdale.

"Wouldn't you want your counsel to know that a stunning, naked, market-splitting" proposal had been made," Warden asked.

Barksdale said he did not decide to tell his lawyers about the June 21 offer to divide markets until Compaq Computer Corp. officials told him that they were backing out of an OEM deal to make Netscape Navigator the default browser because Microsoft threatened to cut off their Windows license. "After the Compaq incident I said I'd had enough," Barksdale said.

"I suggest if you look at defense exhibit 1 [the Reback document] the only fair conclusion is that Marc Andreessen invented or imagined a proposal to divide markets," Warden thundered, and accused Barksdale of signing onto the "invention" to assist in this lawsuit.

Barksdale called Warden's assertion "absurd."

Well, "is there anything in your written record" that shows evidence that dividing the market was discussed at that meeting, Warden asked.

"All I can say is I was there and I know what I heard," Barksdale shot back. "I know I was there and you weren't."

The exchanges between Barksdale and Warden often grew heated. At one point, U.S. District Judge Thomas Penfield Jackson joined in the fray and warned Warden in a loud voice. "You do not need to take this man through every detail of this document. The document speaks for itself. You're wasting your cross examination time," Jackson said, wagging a finger at Warden.

Meanwhile, Warden noted that in his pre-trial deposition, Netscape's Andreessen said he took such detailed notes of the June 21 meeting because "it was a meeting I thought I'd want to remember in great detail because it seemed like it might be topic of discussion with the U.S. government on antitrust issues."

Christine Varney, a Washington attorney representing Netscape said she believes Andreessen was being sarcastic.

Outside the courthouse, William Neukom, Microsoft's general counsel and senior vice president of law and corporate affairs, said that "what really happened in that meeting was that Netscape was trying to draw its own line" to protect its dominant market share in the browser market.

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