Microsoft on Trial: Judge shortcuts 'cryptic' documents

The judge overseeing the Microsoft Corp. antitrust trial Wednesday cut short part of the cross-examination of the government's chief economic witness after Microsoft's lawyers presented documents that suggest America Online Inc., Netscape Communications Corp. and Sun Microsystems Inc. once hoped to challenge the software giant's dominance of the PC operating system market.

The documents, produced by AOL investment banker Goldman Sachs last fall in relation to the AOL-Netscape merger, include a bullet point that suggest AOL, Netscape and Sun should "extend browser to be a more comprehensive desktop application, bundling communications and productivity applications to absorb more share of computing time, with the goal of becoming the user's de facto environment."

In court Wednesday, Microsoft attorney Michael Lacovara presented those document to Massachusetts Institute of Technology professor Franklin Fisher and asked the government's chief economic witness to respond to the apparent plans, which Fisher said he could not do. After a series of similar answers to similar questions, Judge Thomas Penfield Jackson interrupted. "I'd much prefer to hear representatives of America Online, Sun and Netscape as to the significance of the documents and to the extent to which they represent the current state of the relationship," Jackson said. "If the point is to call into question his prognosis, the point has been made and you don't have to go any further." Without comment by the participants, he said, the documents remained "muddled and cryptic"

Earlier in the day, Microsoft attorneys cast aspersions on the motivations of Fisher by suggesting he stood to benefit economically from a victory against the world's largest PC software maker.

To level the charge, Lacovara pointed out that Fisher is also chairman of Charles River Associates, a consulting firm which recently sold shares on the open market for the first time. Several firm members advise companies now readying private antitrust suits against Microsoft. Since a victory in court would relieve future plaintiffs the burden of proving Microsoft is a monopoly, Fisher could only profit from arguing against the company, Lacovara hinted. But Fisher would have none of it. "Since this engagement on this case I've been kept entirely separated from anything having to do with" private suits against Microsoft, the economist replied.

At midday, lead U.S. Department of Justice attorney David Boies dismissed Microsoft arguments out of hand. In fact, he said, the government could easily have argued that Microsoft's own economic witness, MIT business school dean Richard Schmalensee, would profit from a victory for his side. And Schmalensee, unlike Fisher, has not precluded himself from advising private suits, he said. Nonetheless, "we did not say that, during Dean Schmalensee's testimony, that the fact that he was being paid by Microsoft meant his testimony should be disregarded," Boies added. "I don't think that kind of analysis is a very productive one to go down."

Lacovara spent much of the morning grilling Fisher on how he decided Microsoft had monopoly power over the market for PC operating systems. Though the government has maintained Microsoft tried to kill off would-be competitors such as Netscape's Navigator browser and Sun's Java, it has also argued those products fell outside the market for operating systems. Lacovara seized on that point to suggest Microsoft's Windows, in fact, faces many competitors and so cannot be a monopoly.

The Sullivan & Cromwell lawyer suggested that game machines such as those made by Nintendo and Sony Corp. could soon supplant PCs for many functions, particularly for graphics-intensive applications. Fisher conceded that even though many game machines now come with operating systems, he had not considered their popularity when delivering testimony asserting Microsoft had a monopoly that would last for the foreseeable future.

Nor, he said, had he weighed the prospects of hand-held devices such as personal organisers that now often include wireless Internet access.