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What is it Microsoft wants the court to keep secret?

Read the transcripts surrounding the secret session, and you find some pointers...

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Assiduous reading of the Microsoft trial transcripts gives some interesting clues about what went on in the various secret sessions of the court - and more broadly, just what it is that is of concern to Microsoft. Fisher said to Boies: "Microsoft also has created a system that we spoke about briefly yesterday [in closed session] in which in order to earn certain discounts, OEMs have to comply with certain hardware requirements. Contrary to what was suggested yesterday, it is not my..." At this point, Michael Lacovara interrupted Boies' redirect examination and the judge warned Fisher not to disclose anything. Fisher said: "I am going to discuss what I think is perfectly public, the fact that there are marketing development agreements and that they say some things about hardware. The judge asked if that was a problem and Lacovara replied: "Those facts are not public, your Honour. They are confidential," so any further discussion was put off until a possible additional secret session. A conclusion that may be drawn from this is that Microsoft is being sensitive about the conditions it imposes on OEMs who wish to get better prices from Microsoft (for Windows and applications, of course). Microsoft would not want it to be revealed what buttons needed to be pressed to get the best "discounts". But there is another aspect that dares not speak its name: the interest of the OEM is to sell more hardware more frequently. So as well as there being a more public adversarial role, there is a collusive relationship as well to increase hardware requirements, which could partly explain Fisher's reference to hardware. This could also explain why IBM's witness, John Soyring, made such a low-key, personal contribution: after all, IBM is still a major PC manufacturer and does pretty well out of NT, even if that did mean sacrificing OS/2. It is not in IBM's interest to upset Microsoft unnecessarily, especially as it is believed that IBM did get better prices for Windows recently. Boies said he proposed to lead Fisher (normally leading the witness by suggesting answers is not allowed) a little bit to avoid infringing in camera material. He asked if there was significant price discrimination by Microsoft in marketing Windows to OEMs ("Yes") and were there "significant price increases" for Windows ("Yes"). Microsoft also induced OEMs "to do certain things . . ." and Boies asked if Fisher could state it "without tying it to specific pieces of information that was discussed in camera". In response, Fisher asked if he could discuss "the change in the price of Windows 95" and the relation of the Windows 95 price to Windows 98 - provided he did not mention what a particular OEM paid. Lacovara said he would like this to be in camera, and Judge Jackson conceded this. Lacovara made a rather ill-tempered intervention to query why Boies needed an in camera session and how long he intended it to last. Boies suggested he could ask his questions in open court, since the public would not see the data in the charts prepared by Fisher. He went on: "I would say that the idea that some of these things are confidential, when what we are simply doing is rebutting exactly what is in some of Microsoft's press releases and in terms no more specific than what is in Microsoft's press releases, you know, is not something that I'm in total agreement on. I think I could do this for my present purposes entirely on the public record without infringing on any legitimate claim of confidentiality." The judge decided to be cautious, and closed the court for forty minutes. Lacovara noted that Fisher had said in closed session that some amount of the variation [in OEM prices] that you observe reflected business decisions that the OEMs made. Fisher said he wouldn't go into why it was manifest because of the confidentiality issue. He also noted that Microsoft's raising of the price of Windows 95 when Windows 98 came out was discussed in closed session, but added that he and Fisher had disagreed as to whether Microsoft did raise the price of Windows 95 at the time. Boies asked Fisher if the degree of price increases and the degree of discrimination be explained in terms other than in terms of Microsoft's monopoly power and its exercise. Fisher paraphrased this as "without monopoly power or without the market power involved, can what he had in his secret charts be explained?" The answer was that it could not. Fisher said that Lacovara had not pointed out any errors in his data, which had been passed to Microsoft in December. A very interesting revelation was Fisher's analysis, elaborated in a closed session, that "Microsoft, as I said, raised prices Windows 95 to OEMs. "That is a harm. And that was part of -- I believe I said yesterday [in closed session] that is related to Microsoft's efforts to avoid having OEM's ship naked machines, which would have led, possibly, to people, if they weren't otherwise restricted by Microsoft licenses, porting their Windows 95 licenses to new machines." The conclusions are that four matters were discussed in the secret sessions: the increase of Windows prices recently; price discrimination between OEMs (very sensitive for Microsoft); Microsoft's marketing requirements for OEMs wishing to get the best prices from Microsoft; and Microsoft's fear of naked, Windowless PCs. ® Complete Register trial coverage

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