Microsoft on Trial: Microsoft attacks DoJ case

Microsoft attorneys shot back at the government's star witness Wednesday morning by calling into doubt parts of testimony central to the antitrust case against the software giant.

Their allegations: That Netscape Communications Corp. knew the company would give away its browser long before Netscape ever shipped its first product, and that Netscape first approached Microsoft to "divide" the market for Internet browsers. Though the government has long maintained that Microsoft bundled its Internet Explorer browser free with its Windows 95 operating system to kill off Netscape, government statements have long implied that decision came only after Netscape began charging $39 (£24) for its browser in April 1995.

In cross-examination before U.S. District Court Judge Thomas Penfield Jackson, Microsoft outside counsel John Warden asked Netscape CEO James Barksdale when Netscape first became aware that Microsoft would begin including an Internet browser with the Windows operating system. Barksdale replied that he first found out when most people did: December 1995, when Microsoft Chairman Bill Gates told members of the press and analysts that the next edition of Windows 95 would include a built-in browser, free of charge. Netscape had first begun charging for its product earlier that year, Barksdale said, and began giving it away only when Microsoft had done so.

Warden then produced a copy of a deposition by Netscape Founder James Clark. Clark told a different story. "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," he told Microsoft attorneys. Clark first heard the news "at a conference in Washington, D.C., roughly Oct./beginning of Oct. of 1994 ... called The Networked Economy conference. He told me and a group, the whole group, the whole conference."

Though the case against Microsoft has long linked Microsoft's gratis bundling of the browser to its operating system to a desire to deny Netscape of badly needed revenue, each side disputed the statement's meaning. "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 transcripts of the conference to see for themselves. "It's very clear that Microsoft has raised the banner of the 'snippets,' " DoJ 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.' "

Microsoft struck again at Barksdale with an e-mail message written by Clark just a week before he was due to leave his post as Netscape's CEO. In the message to Microsoft Vice Presidents Dan Rosen and Brad Silverberg, Clark asked Microsoft to "reconsider" using Netscape's Navigator as the browser it included with Windows 95. Rather than trying to make money from the consumer browser, Clark told executives, Netscape had decided to concentrate on making money from its server products. "Microsoft is the de facto standard 'client' software company, and we have never planned to compete with you, so we have never considered a client as being our business," Clark's e-mail message said. "Our business is adding value on the back-end in the form of vertical applications.

"We want to make this company a success, but not at Microsoft's expense. We'd like to work with you. Working together could be in your self-interest as well as ours. Depending on the interest level, you might take an equity position in Netscape."

Warden turned to Barksdale. "Is the statement that Netscape's business model is dependent on browser revenue consistent with Mr. Clark's e-mail?," he asked. "I don't know what he was talking about," the executive replied. "I've never seen [the e-mail message], the board of directors has never seen it. If it was in Mr. Clark's mind, we weren't going to sell the browser. He was just wrong." So why did Clark say what he said? Possibly to get Microsoft to license Netscape's browser anyway. "He was just selling," Barksdale said.

At the time of the memo, Clark was just two weeks from leaving his position as CEO to Barksdale, who had just departed AT&T Wireless Services Inc. Press reports at the time portrayed Barksdale as a badly needed replacement for the foundering Clark.

After the questioning was over, however, copies of the entire Clark e-mail message revealed a crucial fact Warden had ignored. In the last line of the e-mail message, Clark wrote: "No one in my organisation knows about this message."

Government counsel David Boies blasted Microsoft for taking documents out of context. "The Clark memo is one piece in a series of memoranda," he said. "That proposal was rejected. That was the end of it."