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Microsoft opts out of hearing

The software giant is facing its third congressional hearing on its business practices, but this time its top executives are not expected to testify.

Microsoft faces another congressional hearing on its business practices Thursday, but this time the software giant's top executives are not expected to testify.

Instead, Senate Judiciary Committee chair Orrin Hatch will hear testimony from some of the company's harshest critics and competitors.

Committee staff members disclosed today that RealNetworks chief executive Robert Glaser and Mike Jeffress, an executive with TV Host also will testify--indicating that the hearing will examine Microsoft's foray into Web broadcasting.

Microsoft has jumped into the market for so-called Web streaming technology, which allows a computer to act like a television or radio. In addition to owning a 10-percent, nonvoting stake in RealNetworks, it also recently acquired VXtreme. Microsoft also holds significant stakes in Web streamer VDOnet, as well as Apple Computer, which makes a streaming product known as QuickTime. Antitrust enforcers had been scrutinizing these relationships.

Jeffress, meanwhile, is a vice president of a Harrisburg, Pennsylvania, start-up that claims Microsoft copied its idea for an electronic television guide shortly after his company pitched the product to the software giant. Microsoft since has folded a similar feature into its Windows 98 operating system, jeopardizing TV Host's future (See related story.)

Acer America product manager Ricardo Correa, who recently criticized Microsoft's business practices, also might testify, a person familiar with matter said. Committee members could not be reached for comment.

The list already includes Larry Ellison, Mitchell Kertzman, and Jeff Papows, chief executives from includes Oracle, Sybase and Lotus Development, respectively.

As for Microsoft, "We appreciate the invitation, but under the circumstances we will have to respectfully decline the invitation to testify given the ongoing legal issues involving Microsoft and the [Justice Department]," said company spokesman Mark Murray. "Given all the effort we have gone through, it just doesn't appear that any useful purpose would be served by additional testimony."

Most of Microsoft's top brass instead will be at home in the Seattle area, reviewing their business strategy with analysts.

Hatch has been an outspoken critic of Microsoft's business practices. He also has accused the software giant of engaging in a "game of hide the ball," and deploying "a massive PR campaign grounded in spin control and misdirection."

Microsoft insists it already has laid all its cards on the table.

"We really have gone the extra mile to provide the committee with all the information that it needs, in addition to testifying for over four hours on a wide range of issues earlier this year," said Murray. "We provided them with detailed background on all our different business practices and products. We've even made all our business contracts available for them to analyze and review."

Despite reading the same documents, however, the committee and Microsoft reached different conclusions about the company's business practices.

One telling example of the diverging interpretations was apparent in the most recent hearing, in which Microsoft chief executive Bill Gates testified that, "There is nothing that restricts anybody who has content relationships with us from developing sites that exploit" competing browsers, including Netscape Communications' Navigator.

Hatch, however, released a report last month that said Gates's comments "flatly contradicted" DOJ evidence.

Thursday's hearing, dubbed "Competition in the Digital Age: Beyond the Browser Wars," is expected to focus on so-called enterprise computing, including Microsoft's Windows NT, Back Office, and Windows CE. It also is expected to address Microsoft's foray into online content, as well as its Java-related activities. Committee staffers have declined to elaborate or discuss an agenda for the hearing.

Murray said Microsoft will have an observer on hand to issue a response to any new allegations quickly.

The hearing will be only the latest public confrontation between Hatch and Microsoft. Last November, he criticized cross-promotional agreements Microsoft has with Internet service providers forbidding them from telling some new customers that alternatives exist to the Internet Explorer browser. The agreements also allowed Microsoft to terminate the deal if the quota of the ISP's subscribers using Internet Explorer fell below a certain level, 85 percent in some cases.

Microsoft since has revised the deals with some providers, but the exclusive requirements remain in effect with the largest providers, including America Online, CompuServe, and Prodigy. Microsoft said that the contracts were perfectly legal, and that the only reason it changed them was to prevent competitors from mischaracterizing them.

Hatch held a second hearing in early March, in which top executives from Microsoft archrivals Sun Microsystems and Netscape went head-to-head with Gates and his ally, Michael Dell of Dell Computer.

Most of the four-hour hearing focused on Microsoft's marketing of Internet Explorer, which is also at the heart of two lawsuits filed by the Justice Department and 20 states.

More recently, Hatch told a subcommittee investigating consolidation among telecommunications companies that Microsoft's foray into the industry might overshadow concerns about the way the company is positioning itself in the browser market.