Trial dominates week's news

The opening of the Justice Department's landmark antitrust suit against Microsoft dominates news in the technology world this week.

7 min read
Cross-examination of Netscape chief executive Jim Barksdale dominated the first week of a landmark antitrust suit brought by the Justice Department against Microsoft.

After opening arguments and the introduction of Barksdale's written testimony, the software giant sought to undermine Barksdale's credibility by introducing a 1994 email from then-chief executive Jim Clark asking Microsoft to consider taking an equity stake in his company. The evidence is supposed to mitigate Barksdale's most explosive claim and a key tenet of the government's case, that Microsoft executives in June of 1995 promised Netscape handsome inducements if it would agree to divide the browser market.

Microsoft's day in court
At the outset, the Justice Department (DOJ) sought to contrast details of Microsoft's business dealings with AOL, Apple, and Intel with videotaped testimony of Microsoft chief Bill Gates. The software giant replied by asserting that the government used misleading evidence to accuse Microsoft of anticompetitive acts.

Then followed the release of Barksdale's testimony, taken before the start of the trial for purposes of saving time. In it, the Netscape chief asserts Microsoft should be forced to separate its Internet Explorer browser from its Windows operating systems and barred from entering into exclusive partnerships. He also details a series of alleged steps that Microsoft took to freeze Netscape, notably a 1995 meeting in which Microsoft manager Dan Rosen allegedly proposed dividing the browser market.

Microsoft attorney John Warden cross-examined Barksdale for three days. A highlight came when Warden asked Barksdale to explain his testimony concerning the Rosen meeting in light of Clark's email. Barksdale appeared to be surprised by its contents.

On Thursday, the final day of the week, Warden introduced more evidence suggesting that it was Netscape that sought a cooperative relationship with Microsoft, and the two sparred over the distinctions between Web browsing as standalone software and as a part of the operating system.

Separately, in the Sun-Microsoft Java lawsuit, newly released internal emails and memos show that Microsoft tried to "kill cross-platform Java" by growing the "polluted Java market," while a Sun Microsystems manager acknowledged that "Microsoft was smarter than us when we did the contract."

Lawsuits a go-go
President Clinton signed a $500 billion spending bill for fiscal 1999 that includes several technology industry-backed provisions as well as controversial Net content regulations. Civil liberties groups, news publishers (including CNET: The Computer Network, publisher of News.com), and online merchants sued the government the next day to overturn the Child Online Protection Act, dubbed "CDA II."

The same day as the signing, a California superior court judge threw out a lawsuit calling for mandatory filters on library computers used to surf the Internet, basing the decision on a remaining portion of the discredited Communications Decency Act which says an access provider is not responsible for the content downloaded by third parties. The attorney who filed the suit said that the case will not end here.

Using Washington's four-month-old antispam law, the state's attorney general filed the first state lawsuit against an alleged spammer, an Oregon company. The Washington law makes it illegal for junk emailers to forge headers, hijack other email systems, or otherwise "misrepresent the messages' point of origin."

Alarmed by a recent spate of telecommunications mergers, the Federal Communications Commission held an extraordinary hearing to ask SBC Communications and Ameritech; AT&T and Tele-Communications Incorporated; and Bell Atlantic and GTE to explain why their proposal business agreements do not go against the goals of the 1996 Telecommunications Act, designed to promote market competition.

Domain deal nears
The transfer of administrative control of the Internet from government to the non-profit sector could begin within a few weeks, according to Clinton administration point man Ira Magaziner. A division of the Commerce Department has selected the Internet Assigned Numbers Authority's (IANA) plan to form a new corporation, the Internet Corporation for Assigned Names and Numbers (ICANN), which would make policy decisions over the domain naming system.

At stake is the power over the underpinnings of the Net as well as millions of dollars in the form of domain name fees and the business value of domain names. Technology luminary Esther Dyson, who will sit on the ICANN board, described her thoughts on the handoff in an interview.

Tragically, Jon Postel, whose leading role in IANA made him one of the most powerful figures on the Internet, passed away as a result of heart problems at the age of 55.

A preliminary standard for digital subscriber line (DSL) modems has been set, paving the way for faster modems that can offer high-speed Internet access over regular phone lines.

An effort to extend Ethernet to heavy-duty data tasks that's being spearheaded by gigabit-speed start-up Alteon Networks will be submitted to the Institute of Electrical and Electronics Engineers as soon as this fall.

