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Cont. Microsoft lawyer memo leaked

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Previous page Notably, the government has been unable to rebut certain key facts, known by all to be true, that undermine all of its claims. We have methodically and somewhat painstakingly developed an extensive evidentiary record, running to thousands of pages, that establishes these key facts, and does so in considerable detail with extensive reference to contemporaneous documents. The government has not even attempted to refute the vast majority of the testimonial and supporting documentary evidence presented by Microsoft. For example, every single one of the government's claims is premised on the assertion that Microsoft blocked Netscape’s ability to distribute Netscape Navigator to customers, in part by our Internet-related improvements to Windows and in part by contracts with third parties. We have shown in many different ways that the claim is false. Netscape has successfully distributed Navigator in vast quantities. This year alone Netscape will distribute about 159 million copies of Navigator -- which is two or three copies for every man, woman and child using the Internet. The source of that testimony, and much more of similar import, is Jim Barksdale, the CEO of Netscape. Faced with testimony like this, the government has not attempted to quantify in any way the alleged "foreclosure" of Netscape’s distribution, leaving a complete failure of proof on this key point. The government has also alleged, as it must, that the Microsoft conduct it challenges does not make "business sense" apart from its alleged negative effect on Netscape. This too is plainly false. For example, the government’s lead economist, Professor Fisher, testified that Microsoft’s "browser development" does not "make sense from a business standpoint." But who can doubt the benefits for Microsoft and its customers of developing innovative Internet client software? And who can doubt the benefits of integrating such client software tightly into Windows? In fact, we have thoroughly documented the many benefits for ISVs, OEMs and end-users of Microsoft’s Internet-related improvements to Windows. The government has not attempted to refute the testimony of Jim Allchin, Mike Devlin (CEO of Rational, an ISV that leverages the Internet Explorer technologies in Windows), Glenn Weadock (the government’s own expert witness), and others, all of whom have testified to the customer benefits inherent in Microsoft’s integrated design. (Remember all the drama around Jim Allchin’s testimony? That drama related to a narrow sideshow issue—certain defects in a software program designed by the government—not to the central thrust of Jim’s testimony, which concerned the benefits of Microsoft’s integrated design. The government cannot, and has not, challenged those benefits.) The case against Microsoft will be decided by applying the relevant legal principles to the evidentiary record. As explained more fully below, we believe that none of the government’s claims can be sustained on the basis of the record as it now stands. You are no doubt thinking that most of the press coverage paints a far different picture of how the trial is going for Microsoft. I will not dwell upon press coverage in this mail, other than ask that you consider the following: First, most news accounts don't undertake the somewhat difficult task of assessing the significance of the evidence presented each day against the legal standards on which the case will be decided. Trials can be pretty dull (think of an afternoon spent listening to testimony on the intricacies of native code interfaces in Java class libraries). Given the tedious nature of court proceedings, most news accounts of the trial focus upon moments of seeming "drama," even though such vignettes may be irrelevant to the likely outcome of the trial. Second, most news accounts have given far more attention to the accusations than to the Microsoft rebuttals (which often come much later, when our witnesses take the stand). "Apple Exec Claims Sabotage" is a lot more interesting headline than news three months later that a Microsoft witness, as expected, denies the charge (and proves it false). Third, and most importantly, remember that press coverage was quite negative in connection with both of our prior antitrust cases. In both cases, however, we won in court, and did so by unanimous decisions of the Court of Appeals. (Appeals are heard by panels of three judges.) In late 1994/early 1995, we saw negative press coverage in connection with Judge Sporkin’s review and ultimate rejection of a proposed "consent decree" between Microsoft and the Department of Justice. The Court of Appeals, however, unanimously determined that Judge Sporkin erred, and agreed with Microsoft that he should be disqualified from presiding over the case for failing to maintain the appearance of impartiality. (We had been criticized in the press for arguing that the judge appeared to be biased.) A little over a year ago we saw negative press coverage in connection with Judge Jackson’s issuance of a preliminary injunction concerning OEM licensing of Windows 95. In June 1998, however, the Court of Appeals unanimously determined that Judge Jackson erred in issuing the injunction. The Court based its decision on an evidentiary hearing held in the trial court in January 1998 that would not have taken place if Microsoft had followed the pundits' advice to accede to DOJ demands concerning the injunction. The resulting Court of Appeals decision should help us greatly in the current case. Set forth below is a summary statement of the key legal standards and facts concerning the primary claims against Microsoft. For more information on the case, visit the Microsoft PressPass site, which has copies of the written testimony of all the Microsoft witnesses and other trial materials. The PressPass Trial Update is here. Next Page

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