DOJ Opens Historic Antitrust Case

Documents, internal memos, and Bill
Gates’ own videotaped testimony show a consistent pattern of using
Microsoft’s monopoly power in the operating system market to threaten
competitors, the Justice Department
argued in its opening statement in the historic antitrust case Monday.

Lawyers for the federal government and 20 states began to lay out the case
before U.S. District Judge Thomas Penfield Jackson that Microsoft has used
illegal tactics to preserve its monopoly position in the operating system

In an opening statement, New York Assistant Attorney General Stephen
Houck sought to establish Microsoft’s monopoly position in the operating
system market. Making the case for the Justice Department, attorney David
Boies said Microsoft used its power to threaten and require companies to
agree to carry Microsoft’s browser, Internet Explorer.

The government’s lawyers directly attacked the credibility of Microsoft
founder Bill Gates by contrasting his videotaped deposition in August with
e-mail and memos written by Gates years earlier. Gates’ video testimony
was played on monitors around the courtroom that included Gates’
statements he wasn’t involved in preparing for a crucial June 21, 1995
meeting between Microsoft and Netscape.

Gates said he “had no sense of what Netscape was doing.” But Boies
presented May 1995 memos from Gates that described Netscape as a new
competitor and suggested that there was a powerful deal Microsoft could do
with Netscape.

The government contended that, after Netscape rejected Microsoft’s offer,
Microsoft used its resources to conquer the market for Netscape’s competing
browser software.

Microsoft general counsel William Neukom said the government’s “out of
context snippets and rhetoric” don’t even approach descriptions of
anticompetitive behavior.

“You did not hear anything that the government hasn’t been saying for
weeks and in some cases for months,” Neukom said. “We have competed
vigorously and fairly.”

Microsoft attorney John Warden is scheduled to present his opening
statement on Tuesday. Netscape CEO Jim Barksdale and Apple Computer
Inc.’s Avi Tevanian are scheduled to be the first two witnesses called by

Arguing for the government, Boies also showed charts of the growth of
Microsoft’s browser share and Netscape’s dwindling share, which he said
illustrates one impact of Microsoft’s conduct. Boies said the browser share
charts, which were based on Microsoft’s documents, show that 76% of
new Internet users are firing up the Internet Explorer browser, and 88% of
new users are expected to do so by May. Netscape, by contrast, is relegated
to a smaller share of an ever-declining group of early adopters, not new
Internet users, Boies said.

Deal making that leveraged Microsoft’s monopoly position in the operating
system market has led to browser dominance among new users, Boies

Boies also pointed to internal memos from Microsoft and Apple and said
they show how Microsoft urged the computer maker to use Internet
Explorer. The memos, Boies said, show Microsoft being willing to do
“whatever it takes.” He quoted from a Feb. 13, 1998 Microsoft memo that
describes the production of Mac Office as “the perfect club to use on them”
require Apple to adopt Internet Explorer.

“This is not business as usual, your honor,” said Boies, who successfully
defended IBM against charges of anticompetitive behavior in the 1970s.

Boies also displayed on an overhead projector memos written by Microsoft
chairman Bill Gates about Intel saying, “I don’t understand why Intel funds
a group that is against Windows 95.” Boies said the memos show that what
is really saying in the memo is “you cannot fund things that compete with us,
or we will retaliate.”

Following Monday’s proceedings, assistant attorney general Joel Klein, the
Justice Department’s antitrust chief, said, “We’re delighted that the trial
begun, and we’re off to a great start.”

Klein said consumers will only get the best products if Microsoft’s illegal
anticompetitive practices are stopped. He said the government intends to
show through detailed evidence that Microsoft’s illegal deeds match its
illegal words.

Ed Black, president of the Computer and Communications Industry
Association, said, “I think the Justice Department blew them away.” Black
said Boies illustrated Microsoft’s consistent statements and actions that
show the company was using monopoly power to force companies to do
what they didn’t want to do.

Jay Amato, chairman of the Technology Access Action Coalition, a group of
companies that support Microsoft, said in a statement, “It is not — and
not — be illegal for a company to be innovative, creative and competitive.”

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