Microsoft on Trial: Rally time for Microsoft?

Come 1999, the Microsoft Corp. defence team gets its turn at centre stage in the historic antitrust trial when it begins calling its witnesses. And it might be holding a wild card, thanks to the pending merger of Netscape Communications Corp. and America Online Inc.

The company will have a lot of work to do to repair the damage that government attorneys have done during the first nine weeks of the trial. Through evidence such as internal Microsoft e-mail and solid witnesses, including Netscape CEO Jim Barksdale, government lawyers say they have succeeded in demonstrating a pattern of predatory practices that proves Microsoft has protected its monopoly through illegal means.

After a two-week holiday hiatus, the government will call its two final witnesses when the trial resumes Jan. 4. Once the government rests, Microsoft will dig in. Its first move: filing a motion to dismiss the case. Microsoft's senior vice president for legal affairs, Bill Neukom, doesn't expect U.S. District Judge Thomas Penfield Jackson to grant the motion, but Neukom said he is confident Microsoft will prevail in the end.

"The burden of proof is on the plaintiff [the DoJ], and they have not accomplished that to this point," Neukom said this week. "If you look at our first motion for defence, you will see the basic outline for our strategy." Of the dozen witnesses Microsoft will call, nine are Microsoft executives. The company's decision to rely heavily on its own executives could backfire, as government lawyers will have a chance to question the company's decision makers.

"We will try to find out the mind-set of the Microsoft employees -- that will be one of the big goals for us when we cross-examine them," said Steve Houck, assistant attorney general for the state of New York. "What were they thinking as they did the actions that we are charging them with? That is the question that we need to get answered."

But outsiders believe the government will have to do more than that to win the case. This week, Jackson made it clear that the impending merger of Netscape and AOL could affect the case. "There has been what might be a very significant change in the playing field as far as this industry is concerned," Jackson said in his first public reference to the merger. "The judge's comment clearly indicates that he has questions about how this affects the marketplace, which might not do anything about the verdict but could go into the level of remedy that is applied," said Stewart Gerson, a partner at Epstein, Becker & Green, based in the US.

Finding the right punishment may be the government's toughest task. Houck said government attorneys are almost finished crafting a remedy in case of victory. "The remedy will address both OEMs and consumers," Houck said, "since the OEMs are the primary way consumers get Microsoft software today. "We will seek to get to the heart of their power and try to create an environment that gives consumers more choices and better competitive prices," he added.

Others have speculated on several possible options. Scenarios include forcing Microsoft to share the source code for Windows or to auction it off to create alternative suppliers of the operating system; prohibiting any further tying of Windows to Internet technologies; relaxing OEM licensing contracts to allow computer makers to alter the Windows desktop; and, at the far end of the spectrum, breaking up the company.

Take me to the DoJ/Microsoft page.