Antitrust case could be delayed

Representatives for the Justice Department and Microsoft said they are in discussions regarding "case management" issues, but they declined to confirm the agreement. The two sides disclosed the negotiations following a hearing held today in U.S. District Court in Washington, D.C.

"Case management" is a broad term referring to procedural issues, such as scheduling, in a legal case.

The hearing concerned a motion in which Microsoft asked that the trial be settled in its favor without going to trial. U.S. District Judge Thomas Penfield Jackson did not rule on Microsoft's motion for summary judgment, both sides said, adding that the hearing appeared to go well.

According to the source, some 40 depositions still must be taken before the trial--now set for September 23--is to start. Given the number and the breadth of the depositions, many pundits have speculated a delay is inevitable.

The outstanding depositions have been requested by both sides, said the source, including some requested by Microsoft only last week.

Those deposition requests were included in subpoenas Microsoft sent last Friday to Sun Microsystems, Netscape Communications, IBM, Oracle, and Novell. They seek information on a broad set of business dealings, including a coalition, or "gang of four" that presumably tried to compete with Microsoft through a host of new products, including a "global Unix," and a Web browser based on Sun's Java programming language.

Other outstanding subpoenas, however, have been requested by the government, the source said.

In a brief filed in the case last week, the software giant asked that certain allegations recently introduced into the case be dismissed. Microsoft asked, alternatively, that the trial be delayed by six months so that its attorneys can have time to prepare a defense.

Under the schedule agreed to by antitrust prosecutors and Microsoft, a pretrial conference would occur on October 9, the source said.

If the trial is delayed, it will not be the first time. Judge Jackson originally set the trial for September 8, but moved that date back after depositions of Microsoft chairman and chief executive Bill Gates and other top executives were delayed.

There was no indication on when Jackson might rule on the request to delay the trial.

In its case, the government contends that Microsoft holds a monopoly in the market for personal computer operating systems and has leveraged that to take over other markets. The company denies that it holds a monopoly.

One of the key issues in the case is whether Microsoft rewrote its software--folding its Internet Explorer Web browser into its Windows 98 operating system--merely to gain a competitive advantage over Netscape Communications.

It is illegal for a monopoly to bundle two different products in order to force the combined product on consumers. But the practice is all right when the combined product provides new advantages to consumers.

During the court hearing, Judge Jackson repeatedly asked Microsoft attorney John Warden whether Microsoft had improved the products by combining them.

"What advantage is there from having Microsoft integrate Windows and Internet Explorer?" Jackson asked at one point.

Warden explained that the same computer code provided Web browsing capabilities and many other functions. He also described the marketing of the Microsoft browser to America Online, where AOL put the two browsers against each other in a side-by-side test.

"Microsoft won that competition," he said. "Microsoft's victory is how the market works."

But David Boies, arguing for the government, pointed out that on January 8, 1998, Microsoft CEO Bill Gates wrote a memo about AOL.

"In that memo, Mr. Gates records [AOL chairman Steve] Case as saying that Microsoft is behind Netscape, but it's good enough to be in the ballpark," Boies said.

He added that the government plans to present evidence showing that AOL would probably never have chosen the Microsoft product, except that it wanted favorable placement on the Windows "desktop."

Warden replied that AOL did not begin using Internet Explorer until months later, when it was much improved.

Reuters contributed to this report.