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Ballmer dropped from witness list

Microsoft shortens its witness list for the second time this week, announcing that CEO Steve Ballmer will not testify as expected in its ongoing antitrust trial.

Microsoft CEO Steve Ballmer will not testify as expected in the ongoing antitrust trial, Microsoft said on Friday.

Ballmer was expected to testify in opposition to a proposed states' remedy that could strip software code out of Windows XP. Ballmer's testimony would have followed up testimony from Chairman Bill Gates, who spent three days on the witness stand last week.

Now scheduled to testify on Microsoft's behalf are: Jim Allchin, the senior executive in charge of Windows; Linda Averett, a product unit manager in charge of the Windows Digital Media Platform; John Bennett, a computer science professor at the University of Colorado; and Kenneth Elzinga, a professor of economics at the University of Virginia.

In his testimony last week, Gates lashed out at the litigating states' proposed remedy as "impossible" for Microsoft to follow. Antitrust experts later said he delivered the classic monopolist's defensive: Competition would be less efficient than maintaining the uniformity of Windows, Microsoft's monopoly product.

Nine states and the District of Columbia are pursuing stiffer sanctions against Microsoft than the November settlement deal made with the Justice Department and nine of 18 states. The litigating states want Microsoft to sell a second version of Windows with so-called middleware removed, license through auction the Office desktop application software for use on other operating systems, and give away the source code--or blueprint--to the Internet Explorer Web browser.

For the second time this week, Microsoft shortened its witness list for the second half of a court proceeding that could determine a remedy for its antitrust violations. On Monday, Microsoft chopped eight people off the list.

Removal of one witness could set back the states' plan to raise more allegations that Microsoft used a provision of the Justice Department settlement to tighten its control over PC makers. The states had planned to introduce 12 documents during the cross-examination of Richard Fade, the Microsoft executive in charge of relations with OEMs, or PC makers. But on Monday, the eve of his expected testimony, Microsoft abruptly dropped Fade from its witness list. Some of those documents, which include e-mails from Dell Computer, could be introduced next week. But on Friday Microsoft also removed OEM account manager Gayle Brock from the witness list. In the past, U.S. District Judge Colleen Kollar-Kotelly has seemed reluctant to introduce documents into evidence without a witness that could be cross-examined about them.

If Kollar-Kotelly accepts the evidence, it could have an impact on the remedy proceeding and the Justice Department settlement, which she has not yet approved.

Rich Gray, a Menlo Park, Calif.-based attorney closely following the trial, said PC makers are "the group the judge should care deeply about." Kollar-Kotelly needs to examine "flaws with the proposed settlement" and look for ways to offer PC makers "further protection from Microsoft's monopoly power, here being exercised to obtain apparent price increases."

Four witnesses remain on Microsoft's witness list, so testimony could conceivably wrap up as early as next week. Once testimony concludes, the litigating states will have an opportunity to offer some sort of rebuttal.

The trial begins its eighth week of testimony on Monday.

Poole at Bay
Will Poole, vice president of Microsoft's Windows Media Division, took the witness stand on Thursday and is expected to finish up on Monday. Like other witnesses, he submitted written testimony to the court before being cross-examined.

In some respects, Poole's testimony did not go well for Microsoft. During cross-examination, states' attorney John Schmidtlein introduced Microsoft e-mails that suggested company executives in 1999 set out to tackle RealNetworks using a similar strategy taken against Netscape Communications, now owned by AOL Time Warner.

As in its earlier battle with Netscape during the so-called browser wars, Microsoft trailed RealNetworks both in technology and market share. To combat Netscape, Microsoft integrated Internet Explorer into Windows 98. In June 2001, a seven-panel Court of Appeals ruled this "commingling of code" to be an anti-competitive act.

In one e-mail to Gates, Microsoft executive Anthony Bay wrote that Microsoft had to "change the rules, reposition (the) streaming media battle from NetShow versus Real to Windows versus Real--follow the IE/IIS (Internet Explorer/Internet Information Server) strategy wherever appropriate."

NetShow later was morphed into Windows Media Player.

"There are aspects of the battle that were very similar to Netscape. There are aspects of the battle that were very different," Poole conceded on the witness stand.

In another e-mail, Bay wrote, "Talk has turned to comparisons to the Microsoft-Netscape battle. RealNetworks is still significantly ahead of us and not slowing down. They have not yet made any major mistakes."

The e-mails also suggest Microsoft executives were concerned about RealNetworks' plans to introduce browser functions to its media player.

Microsoft fully integrated Windows Media Player into the operating system with Windows XP. Internet Explorer 6, which also is integrated into XP, introduced Windows Media playback from within a special pane in the browser. The browser also did not initially work with Apple Computer's QuickTime media player.

The litigating states proposed the second version of Windows without middleware as one way to address the Court of Appeals' commingling finding. The court found the presence of Internet Explorer code deterred both consumer and developer interest in Netscape's browser.

"If you've already paid for all the middleware as part of the operating system, what's the incentive to go out and try something better?" asked Jeff Shohet, an antitrust attorney with Gray Cary's San Diego office.