Strong earnings season continues
Stronger sales of its Thinkpad portables and Aptiva home computers were a big part of IBM's better-than-expected third quarter.

Microsoft posted big first-quarter earnings that blew past analysts' expectations, and disclosed that it holds more than $17 billion in cash--with no debt. Wall Street cheered, but given events in Washington, it may have been an awkward time for the software giant to report its highest quarterly profit since it went public in 1986.

Direct-sales PC maker Gateway topped analysts' earnings estimates for its third quarter on the strength of record shipments.

Texas Instruments' third-quarter earnings surpassed Wall Street expectations, despite weakness in the memory sector and the overall downturn in the semiconductor market.

Lucent reported a 23-percent rise in revenue and a 49-percent gain in net income, topping expectations.

Mergers and acquisitions
For $67 million, ATI Technologies acquired Chromatic, a once promising media processor venture that recently had to lay off a big chunk of its workforce. ATI will move into the market for integrated chips for set-top boxes and other intelligent devices. The Toronto-based graphics chip manufacturer also reported that revenue jumped 92 percent for fiscal 1998, while earnings shot up 253 percent, a surge largely attributable to design wins Dell, Compaq, and Hewlett-Packard, as well as strong ties to Intel.

In an effort to jump-start the development of Net-based TV cable technologies and services, Web software developer Spyglass and cable equipment manufacturer General Instrument teamed up on a three-year, $20-million joint venture.

Intel will pay $185 million in cash for virtual private network (VPN) and remote access equipment maker Shiva, in an effort to get a jump on the increasingly lucrative VPN business, and possibly the even more lucrative voice-over Internet market.

Sun Microsystems acquired Canadian software developer Beduin Communications, a company that has developed a "small footprint" Java-based Web browser for cellular telephones, for an undisclosed price.

Online music sellers CDnow and N2K agreed to merge, concluding negotiations that became publicly known earlier this month. The move is apparently intended to create one company better suited to fighting off challenges from bookseller Amazon.com as well as brick-and-mortar retailers moving into Web sales.

Silicon Graphics will delay shipments of workstations based around Intel processors and Windows NT until January 1999, an embarrassing slip that once again pushes back the company's revival strategy. News came with SGI's report of first-quarter net losses.

TheGlobe.com and Vignette dropped plans for initial public offerings, marking two more tech companies to retreat from the public trough this week. TheGlobe.com, an online community, apparently found that lowering its pricing range earlier this week was not enough to push its stock offering forward.

Online health care company Healtheon too canceled its proposed initial public offering, citing poor "market conditions."

Support or perish
According to Lucent Technologies chief Richard McGinn, the growth of data traffic is far out-distancing that of traditional voice usage, forcing companies to become data supporters or perish. Lucent is making huge bets that previously disparate voice and data networks will converge within a common layout using a standard transmission means, the Internet Protocol.

Computing giant Hewlett-Packard is evaluating whether to fit upstart operating system Linux into its product plans, just as a new version of the increasingly popular software is readied.

Staunch Microsoft foe Sun Microsystems is backing into Windows NT support, having completed its purchase of application server vendor NetDynamics. New application server customers include Countrywide Home Loans, Federal Express, and Australian phone company Telstra, all of which will use NetDynamics on Windows NT, among other operating systems.

Oracle is stealing a page from Microsoft's playbook by integrating new ease-of-use features into its Oracle 8i server. The new features, included in a new release of its Enterprise Manager administration tools, are the cornerstone of a strategy to counter Microsoft's SQL Server database, which also includes tools to minimize the time and needed to install, configure, and manage the software on Windows NT-based servers.

Also of note
AOL and Time's New Media unit expanded a deal to make the online edition of People magazine available exclusively on the proprietary network ? Microsoft relaunched its Sidewalk site as a consumer guide ? Lexis-Nexis, the popular legal and news search firm today, debuted an ambitious Web service aimed at the business user ? Netscape released Communicator 4.5 ? Meanwhile, the company acknowledged a bug that strikes Unix versions of the browser ? Slow to jump into the sub-$1,000 market, IBM is poised to become the first major vendor to ship a sub-$600 PC ? IBM also announced a massive 14.1GB hard drive for portables ? Hewlett-Packard introduced a new version of its slimline notebook series ? Intel fixed a notorious bug with its Xeon processors and began volume shipments of the high-end server chip.