Microsoft on Trial: Netscape 'imagined' antitrust case

Microsoft returned to its assault on the testimony of Netscape Communications Corp. chief Jim Barksdale Thursday, attacking his account of a celebrated June 21, 1995, meeting between the two companies at which he claims Microsoft tried to convince Netscape to illegally divide the browser market with them.

Microsoft returned to its assault on the testimony of Netscape Communications Corp. chief Jim Barksdale Thursday, attacking his account of a celebrated June 21, 1995, meeting between the two companies at which he claims Microsoft tried to convince Netscape to illegally divide the browser market with them.

Barksdale, at times as frustrated as his examiners, shot back with gusto. To win its case against the world's largest PC software developer, the government must show Microsoft has willfully maintained its monopoly over operating system software through any of a variety of unfair practices. Likewise, it needs to show Microsoft has tried to extend that monopoly to the Internet browser market. The June 21 meeting is central to that charge.

The government earlier submitted a set of notes taken by Netscape co-founder Marc Andreessen to show what took place at the meeting. In response, Warden produced a 1997 deposition in which Andreessen told federal investigators.

In that deposition, Andreessen told government lawyers: "It was a meeting I thought I'd want to remember in great detail. I thought, it might be a topic of discussion at some point with the US government on antitrust issues. I also wanted to make sure that Netscape executives who weren't present knew what had transpired."

Why, Warden asked, would Andreessen have taken those notes? "The only reason I can think of is we had already had inquiries from the Justice Department on AOL," Barksdale said. America Online had earlier asked the DoJ for assistance so it could get its service placed on the Windows "desktop" alongside the Microsoft Network. AOL eventually got what it wanted without government action, however.

Warden pressed further. How, he asked Barksdale, did Microsoft say it would "kill" Netscape? Microsoft, Barksdale said, drew a line around its operating system and the browser it had developed for it. To survive, he said, he was told he needed to develop browsers only for Macintosh, Unix, and obsolete operating systems produced years previous by Microsoft. Netscape still thought its future lay in developing browsers for the soon-to-be-released Windows 95 operating system. Microsoft's reaction, he said, was that "we were kind of foolish for even thinking of doing that." In short order, he was told, the company would release its own browser, eventually killing off Netscape entirely.

Microsoft denies that conversation ever took place. Since then, though, it has bundled its browser with its operating system, integrating the two so tightly that the company now claims it is "impossible" to separate the one from the other. In addition, it has deprived Netscape of some $60 million each quarter by giving the browser away instead of charging for it. Antitrust officials have pronounced that action illegal. But since antitrust law often frowns on undoing such "technical ties," Microsoft has argued it cannot be sued for anticompetitive behaviour.

Warden quickly moved to that point. Did Barksdale think it was possible to draw a line between the two? "There is a line between applications and the operating system, that is correct," he said. Warden's voice rose. "Is there anything more going on here other than a difference of opinion between you and Microsoft in where the line is between the operating system and the application?"

Barksdale shot back. "We feel that a browser is an application and an individual manufacturer of an operating system that controls 90 percent plus of the world's platforms, that pulls the browser into the operating system, has stepped across that line." Warden asked Barksdale about a list of meetings prepared by Silicon Valley lawyer Gary Reback, long known for his anti-Microsoft views and a former attorney for Netscape. The Reback chronology covered a number of events that covered business dealings between the two companies, but did not include the June 21 meeting.

"Wouldn't you want your counsel to know what you characterised as a naked market division proposal had been made to you?" he asked. Barksdale said he'd never seen the document before. "But you wanted your God-given right to 95 percent of the market didn't you?" Warden asked, quoting a quip first attributed to Barksdale in the 1970s when he was an executive at Federal Express.

A short time later, Warden summed up, his voice rising as he did so. "Isn't it true," he asked, "that the only fair conclusion that can be reached is that Mr. Andreessen invented or imagined a proposal to divide markets and that you and your company signed onto that invention or imaginary concoction in order to assist in the prosecution of this case?" "No," an angered Barksdale shot back. "That's absurd."

After the day's hearing, government attorney David Boies said accounts of the June 21 meeting by Microsoft officials had done nothing to dispel Netscape's version of events. "I think it's pretty clear from Microsoft's notes, Netscape's notes and AOL's notes what was going on," he said.

The Reback chronology, Boies said, was related to a separate investigation of Microsoft's licensing of its Internet dialler software. Copies of the chronology released to the press referred to a specific subpoena, but left the subject matter unclear. The chronology was originally prepared for the Justice Department.

Microsoft Senior Vice President for Legal and Government Affairs William Neukom said the day turned the case on its head. "To the contrary," he said. "What really happened at the meeting on June 21 is Netscape was trying to draw a line around its browser market.