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From...

Speculation runs wild on Microsoft case

May 21, 1998
Web posted at: 3:45PM EDT

by Brian McWilliams

(IDG) -- While much of the government's evidence against Microsoft is under seal, the complaint filed Monday by the U.S. Department of Justice provided excerpts of potentially damaging internal Microsoft documents. At a press conference, Assistant Attorney General Joel Klein read from a February 24, 1997, memo by Microsoft's Christian Wildfeuer.

According to Klein, "The evidence ... demonstrates that Microsoft's use of exclusionary and predatory practices was not designed to help consumers, but rather to make sure that Microsoft could crush its competitors. As one key Microsoft executive [Wildfeuer] candidly stated, 'It seems clear that it will be very hard to increase our browser market share on the merits of our browser alone. It will be more important to leverage Windows to make people use our browser instead of Navigator'."

Also cited in the Justice Department's complaint are internal memos by Microsoft executives Jim Allchin, Brad Chase, and Kumar Mehta.

Legal experts are saying it appears the government has a strong case and is likely to prevail in court.

"[I'm] somewhat surprised by how strong the government's case looks," says John Briggs, head of the antitrust practice for the Washington DC firm Howrey & Simon. "At some point Microsoft officials are going to have to take the stand and explain why the jury should not believe the contemporaneous document but should believe some other explanation of it offered a year or two later. And that is a hard task for even the best lawyers."

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Briggs adds that the government will have a harder time persuading the judge to agree with one of its proposed solutions for remedying the situation: "It's hard for me to imagine that the court would prohibit Microsoft from distributing a bundled version of its operating system and Internet Explorer unless Microsoft also put Netscape's browser on the OEM's machine. That just doesn't strike me as realistic--it would be, if not unprecedented, very unusual."

Indeed, in full-page ads running in newspapers across the country, Microsoft has compared the Justice Department's request to forcing Coca-Cola to distribute Pepsi.

But Ed Black, an attorney and president of the Computer & Communications Industry Association, says that there are problems with Microsoft's Coca-Cola analogy.

As Black describes it, "Imagine that Coke also controlled 90 percent of the grocery store outlets, and they said we're not going to let Pepsi, 7-Up, or anybody else have any shelf space. It's only going to be Coke on the grocery store shelves. That's the metaphor. In that kind of a setting, [forcing Coke to distribute Pepsi would be] ... getting a reasonable shot for their customers to look at, to have exposure to, to have the option to choose their product. There's nothing out there that says the consumer has to pick Netscape as his browser. It's saying we're going to make sure there's some shelf space so he gets to look at and have it as an option."

Nonetheless, Richard Gray, of high-tech law firm Bergeson, Eliopoulos, Grady & Gray, believes Microsoft's courtroom strategy will be to prove that its browser bundling ultimately benefits consumers.

"First they're going to dispute that they have monopoly power in the desktop operating system," says Gray. "I think that fight they're going to lose. Then what they're going to say is even if we do have monopoly power in the operating system marketplace, all we're doing is bringing new functionality into the operating system software, and that's a consumer benefit, that's a plus. There's nothing anticompetitive about that. It's simply increasing consumer value by giving them more bang for their buck."

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