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How Microsoft squeezed Netscape out of contracts – Barksdale

Netscape CEO's testimony details 'anticompetitive' allegations

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Netscape CEO Jim Barksdale will take the stand in the Microsoft antitrust trial later today with his testimony already in the court records. Barksdale will be cross-examined on his testimony, but in accordance with Judge Thomas Penfield Jackson's wishes to speed up the trial, the text of his 127 page deposition was released by the DoJ late last night. Unsurprisingly, the deposition is wide-ranging, alleging a concerted Microsoft campaign to destroy Netscape by altering Windows software to disadvantage rival browsers, by restrictive contracts, and by giving away the browser free, or even paying ISPs to distribute it rather than Netscape Navigator. Barksdale covers the meeting of June 1995 where Netscape claims Microsoft offered to carve up the browser market with it, and says that in exchange for steering clear of the Windows browser segment Netscape would be made a preferred Microsoft partner, giving it privileged access to API and technologies. This is an area that's been well-trodden in the past by Microsoft's critics -- applications developers have complained about 'secret' hooks in the OS that were known only to Microsoft's developers. So Barksdale is claiming not only that Microsoft concedes such things exist, but that the company does use them as a competitive weapon, granting or declining access to them as it chooses. Says Barksdale: "I have never been in a meeting in my 33-year business career in which a competitor has so blatantly implied that we should either stop competing with it, or the competitor would kill us... I have never heard nor experienced such an explicit proposal to divide markets." After Netscape declined the offer, Barksdale says that Netscape's ISP customers were slowly picked off. It had over 1000 ISP browser contracts in 1995-96, but now Barksdale says practically none of these remain as originally negotiated (although Microsoft here might observe that it would be a strange ISP that was still paying Netscape $20 a pop when Navigator's been free since last winter). AOL went exclusive with Internet Explorer, and the fact that Explorer was free shoehorned Netscape out of other accounts. He describes how Erol, then a major US regional ISP, defected: "According to Erol's CEO, Microsoft not only offered Internet Explorer for free, but also offered to pay 20 per cent of the $600,000 a month Erols' spends in advertising along with some other attractive incentive he didn't disclose." Other ISPs dropped Navigator complaining that they couldn't afford to pay Netscape when Explorer was free, even saying that they still preferred Netscape as they did so. Barksdale also covers the Compaq episode, when Microsoft threatened to withdraw Compaq's Windows 95 licence. Microsoft's case here is that Compaq was making changes to Windows in contravention of its licence terms, and that these terms are intended to protect the integrity of Windows. Barksdale, however, says that what this boiled down to was that Microsoft would terminate Compaq's licence if it removed IE and substituted Netscape, or even if it put the Netscape icon alongside the Explorer one. In addition to this, Barksdale cites a long list of OEMs he claims have been forced at best to offer Netscape only limited contracts. Basically, he's painting a picture of how Microsoft set out to cut off Netscape's air supply. Nor did the giveaways stop at IE -- Barksdale claims that some corporate customers were given free upgrades to Windows 95 in exchange for standardising on IE internally. These are at the moment largely allegations that Microsoft can deny, but that's exactly why the DoJ and Microsoft are tussling so hard over access to Microsoft's databases. If Microsoft has been offering special terms or even subsidies in order to knock Netscape out of OEMs, ISPs and corporate customers, this should show up from the numbers in its sales databases. If not, then Microsoft could no doubt exonerate itself by letting the DoJ see the figures. ® Complete Register trial coverage Click for more stories

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