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Intuit exec claims MS pressure killed Compaq deal

Even a successful competitor's alliances are limited by Microsoft, it seems

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The difficulty that William Harris, Inuit's CEO, faced in court yesterday was that Intuit is a shining example of a company that has successfully managed to hold Microsoft at bay - at least so far. On the surface, this made it difficult for the DoJ to show that Microsoft has monopoly power, but Harris' direct testimony contained abundant evidence that Inuit was squeezed into agreements with Microsoft that stopped it forming alliances as it chose. Harris' point that Intuit users could switch to rival products such as Microsoft Money, whereas Microsoft Windows users could only switch with great cost or difficulty to an alternative operating system product, did not sound to be very important, although the ease of switching is in fact a significant factor in competition law cases. Microsoft tried to argue that it was superior Microsoft technology in IE that made Intuit decide in 1997 to adopt IE exclusively, and not the lure of a link to Intuit from Windows. It was not a convincing argument. Harris had a similar story to tell to those of Apple and AOL so far as the use of IE rather than Navigator was concerned: the real estate that Microsoft had to offer, in the form of a position for an Intuit icon in a folder, was too valuable to make possible an independent arrangement with Netscape, at least until the DoJ was breathing down Microsoft's neck and Microsoft's resulting relaxation of its restrictive exclusivity requirements. It is surprising that Microsoft had not sought money from Intuit for including its icon with Windows 95. John Warden, an attorney for Microsoft, sarcastically asked Harris if he was proposing an "interstate operating systems commission". Harris elaborated on the circumstances in which Compaq broke its agreement with Intuit in order not to upset Microsoft. Compaq evidently felt rather sheepish about the demonstration of this weakness, but Intuit did not sue. Outside the court room, David Boies, the DoJ's special trial attorney, made the point that even a company with an 80 per cent market share could not enforce an exclusive contract with Compaq against Microsoft's wishes. ® Complete Register trial coverage

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