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Gates' claimed ignorance of Netscape ‘bizarre’ – DoJ

Trial pattern continues as rival refutations filed

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MS on Trial Bill Gates' video testimony comes under fire in the DoJ's final written contribution to the Microsoft trial. In a 21 page memorandum in response to Microsoft's proposed findings of fact, Gates is slammed for "bizarre assertions... that he was not aware of what Netscape was doing in mid-1995" and that his statements were "simply not credible." In a rare moment of bare-knuckle fighting, the DoJ asserts that Microsoft had attempted "to bribe and coerce Apple and Real Networks to stop offering multimedia support at platform level". The best joke is the DoJ's comment about Microsoft's conduct towards Netscape's browser. "Having first claimed that it did not shoot the victim, and then that everyone does it, and then that the victim would have died anyway, Microsoft now argues that the victim is unharmed". But largely the DoJ document sharpens up its case rather than directly refuting Microsoft's document. The main new DoJ section is about consumer harm. Much of the DoJ's argument so far has implicitly assumed that consumers were harmed, but detailing this has strengthened the DoJ's case. The other essential proofs of monopolisation - the restraint of trade and the prevention of competition on merits - are discussed, although the DoJ has not yet got round to putting on its web site the plaintiffs' revised proposed filings of fact. Microsoft's response Curiously, Microsoft did not produce a separate document attacking the DoJ's proposed findings, but added 38 attack-paragraphs to its previous version of its proposed findings of fact, and modified 184 additional paragraphs or sections. Microsoft's attack is essentially a sneer at the DoJ for using the same "snippets from the same stack of documents over and over again". Of course the problem for Microsoft with these snippets are that they disclose Microsoft's true intention, which seems to be at odds with the case its lawyers have been presenting. So far as the content of the DoJ's proposed findings is concerned, they have "internal inconsistencies and contain stunning concessions that undermine the claims alleged in the complaint", Microsoft says. Microsoft repeats previous claims that it does not have a Windows monopoly, and wants to include Java and browsers in a market definition, despite the fact that Microsoft's economist Schmalensee had claimed that a market definition was not relevant. It was tired old stuff, with Microsoft claiming "a complete failure of proof" of a "specific intent to monopolise the alleged market", which is controverted by dozens of Microsoft's contemporary documents. It also proved hard for Microsoft to defend Schmalensee's gaffes. At one point, Microsoft claims that Schmalensee was taken out of context in an article he had written. It appears that Schmalensee had the habit of writing papers in such a way that they could be used in more than one way, according to what his clients required. This is very useful for somebody whose principal source of income must be from acting as a paid witness. Microsoft's effort at dismissing the entry barrier issue is to cite the number of applications developed for Apple (12,000), OS/2 (2,500), Linux and Be (several hundred). "Some barrier," Microsoft quips, without any concession to the number of developers and their reasons for developing for Windows. When Microsoft discusses the price of Windows, it is to claim that the DoJ discussion is contradictory, not that Windows prices are increasing in real terms and as a percentage of systems cost. Microsoft is nearer the truth when it claims that it has never charged a short-term profit-maximising price for Windows, since as the DoJ points out, its price is long-term price maximising. Apart from claiming not to be a monopoly, Microsoft is also in denial over all the major claims made by the DoJ: "no foreclosure" (trying to ruin Netscape's browser market); "no tie-in" (forcing people to have IE if they want Windows); "no predatory pricing" (by giving away IE and forcing Netscape to stop charging for its bowser); "no exclusionary agreements with OEMs" (such as Compaq and IBM); "no exclusive-dealing agreements" (with ISPs, online service providers, and the like); "no pretextual justifications" (meaning inventing justifications after the event); and finally, "no consumer harm" (but so far as harm to competitors is concerned, and hence to users denied the benefit of competitive products, Microsoft remains silent). All in all, Microsoft would seem to be a model corporate citizen if its assertions were to be believed. Microsoft also assumes that any changes in circumstances since the original Complaint was issued in May 1998 (such as the release of Windows 98 in June 1998 and the tying claim between Windows 95 and IE) render the original Complaint moot. In fact, Microsoft remains liable for all its previous actions, if the court finds in the DoJ's favour. The Court of Appeals' earlier decisions (such as that on 23 June 1998, which arose from an earlier case - although Microsoft then claims that the DoJ cannot use evidence from the earlier case) are trotted out by Microsoft in an anticipatory way. It seems clear that Microsoft is already getting into gear for an appeal. Judge Jackson's statement that "foreclosure of more than 40 per cent" must be proved if the plaintiffs are to prevail is readily provable using Microsoft's own data, since it used more than one data set for IE market share in its evidence, as the DoJ points out. For Microsoft to seize on such inconsequential minutiae as Glenn Weadock's agreement that IE was more deeply integrated in Windows 98 than in Windows 95 at this stage of the trial is a sign of real desperation. Gates gets a small outing in Microsoft's evidence when he is quoted by Jim Clark of Netscape as saying that he hoped [sic] "no one plans to make money on browsers because they will get bundled in the operating system". Of course, that was a threat to Clark in the (pre-Navigator beta) days and was said to rough-up Clark - which it did, as we now know. Of course there's no mention of evidence that Microsoft did indeed consider charging for IE, quite apart from that pesky Windows Plus product that Microsoft sold rather unsuccessfully, which consisted of additions to the operating system. Microsoft's conclusion about the plaintiffs' actions is that they should have considered whether consumer harm could be proved. Of course, Microsoft was not to know that this has been spelt out more precisely in the new DoJ filing. The next step is scheduled for 21 September when both sides will have the opportunity to make oral arguments about the evidence. Whether the arguments will be allowed to take more than a day is not yet certain, but it will be a matter of months before Judge Jackson makes his findings. ® Complete Register Trial coverage

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