AOL deal overshadows witness testimony
America Online's plans to purchase Netscape once again dominates testimony as Microsoft seeks to use the deal as another reason why the government should drop its case.
As Microsoft's antitrust trial under way here was finishing its sixth week, the company's senior general counsel, William Neukom, said the government "ought to drop this case [and] ought to stop wasting public resources."
He added that the proposed deal, which also involves Sun Microsystems, shows just how unneeded the government's case is, because the merger would profoundly shape the future direction of browser technology, online services, and electronic commerce.
But Justice Department (DOJ) lead prosecutor David Boies said the government had no intention of dropping the case, adding that the merger was not likely to have a "material effect" on the case his agency and 20 states brought against the software giant in May. Nonetheless, Boies seized on the deal as more evidence of Microsoft's alleged anticompetitive acts in the market.
Warren-Boulton, who was the top antitrust economist under the Reagan administration, said he did not know enough about the deal to answer, but that in any event, Microsoft's effect on Netscape had clearly been felt, "at least prior to the events of yesterday and the day before."
Lacovara questioned Warren-Boulton on whether the theory can be used to explain Microsoft's dominance, "But you don't believe network effects completely explains the popularity of Windows, do you sir?" he asked.
Warren-Boulton replied that "the success of the Windows operating system has been a reflection of the success of the applications."
Lacovara countered: "Do you believe that Microsoft can essentially release an operating system, sit with its feet up, and watch the applications roll in?"
Warren-Boulton answered: "I certainly wouldn't expect them to do that. That would not be a profit-maximizing strategy."
Warren-Boulton has claimed in written testimony that Microsoft holds a monopoly in the operating system market for personal computers that run on Intel chips.
He further accuses the software giant of abusing that monopoly position through a series of predatory acts, such as shutting out competitors in the Internet space through restrictive contracts with Web sites, service providers, and computer vendors.
Late yesterday, antitrust prosecutors released new evidence documenting deals Microsoft signed with Internet service providers and Web sites to get them to distribute the Internet Explorer browser exclusively, or at least to the vast majority of their customers.
Lacovara told the court today he was "very substantially" past the halfway point in his cross-examination, and would likely finish by Monday. The next witness to be called is James Gosling, a vice president at Sun and a creator of the Java programming language.
Court will then recess for the Thanksgiving holiday, with the trial resuming on Monday. Sun executive James Gosling is scheduled to take the stand for the government next week.
Reuters contributed to this report.