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Microsoft rebuts government case

The software giant releases a detailed statement outlining why its attorneys believe the government's lawsuit is legally and factually flawed.

Microsoft today provided new evidence that it says rebuts the antitrust case filed against it, releasing a detailed statement outlining why company attorneys believe the government's lawsuit is legally and factually flawed.

The bulk of the report, titled "Setting the Record Straight: Microsoft Statement on Government Lawsuit," repeats point-by-point rebuttals Microsoft has made for months about the case. But among the arguments is new evidence that sheds light on Microsoft's plans for countering two government allegations related to partnerships struck with America Online and Intuit.

"In this litigation, supported by a few of Microsoft's competitors, the Justice Department (DOJ) has ignored the choices made by consumers in a free market," the 43-page statement argues. Elsewhere it says that the DOJ and 20 states have improperly altered their case because it is unsupported by both the facts and the law at issue.

"The government has turned its back on its original case because it was supported neither by the facts--as revealed in discovery during the summer--nor by the law, as revealed by the Court of Appeals decision for Microsoft in June 1998," the report argues. "Rather than proceed on the case they filed, the DOJ spent the summer looking for new stories that could be transformed into allegations of supposedly anticompetitive conduct."

The government claims that Microsoft improperly promised AOL valuable placement on the Windows desktop in exchange for the online giant agreeing to exclusively ship Internet Explorer. The government cites internal Microsoft email to further allege that AOL chairman and chief executive Steve Case believed Internet Explorer was technically inferior to Navigator, Netscape Communications' competing browser. It is a violation of federal law for a company to use a monopoly in one market to gain a foothold in a new market.

For the first time, Microsoft today publicly rebutted a number of key points related to the AOL allegations. "In the very 1996 email cited by [Justice Department attorney David] Boies, [Microsoft chairman and chief executive Bill] Gates says that he told AOL's Case that Microsoft's technology and service were the best for AOL," the report argues. "Gates explicitly promoted the quality of Microsoft's technology, not any 'leveraging' of Windows."

The report also claims that Case's belief that Netscape's Navigator was a superior browser was based on technology in version 2.0 of Internet Explorer. "Over the next three months Microsoft worked hard to show AOL how Internet Explorer 3.0 would be a far better base for building AOL access software than Netscape Navigator," the statement claims.

Microsoft's rebuttal, however, appears to be at odds with public statements Case made last month, in which he said the online giant chose Internet Explorer because, under the deal, AOL software would be bundled with every copy of Windows sold.

The other new piece of evidence cited in the report attempts to rebut government claims that Microsoft similarly "bribed" financial software maker Intuit into a deal to use Internet Explorer instead of Navigator. Citing a July 24, 1996, email message from Bill Gates to Intuit chairman Scott Cook, the report claims Gates promised "that the primary thing Microsoft could offer Intuit is the best browser technology, componentized in a way that specifically addressed Intuit's needs."

The report also catalogs numerous public statements Intuit representatives have made that they believed Internet Explorer to be superior to Navigator.

Today's statement also repeats rebuttals Microsoft has been making for months now, including the following:

  • Contrary to allegations that Microsoft "ties" its Internet Explorer browser to its Windows operating system, "Windows 98 is a single, integrated product that benefits consumers"

  • The screen users see when turning on their new computer for the first time "benefits consumers and PC manufacturers," a statement directed at the government's claim that "initial screen" requirements imposed on computer vendors are anticompetitive

  • Microsoft has not foreclosed distribution channels for the Navigator browser, as the government claims

  • Microsoft did not try to persuade Netscape to divide the browser market in a June 1995 meeting, as the government claims

    "We believe the facts and the law are on our side, and we feel that it's important that the American public hears from both sides in this story," said Microsoft spokesman Mark Murray. "The government has tried to use misleading snippets of information to mislead the American public and attack a successful American public company."