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MS paid economist witnesses' company $6m in 18 months

Bristol trial reveals NERA's substantial Microdollar pile

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MS on Trial Attorneys in the various Microsoft trials are becoming increasingly fascinated by the relationship between MS and NERA, the outfit that employs (in addition to his day job at MIT) DoJ trial witness Richard Schmalensee and Bristol trial witness Richard Rapp. In the latter trial it was revealed last week that NERA had earned $6 million from Microsoft in the past 18 months. NERA, National Economic Research Associates, is a private organisation with expertise in economics and antitrust, and it does a lot of business with Microsoft. The DoJ had earlier had some sport with Schmalensee, the final rebuttal witness for Microsoft's defence, by trying to nail down even approximately the amount of money he'd earned by working for Microsoft (Does an MS star witness cost $1m?). The situation in the Bristol trial last week was rather different, with the $6 million coming up during court discussions of whether or not the number should be presented to the jury. Richard Rapp, the president of NERA, is testifying on Microsoft's behalf at the trial. He's on salary, so the amount he bills for work for Microsoft on the Bristol trial, and the amount other NERA employees bill, actually goes to NERA. Nor does the total of this billing add up to $6 million - that's for all of the work NERA has done for MS over the period, and there does seem to be quite a lot of it. Bristol's attorney argued that it would be valid to use the NERA billing figures and that "the very significant payments of over $6 million in the last 18 months... is a fact the jury should consider in evaluating Dr. Rapp's testimony. I think the fact that the organisation of which he is president, and whose very significant client from whom they wish to seek further business and with whom they have this ongoing relationship, I think that significant a relationship ought to be brought out to the jury." The defence argued that these figures would give the jury "a misleading impression," and that even the use of the total amount paid for work NERA has done on this specific case would be misleading. The judge did however concede that the "very significant" figures could be relevant: "I think that what Attorney Altieri [the Bristol attorney] suggests he wishes to pursue would suggest that relationship with Microsoft is one which perhaps NERA wishes to maintain because of the significance of the billings it has had and might hope to have." The judge then attempted to recess the court for the weekend, before realising it was only Tuesday. Rapp himself does not appear to have been particularly good value, if last week's trial transcripts are anything to go on. Rapp had contended that NT was gaining share in the workstation market because of lower pricing, and had produced the results of a weekend shopping expedition to prove it. He'd come up with a Compaq box running NT at $10,000, or running Tru64 Unix at $13,000. Point proved? Not exactly. Bristol attorney Altieri took him through the pricing of Exchange Server, MS proxy server and licences and forced a concession that these alone added up to more than the missing $3,000, as equivalents were bundled with the Unix machine. Warming to the theme, Altieri pointed out that BSD would have been even cheaper. NERA, incidentally, has mailed us suggesting we might like to improve our trial coverage by adding a link to NERA's trial coverage. Well of course, good people: Here it is. It includes the full text of Richard Schmalensee's testimony. Yum. ® Complete Register Trial coverage

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