Did Compaq and MS collude to ambush DoJ witness?

If so, Netscape paid money to help Microsoft

MS on Trial Franklin Fisher, the DoJ's economics expert witness, was made one of the victims of an elaborate sting operation by Microsoft, it would appear. It seems that Netscape was probably manipulated into paying Compaq to load its browser on new models, as part of a plan at least partly devised by Microsoft. Fisher was made to look particularly ill-informed when in evidence given in early January he did not know that Compaq had announced it was putting the Netscape browser on every new model of desktop. Consequently, Fisher had used earlier data provided by Netscape. It now transpires that Compaq first announced that it would offer the Netscape browser at a very important juncture in the trial. The transcript shows that Fisher said in his rebuttal last week: "In fact, the Compaq arrangement to put Netscape on the desktop was announced on January the 5th, the day that I took the stand, and therefore was not part of the information I could possibly have had before I was on the stand. The deal was consummated in the middle of the trial. "More substantively than that, what this does not tell you is that Netscape is actually paying Compaq in order to get its browser on the desktop. It was paying them advertising, something supposed to be worth over $700,000. "Now, there isn't any doubt, I suppose, that if Netscape were willing to pay sufficient money, it could, in fact, get OEM's to put it on the desktop. That would not mean that it is not severely disadvantaged. That's called raising rivals' costs. And it is, at least, misleading to suggest that gee, this is just happening." We suspect that the following occurred. First, Microsoft wanted to discredit Fisher's evidence; to neutralise with FUD as far as possible the harm done by some testimony from Compaq witnesses that reflected very badly on Microsoft; and to show what tough competition Microsoft faced when the number one PC maker "decided" to offer Navigator. So when it came about, either by Microsoft's design or by chance, that Netscape offered Compaq $700,000 to get its browser on new Compaq models, Compaq decided to go ahead. What we don't know with certainty is the degree of collusion between Microsoft and Compaq. There could have been none, but the accident of a deal being announced the day that Fisher's evidence started is too great to make that a serious possibility. With Netscape very busy with plans for the AOL merger, it is less probable that the initiative came from Netscape, although it is possible. On the available evidence at the moment, we favour a scenario where Microsoft suggested to Compaq that it approached Netscape with the offer of putting up its browser for some advertising money. Netscape would agree; Compaq would not upset Microsoft because the idea came from Microsoft; and Compaq would benefit financially. The beauty was that Netscape would pay for it all, and no under-the-counter payments from Microsoft to Compaq would ever be discovered. Clearly the DoJ knows more than it has fed to Fisher so far, and we may discover more from the redirect testimony. There is no possibility that Fisher worked this out for himself. Re-reading the transcript of Fisher's primary cross-examination in January supports the hypothesis of Microsoft's intervention in several ways. Lacovara said in his cross-examination of Fisher on 13 January 1999: "Let me suggest to you that there is at least another source of information that you may not know of, which presumably is the PC OEMs themselves. And so I decided yesterday to go to the web site of Compaq Computer and to see exactly what they ship on desktops today. Now, you understand that Compaq is the largest OEM by far ... It accounts for roughly 20 percent of the units shipped in this country ... let me offer into evidence ... pages from the Compaq web site that I located and then my colleague here printed under my direction yesterday. You will see the date 1/12/99 [the previous day] in the lower right-hand corner." It is beyond reason that Microsoft or its legal team could have stumbled into this. It was orchestrated in some way, as is seen from Lacovara's statement that: "I asked someone to go to CompUSA to verify that where Netscape Communicator appears in the model number, the software is actually on the desktop and not somewhere else in the machine." This seems to confirm it was all a fix, because Microsoft made the mistake of going over the top with the "evidence". Lacovara disingenuously asked Fisher if he'd thought of looking at OEM web sites to determine if Netscape was used. This was of course a silly suggestion, since Netscape knew precisely what agreements it had. Microsoft had set out to exploit the time interval between Netscape's evidence in October, and Fisher's evidence in January. It was a trick, tantamount to misleading the court. Fisher had to admit that he hadn't thought of this. Microsoft's problem is that it lacks finesse in undertaking dirty tricks, and barges in with brute force, tripping itself in the process. Nor was it a good idea for Lacovara to address Boies as "David" for the only time in the long examination, after Boies (smelling the rat, no doubt) asked him how the Compaq data was obtained: "I went through all the Compaq products, David, and downloaded every one that says Communicator is included." It seemed to confirm that it was all a set-up. No wonder when we called Compaq in the US about this in January, they were tight-lipped and couldn't say when they had started offering Netscape. You could feel the embarrassment. ® Complete Register trial coverage

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