MS Attorney and Harris stage scrappy fight
A messy business, but probably Harris on points
William Harris, the CEO of Intuit was cross-examined rather incompetently for a little over a day by John Warden, for Microsoft. Warden tried to establish, without success, that an Intuit lawyer had played a prominent role in writing Harris' testimony. Warden's line of questioning had no evident structure, and it was clear that he was poorly prepared. It has been a source of constant surprise as to how poorly informed most of the DoJ's witnesses have been: Harris was no exception. He clearly has no technical understanding of computing, and characterises himself as a "non-academic" "trained business person" - except that he was not at all successful in negotiating with Microsoft. It did not seem to occur to him that Intuit could have charged Microsoft for the exclusivity that Microsoft wanted from his company. Harris' knowledge of Intuit's products is demonstrably inadequate for a CEO. He had not taken the trouble to read the DoJ's Complaint, and his knowledge of the major trends in the industry was severely wanting. Warden several times tried to suggest that Harris was not qualified to make statements about various matters - and especially those embarrassing to Microsoft it turned out - but he made no headway, because at least Harris exhibited a certain degree of wiliness. What Warden called speculation was informed judgement, or business planning, Harris claimed. Many of Warden's questions seemed to be directed at exercising his newly-acquired and shallow knowledge of computing, with no attempt to move the line of questioning to a useful climax. At the same time, Warden was very jealous of any attempt by Harris to stray into legal areas, so when Harris used phrases like "exclusionary behaviour", and "discriminatory behaviour", or suggested possible remedies that the court might impose, Warden asked if Harris was a member of the bar. The opportunity to discuss watering holes did not occur to Harris, but when Warden asked if he had attended law school, he quipped that he had done so for one day and found it "like stirring concrete with your eyelashes". Warden then showed off his legal knowledge by pointing out that "the court has dismissed the monopoly leverage claim" and rhetorically asked Harris if he thought that the people who used to work at the Interstate Commerce Commission should be brought back to be the National Operating System Commission. Warden asked Harris to look at Intuit's 10-K (annual filing with the Securities & Exchange Commission) during the mid-morning recess, so that he could answer questions on it, reminding Harris that "penalties akin to those for perjury for misstatements or material omissions" could be imposed. Unfortunately, Harris was probably unaware of misstatements by Microsoft in its own 10-K's, such as Windows 3.1 being an operating system, and the omission of any mention of legal cases against Microsoft that could prove to be very costly indeed. Warden wanted to know if the latest 10-K mentioned the danger to Intuit from the Windows "choke point" to which Harris had referred in his written testimony. It didn't specifically, but there was other language that generalised the threat. Warden mischaracterised the famous case that introduced the notion of essential facilities when he referred to the St Louis railroad terminal. He omitted to note that the point of the case was the control of access to the terminal via a bridge owned by some of the railway companies that wanted to stop the others from using it. Instead, he went off on a hypothetical tangent, asking if the owner of the terminal had the right to control the billboards inside the terminal. It was as though Warden were trying to anticipate arguments about making Windows an essential facility, introducing the reference so that the Microsoft propaganda machine could later say that the issue had been discussed. Unfortunately for Warden, Harris said he had limited experience of railroad terminals, and would not venture an opinion. Intuit's concern, and a probable reason for accepting the ultimately unsuccessful attempt by Microsoft to acquire Intuit, was that Microsoft might integrate personal finance functionality with Windows. Harris mentioned that MasterCard intended to sign an agreement with Microsoft to use Microsoft Money to work together, but the deal fell through. Microsoft subsequently signed a deal with Visa whereby Microsoft agreed not to get into the electronic bill paying business, and Visa agreed not to work with Intuit - something Harris had not mentioned in his written testimony. Warden moved to have this struck from the record, but Judge Jackson did not rule on the matter. The next morning Warden bounced back, clearly having been briefed overnight, to say that the agreement had been dissolved a year ago, and was not a commercial success. He also started prying about Intuit's relationship with CheckFree, as though he were under instructions from his client to find out what he could. When substitution was discussed, Harris easily won the point that applications were easily substitutable, but operating systems were not. Warden referred to a WSJ article by Walter Mossberg, who in the past has taken a generally favourable attitude to Microsoft. The previous week, Mossberg had a piece about Money and Quicken that