Microsoft on Trial: Judge closes hearing

The judge in the Microsoft Corp. antitrust trial has closed a hearing on OEM pricing after Dell Computer Corp.
Written by Lisa M. Bowman, Contributor

The judge in the Microsoft Corp. antitrust trial has closed a hearing on OEM pricing after Dell Computer Corp. and Compaq Computer Corp. complained that disclosing such information would hurt their business.

At issue are the various prices computer makers pay Microsoft to include Windows on their machines. Microsoft keeps a tight seal on such numbers -- in much the same way an employer often keeps employee salaries confidential -- so it may negotiate the best deal with each one. The U.S. Department of Justice plans to bring up the pricing during the testimony of its final witness, Massachusetts Institute of Technology economist Franklin M. Fisher. Fisher and other witnesses have argued that Microsoft has the market power to raise prices.

An attorney for various media outlets -- including Ziff-Davis (publisher of ZDNet), the New York Times and Bloomberg News -- had argued much of the pricing information should remain open because closing the hearing could set a dangerous legal precedent. But Judge Thomas Penfield Jackson sided with computer makers and Microsoft, ruling the information competitively sensitive. A transcript edited to remove competitive secrets will be released following the hearing. The judge also will decide whether certain documents that some parties hope to keep sealed will be unsealed.

Though the judge has not been particularly sympathetic to Microsoft's motions, some trial watchers think the presence of third parties such as Dell and Compaq may have swayed him. During an open part of the hearing early Monday, DoJ attorney David Boies agreed that making information about current pricing public could be harmful to computer makers. But he did not address older prices, and parts of such information could eventually be made public if the judge agrees.

In a statement, Microsoft accused the government of misrepresenting the numbers and drawing conclusions that are "deliberately misleading." But in November, the DoJ submitted as evidence documents in which Microsoft executives worry that Windows prices are on the rise even though the cost of hardware components is dropping.

A story in the Wall Street Journal citing sources close to the documents in question said Compaq receives the best deals from Microsoft, followed by Dell. Those companies pay substantially less than computer makers such as IBM Corp. and Gateway Inc.. Dell and Compaq are strong allies of Microsoft. Compaq is the largest maker of personal computers worldwide, while Dell is the fastest-growing large PC maker.

Take me to the DoJ/Microsoft page.

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