US Report: Microsoft homes in on Netscape/AOL talks

Microsoft. wound down its cross-examination of America Online senior vice president John Colburn yesterday with a final series of internal memos that portrayed Netscape Communications as an unreliable partner in AOL's efforts to move from a proprietary online service to an offering that included a hefty dose of the wide-open Internet as well.

Microsoft. wound down its cross-examination of America Online senior vice president John Colburn yesterday with a final series of internal memos that portrayed Netscape Communications as an unreliable partner in AOL's efforts to move from a proprietary online service to an offering that included a hefty dose of the wide-open Internet as well.

An expected, taped deposition of Microsoft chairman Bill Gates failed to materialize, as Microsoft continued what opposing lawyers claim are delaying tactics.

To drive home their point, Microsoft lawyer John Warden dug up a May 1996 memo, written nearly two months after America Online had already decided to give a crucial browser contract to Microsoft instead of Netscape. In it, an AOL executive in charge of relations with the browser maker's staff chided Netscape for failing to deliver on its promise to develop an "integrated" browser that would work as a seamless part of the AOL service. "They are not holding up either to the letter or the spirit of the contract," the technical specialist told top management. The company missed meetings, failed to deliver phone calls, and generally showed a lack of concern wrote the executive.

That memo seemed to fit with Microsoft contentions it won the struggle to supply the browser for the AOL service "fair and square".

"Isn't that the same behavior you'd seen earlier?" Warden asked Colburn.

"No," Colburn said: Netscape made meetings, returned phone calls and the rest. The problem, Colburn asserted, was Netscape simply lacked motivation to perform in the wake of the Microsoft deal. Under terms of the "primary browser" contract, Netscape could never have more than 15 percent of the browser business at AOL. When the Silicon Valley company had signed its original contract, there had been no such restrictions.

In fact, Colburn testified Tuesday, Netscape had lost so much from the Microsoft deal that AOL never felt compelled to enforce the original terms at all.

Warden spent most of his time this morning once again scrutinizing the America Online Inc./Netscape Communications Corp. "alliance". And again, he painted unflattering comparisons between it and Microsoft's alleged monopolistic practices.

Microsoft itself is accused of offering to divide the market for Internet browser software with Netscape by guaranteeing itself a free hand in computers that run Windows 95, Windows NT and all future versions of the Windows operating system. Netscape, in turn, would have gotten a lock on software for older, less popular operating systems. Netscape officials say they rejected that proposal. Microsoft denies it ever made the offer.

Microsoft attorney John Warden homed in on an AOL-Netscape contract that set out terms of collaboration on America Online's "Instant Messenger" service, an e-mail-like Internet program that lets Net users alert other users that they want their attention immediately. The contract also covered conditions under which AOL would offer Netscape's browser software to its customers.

Why, Warden asked AOL Senior Vice President David Colburn, did the contract prohibit AOL from linking the IM service to advertising that might compete with Netscape? Warden had suggested Wednesday the two were trying to "divide the market" for browsers and online service.

The ban on other ads, Colburn said, was only logical. "AOL felt certain that makes sense," he said. "They don't want to distribute a product that's going to tell people to go somewhere else."

Warden wanted to know more about advertising provisions that guaranteed AOL and Netscape up to 10 percent of the unsold advertising space on each others' sites -- gratis. Wasn't this a requirement to promote another company's product? Colburn had previously criticized Microsoft's insistence that AOL promote its browser while all but banning similar promotion of Netscape's Navigator browser. "There are requirements for swapping inventory," Colburn said blandly.

With the Colburn testimony out of the way, Apple Computer's Avadis Tevanian is scheduled to take the stand on Monday. The trial recesses for Tuesday, which is election day, and resumes the next day. Independent Software Consultant Glenn Weadock is scheduled to take the stand that week if time permits, Intel's Steven McGeady will testify for the government Monday Nov. 9. Microsoft Chairman Gates will likely not appear until sometime after then, although government attorney David Boies declined to predict when.

Lawyers for both sides say privately the trial itself may last into January if not February.