Microsoft on trial: Tempers grow short in courtroom

The gloves started coming off Wednesday as Netscape CEO Jim Barksdale and Microsoft lead litigator John Warden duelled for a second day of cross-examination in the Microsoft antitrust trial.

The morning session was dominated by the surprise introduction of a Dec 29, 1994, e-mail between then-Netscape Chairman Jim Clark and Microsoft's Brad Silverberg, a message that depicted Netscape inviting Microsoft to take an equity stake in Netscape.

The afternoon was filled with detailed questioning about Netscape's financial health and ability to distribute its products to consumers. The line of questioning -- which lasted the better part of the three-hour afternoon session -- was designed to prove Microsoft's contention that the Redmond, Wash., software giant had not impeded Netscape from growing its installed base of clients, nor significantly damaged Netscape's bottom line.

"Isn't it true that revenues have increased every year you have been in business?" asked Warden. To which Barksdale coolly replied that although that might be true for the company's first three years, it would not happen this year.

In a separate exchange, which sparked a sidebar meeting of the two sides' attorneys at the bench, Barksdale refused to give out information about how Netscape might fare in its fourth-quarter and year-end earnings. Netscape's 1998 fiscal year ends this month.

When ordered by U.S. District Court Judge Thomas Penfield Jackson to answer, Barksdale again ducked the question by saying he could not answer since he is not responsible for providing Wall Street analysts with estimates of the company's performance.

It appeared the agonising repetition of questions from Warden began to get to Barksdale as exchanges between the two escalated. Frequently throughout the afternoon, Warden and Barksdale sparred over questions several times -- most notably about the size of Netscape's customer base -- before Barksdale would either answer the question or Warden would back down.

On a separate occasion, Warden pressed Barksdale to answer questions regarding the impact Microsoft had on Netscape's ability to innovate, saying that Netscape has released more than a half-dozen different versions of its Web browser software during the past six months.

Barksdale countered that Microsoft's free give-away of Internet Explorer had forced Netscape to discontinue charging for its own Navigator browser, and that Netscape had to kill several planned features and products for PCs such as Javagator, its pure Java browser.

At one point, Warden appeared to press Barksdale's buttons, asking him repeatedly if he had ever heard that Netscape's business model was based on the concept of its being "free, but not free" -- a term Warden claimed was proffered by Netscape co-founder Marc Andreessen. "I have never heard that before," Barksdale responded angrily. He said that has never been the company's strategy.

While Wednesday afternoon's session may have begun to grate on Barksdale, the morning session was little better. He was blindsided when Microsoft counsel revealed both the Clark e-mail and information contained in Clark's deposition. In the e-mail, Clark, the Netscape co-founder, not only tried to persuade Microsoft to invest in Netscape, but also told Microsoft that the browser was not Netscape's real business -- that instead it was focused on developing server software.

Clark said that he had not told anyone else at Netscape about the offer, and even apologised for the treatment a Netscape employee had given Microsoft.

Clark gave a deposition in July, stating that Microsoft CEO Bill Gates had told attendees at the Network Economy Conference in 1994 that Microsoft was going to put a browser into its operating system and give it away for free.

Netscape's outside attorney, Christine Varney, said that Clark's e-mail had been dismissed the next day by Microsoft, which sent a message back to Clark saying it had no interest in investing in Netscape.

Varney also claimed Clark had sent the message to Microsoft because at the time, Netscape was running out of money -- $5m (£3m) of which had come out of Clark's own pocket. "I decided to give it away because Bill Gates had told me he was going to give it away free -- before we released our first beta," Clark told Microsoft attorneys in the deposition. Barksdale said he had never heard anyone suggest Gates said that at the conference.

Each side disputed the meaning of Clark's statement. "These are very powerful facts that have begun to chip away" at the government's case, Microsoft spokesman Mark Murray said. "Not only did Bill Gates tell that to Netscape, he told that to a whole room of computer executives."

Netscape officials said Microsoft was twisting the truth and encouraged reporters to find the transcripts of the conference to see for themselves. "It's very clear that Microsoft has raised the banner of the 'snippets','" Government lawyer Christine Varney said outside the courthouse. "Gates, in fact, never told anyone at the conference that he would bundle the browser free. What he said is, 'If anyone plans on making money on the Internet, they had better not because I will bundle the browser.'"

Documents later released that day added a new twist to the debate. Transcripts of the deposition revealed Clark refined his statement further. "Did you have any one-on-one discussion with Mr. Gates at that conference in October of 1994 about including Internet Explorer in Windows 95?" a Microsoft lawyer asked. Clark responded: "No. All he said was: I hope no one plans to make money on browsers because they will get bundled into the operating system."

Microsoft spokesperson Mark Murray called the day in court a "good one," and said that Microsoft had gone a long way toward discrediting the government's case.

Barksdale is expected to remain on the stand through Thursday and likely into next week as Microsoft finishes its cross-examination and the government conducts its redirect.


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