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Microsoft to depose AOL's Case

AOL's chief executive is among four witnesses Microsoft will depose in its search for more information about AOL's $10 billion acquisition of Netscape.

Microsoft will depose America Online chief executive Stephen Case in an effort to undermine a key charge in its federal antitrust trial, now in recess.

Case and another witness from AOL and one each from Netscape Communications and Sun Microsystems will testify under oath about AOL's $10 billion acquisition of Microsoft rival Netscape, Microsoft said today. The other three witnesses have not yet been identified.

Judge Thomas Penfield Jackson Microsoft's day in court granted Microsoft's permission to depose four witnesses on Friday, Microsoft said. The company had sought permission to question seven witnesses.

Microsoft argues that AOL's recently completed purchase of Netscape and its licensing agreement with Sun demonstrate competition in the software market. That undermines the government's contention that Microsoft is a monopoly that illegally wields its power, the company says.

The depositions "will only confirm how the agreement undermines the heart of the case," a Microsoft spokesman said.

The news comes on the eve of settlement talks expected to begin tomorrow afternoon in Washington between Microsoft and the Justice Department (DOJ) and 19 states. Microsoft recently submitted a four-page proposal as a starting point. Little is known of its contents, but the proposal has been widely criticized by government officials.

Also tomorrow, AOL and Sun will detail their strategic alliance, under which Sun will sell Netscape server software. (See related story) The tie-up was a key component in AOL's agreeing to buy Microsoft's leading rival in the browser market.

The depositions are likely to begin the week of April 12, though that will depend on whether documents needed for the questioning can be produced in time, a second Microsoft spokesman told Bloomberg.

The Justice Department opposed Microsoft's request, arguing that "nothing about the deal or its outcome can affect the legality of Microsoft's past anti-competitive actions."

Microsoft, meanwhile, filed an emergency motion to force AOL, Netscape, and Sun to produce email messages about the transaction. Microsoft argued in court papers that the companies had produced fewer than three boxes full of documents. The software maker said it had turned over more than 120 boxes to the Justice Department as part of the agency's antitrust review of the three-way combination.

"It is simply not plausible that so few email messages exist with regard to AOL's $10 billion acquisition of Netscape and AOL's 'strategic alliance' with Sun," the company's lawyers said in the court filing.

An AOL spokesman declined to comment.

Sun spokeswoman Lisa Poulson said the company did its "best to thoroughly satisfy the first subpoena and upon rechecking, we don't believe we have anything additional to produce."

The antitrust trial has been in recess since late February and is not expected to resume until mid-May.

Case's deposition could give Microsoft's lawyers an opportunity to size him up as a potential rebuttal witness for the trial. If the case does reconvene in May, each side will get to call witnesses to attack the other side's arguments.

One Microsoft executive testified at trial that he believed AOL planned to stop using Microsoft's Internet Explorer Web browser for its online service and adopt Netscape's rival Navigator product. AOL has consistently said it would continue using IE.

Shares of Microsoft rose 3.25 to 92.375. AOL shares rose 6.6875 to 132.375.

Bloomberg contributed to this report.