Strategies Set in Microsoft Antitrust Case

Article excerpt

WASHINGTON -- After nearly a year of testimony, acrimony and debate, the opposing parties in the antitrust suit against Microsoft appear to have settled on strategies for the upcoming trial.

For Microsoft -- accused of bullying competitors, bribing allies and forcing customers to use the company's products, like them or not -- one general defense has come down to this: So what? Everyone does it. That is how business operates.

As John Warden, a Microsoft lawyer, put it: "All companies compete; that's how the market works."

But lawyers for the Justice Department and 20 state attorneys general who filed the landmark lawsuit against the software giant four months ago predict that Microsoft's own leaders will prove the government's case. In hundreds of e-mail messages and memorandums written over the last several years, most of which will be entered as evidence, these executives unabashedly laid out their plans and intentions.

What the documents show, said David Boies, a Justice Department lawyer, is that Microsoft "bribed people to take their products, used predatory pricing and other anti-competitive tactics."

If every company behaves this way, as Microsoft asserts, "then we're going to be very busy" in the coming years, one antitrust official remarked.

As the two sides offered their competing strategies on Friday, Judge Thomas Penfield Jackson of the U.S. District Court seemed equally willing to challenge both.

For example, one part of the government's suit accuses Microsoft of requiring Internet service providers to support Internet Explorer, Microsoft's browser for navigating the World Wide Web, in exchange for receiving promotional space on a part of the main Windows screen known as the channel bar.

"If your browser is so good, why do you need all those covenants anyway?" Jackson asked.

Warden, the Microsoft lawyer, responded that the arrangements were simply "promotional marketing agreements, very common tools of competition, just like Pepsi makes a deal with Pizza Hut to feature Pepsi exclusively."

The judge responded that such marketing arrangements did not exist in the computer industry until Microsoft introduced them.

"But Coca-Cola certainly does it," Warden said.

"Yes, but Coke is not a monopoly," the judge answered. As he had noted earlier, the rules governing how a monopolist can behave are very different from those governing other companies.

Jackson seemed skeptical at times of the government's position, too. Stephen Houck, an assistant attorney general from New York, read from several internal memos and documents that the government has introduced as evidence. One was a note that an employee sent to Bill Gates, Microsoft's chairman, in March 1997 suggesting ways to increase use of Internet Explorer and take customers away from Netscape, the company's main competitor in the Web browser market.

"It would be a mistake not to bundle Internet Explorer with Windows," Microsoft's operating system, the employee wrote. "If we take Internet Explorer away from the operating system, Netscape users won't switch to us."

Jackson then said rhetorically: "These documents are not necessarily inconsistent with the behavior of a competitor."

To that, Houck responded: "No, it is inconsistent to use your monopoly position in operating systems to gain market share and disadvantage competitors. …