Microsoft on trial: Sharp at Comdex, forgetful on tape

He may have been laughing during his keynote speech at Comdex, but Bill Gates wasn't nearly as chipper in his taped testimony released on Monday.

The testimony presented in the ongoing state-federal antitrust case against Microsoft once again showed a forgetful and combative Microsoft chairman and CEO incapable of explaining the meaning of common English words in memos written by Microsoft executive in 1996. Portions of Gates' videotaped deposition focused on internal e-mail messages and at least one public statement made by Microsoft (Nasdaq:MSFT) officials regarding the importance of market share garnered by the company's Internet Explorer browser.

Government attorney Steve Houck used his time to ask Gates for comment on a 1996 analysts' meeting at the Redmond company. Houck was particularly interested in one participant's question about browser share. Microsoft officials told participants at the meeting that the company planned to increase its market share through deals with large Internet service providers and other major accounts. Gates dodged specifics, however. "Transcripts like this which come off in audio tape are somewhat unreliable," Gates said. "I don't have a specific answer."

The chairman also dodged questions relating to competitors. Government attorney David Boies at one point asked Gates for his response to an e-mail message from Microsoft executive Paul Maritz that said that browser share was "the No. 1 goal." Gates said he had no idea if that was the case in 1996. "Did you ever tell Mr. Maritz that browser share was not the company's No. 1 goal," Boies asked. Gates paused, waiting nearly 50 seconds before answering. "No," he replied.

Since filing its case last May, the government has argued that Microsoft had attempted to monopolize the market for Internet browsers by forcing customers to take its browser free as part of the Windows PC operating system. By tying the browser to the operating system, the company has illegally tried to drive the market price for browsers down to nothing, thereby denying vital revenue to companies -- most notably, Netscape -- that once made a business out of selling them, the government has alleged.

Microsoft, in turn, argues that it "integrated" the browser into the operating system as a natural improvement to Windows, and is in full compliance with antitrust laws. As a result, company officials ceased last year referring to "browsers" as software products separate from the operating system. Much of the discussions bogged down over a Gates e-mail dealing with market share. Gates said he had no idea of which specific companies he had in mind when he wrote that memo. At the time, Netscape (Nasdaq:NSCP) had a market share in excess of 60 percent of the browser market.

Boies quizzed Gates about a Jan. 5, 1996, e-mail in which he told other executives that "winning Internet browser share is a very, very important goal for us."

Boies asked: "Now, when you were referring there to Internet browser share, what were the companies who were included in that?"

"There's no companies included in that," Gates replied.

"Well, if you're winning browser market share, that must mean that some other company is producing browsers, and you're comparing your share of browsers -- is that not so, sir?" Boies asked.

"You asked me if there are any companies included in that then and now -- I'm very confused about what you're asking," Gates said.

"All right sir," Boies said, "let me see if I can try to clarify. You say here, 'Winning browser share is a very, very important goal for us.' What companies were supplying browsers whose share you were talking about?"

"It doesn't appear I'm talking about any other companies in that sentence," Gates said.

Following the Gates tape, Microsoft attorneys stopped just short of wrapping up its cross-examination of government witness and software consultant Glenn Weadock. Weadock, of Independent Software, stuck to his position that Microsoft could separate its Internet Explorer browser from current versions of the Windows operating system -- but chose not to.

Microsoft attorneys, meanwhile, also stood firm insisting that customers have benefited because the software giant kept its Internet Explorer browser and Windows operating system together. Weadock testified in written testimony Friday that many companies and consumers would prefer to buy the Windows operating system without a browser, but that Microsoft has denied them that choice by bundling the browser with the operating system regardless. Many consumers and companies suffer because of the integration and Windows, he testified.

Since Microsoft holds a near-total monopoly over the basic software that makes PCs run, Weadock says, there are no alternatives to buyers who don't want to use the Microsoft browser. Microsoft attorney Richard Pepperman tried to hone in on Weadock's credentials. Though Weadock had described himself as a consultant to many of the world's largest companies, he conceded under oath that it had been four years or more since he had done business with any of the ones he mentioned as past customers in his written testimony.

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