suited Warden's arguments. Mossberg had said that switching between the products was painful, but Harris pointed out that Microsoft's manuals said it was an easy procedure. Warden really put his foot in it by suggesting, truthfully, that "given Quicken's strong dominance in the install[ed] base in this area, Microsoft's marketing talk doesn't have much choice but to say [that conversion is easy], does it?" Harris hit the nail on the head by asking Warden if "they would say things that were not true?" Warden told him he was not testifying, while Harris retorted "I would only say things that were true." Microsoft's pressure on Compaq to break its exclusive contract with Intuit was mentioned, and after direct contact between the two CEOs it was agreed that Compaq would carry both the Quicken and Money icons. It would be interesting to know if there was a secret agreement that Microsoft would indemnify Compaq's legal costs had Intuit decided to sue, as it was entitled to do. At times, Warden resorted to pointing out what a tough time Microsoft had from its competitors, and how MSN still had less than 2 million subscribers compared with AOL's 15 million plus. Warden did make a telling point when he suggested that with access to pornography being perhaps the most common use of the Web (he suggested up to 85 per cent, and seemed rather knowledgeable on the subject). He noted that this had been achieved without any message icon or logo on the Windows desktop. Judge Jackson mused: "I'd like to know what the icon [for pornography] would look like." Warden tried to suggest that Linux was easily substitutable for Windows but neither knew enough about it to reach any useful conclusion, and Harris was unable to point out that users would have to pay for Windows even if they did not want it. Harris had been advised by his computer department not to switch to Windows 98 as it was "not yet stable". Warden jumped up: "I move to strike," he cried. The Court: "Denied. Go ahead." Warden also lost an appeal to the judge when he asked that Harris be prevented from referring to documents used in his deposition by Microsoft, but not placed in evidence. Judge Jackson said Harris could use the documents to refresh his recollections. Harris had asked Intuit's treasurer to study the profitability of 473 US corporations with more than $3 billion in revenue. It was found that the average profitability was 9 per cent. Some 8 per cent of these corporations exceeded 20 per cent profitability, and five companies exceeded 30 per cent. Microsoft's profitability was top at 49 per cent and still climbing. Harris' point was that this was unreasonable, to put it mildly, and that Microsoft should have reduced its prices. Warden tried to debate the matter by suggesting that Microsoft's return on investment was not unusual, but he failed to win the point. There was much discussion about Intuit's choice of browser. Microsoft wanted to claim Intuit's "choice" as a win for its componentised IE. Harris admitted that he wanted to mend fences with Netscape since Microsoft relaxed its IE-only requirement last April in the face of mounting DoJ pressure not to leverage its Windows monopoly to gain IE clients. Interestingly, Intuit had not restored a Netscape button to its web sites because it hoped this would provide some negotiating muscle, but in reality this is probably wishful thinking. As a consequence, Harris made contradictory statements probably designed to provide either side with whatever headline might be required about why Intuit had gone with IE. In his redirect, David Boies for the DoJ obtained a more definitive response when he asked: "In the absence of the linkage by Microsoft to access to the Windows desktop, would you have agreed not to work with Netscape?" Harris replied "No", and Boies ended his redirect. The failure of Microsoft's channels in IE4 presented a disappointment to Intuit and Microsoft. Intuit thought it had negotiated something valuable, but it turned out that it was not particularly advantageous to have a second tier icon in the channel bar, which was a feature that few people used (and is now being abandoned), in exchange for appallingly demanding concessions from Microsoft. Intuit products have diminished capabilities with Netscape's browser, and Harris admitted that Intuit severely cut back its support and development effort for Navigator. In this respect, Intuit has contributed significantly to the problems that it has encountered by not maintaining its independence from Microsoft. Even worse, Harris sees no potential for Intuit products to operate with Linux, and is evidently very poorly informed about what is happening in the real world. Intuit made itself easy carrion for Microsoft, and it must be on the cards that Microsoft will now decide that the time has come to include Money in the operating system, and eliminate Intuit. David Boies redirect was concise and suggested yet again that when he becomes cross-examiner-in-chief of Microsoft's witnesses they will not have an easy time. Boies played ten minutes of the Gates videotaped deposition, with Gates putting on what was probably his worst performance. Warden proved again that he was a mean cross-examiner, but not a clever one. Harris stood up well enough, and won the match on points, despite his not being a technically skilful boxer. It was not a pretty fight.