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Two versions of reality in DOJ case

If the documents filed so far in the the government's case against Microsoft are any indication, the judge clearly has his work cut out for him in deciding where the truth lies.

If the documents filed so far in the Justice Department's case against Microsoft are any indication, U.S. District Judge Thomas Jackson clearly has his work cut out for him in deciding where the truth lies.

The night-and-day accounts portrayed in the documents are central to an action Attorney General Janet Reno brought a month ago when she alleged that Microsoft violated terms of a 1995 court order. She accused the software giant of requiring PC vendors to install the Internet Explorer browser as a condition of licensing the dominant Windows 95 operating system, a practice that the department maintains is expressly forbidden by the consent decree.

With documents in the case numbering in the tens and possibly hundreds of thousands, both sides are unearthing evidence that puts the best spin on the facts while disavowing the rest. The Justice Department has accused Microsoft of seeking "to rewrite history," while a company spokesman has accused the government of "selective use of facts."

One expert in antitrust law said the ambiguity in the court documents ultimately may work in Microsoft's favor.

"If it's clear that they're violating a consent decree, it's one thing," said Mark Lemley, an associate professor specializing in antitrust issues at University of Texas School of Law. "But if it's sufficiently ambiguous that reasonable people could come to different conclusions, it seems unfair to [punish] them for conduct that might have been entered into in good faith."

Both sides in the case are pinning their arguments on internal company communications that, on the surface, appear to present starkly different versions of reality on the key issue of software "integration"--specifically, whether Internet Explorer is a separate product or part of Windows.

In its filing last week, for example, the Justice Department cited a December 1996 email message from Microsoft senior vice president Jim Allchin that referred to Explorer as "an add-on to Windows" and suggesting that the company "leverage Windows more" to promote the browser. The department says such correspondence shows that Microsoft considered Explorer and Windows separate products that could be used to leverage one another.

Microsoft, however, has submitted its own documentation, including a December 1994 email in which its managers discussed creating "a series of integrated products" to respond to the rapidly emerging lure of the Internet. The company says this and other documents show that the government was notified years ago of the company's intentions to meld its Internet applications and technologies.

The contradictory evidence by no means stops with the two emails submitted by Microsoft and the Justice Department.

To back its claim, the Justice Department filed with last month's petition a bevy of exhibits that documented accounts of original equipment manufacturers such as Compaq Computer, Gateway 2000, and Micron being told they would lose rights to carry Windows 95 if they removed the Internet Explorer icon from the computers they sold. Anticipating a likely Microsoft defense, the department further provided a mound of evidence that Windows and IE are indisputably two separate products.

Three weeks later, Microsoft fired back, arguing in court papers that it had long intended to build Internet capabilities into its operating system and had clearly communicated this intention to government attorneys during settlement negotiations in late 1993 and 1994. The court memorandum was chock full of names, dates, and other details, among them:

• Two memoranda penned in January 1994 by Microsoft executives, one titled "Windows: The next killer application on the Internet," and the other, "Microsoft and the Internet." Both specifically made reference to building Internet capabilities into Windows 95, which at the time was still in development under the code name "Chicago."

• A December 1994 email in which its managers discuss creating "a series of integrated products" for the Internet.

• Microsoft documents dating back to late 1993 that were subpoenaed by the Justice Department, detailing plans to build Internet technologies into Chicago. The fact that they were obtained by the government before the two sides signed the consent decree proves that the department knew and approved of the plans, Microsoft contends.

• Accounts of negotiations between the Justice Department and Microsoft, made under oath by its attorneys, in which the software company steadfastly insisted that it reserved exclusive control over what capabilities it built into its operating system.

"One way or another," Microsoft concluded in its response brief, "the DOJ was on notice more than three years ago that Microsoft intended to make Windows 95 itself a vehicle for accessing information on the Internet. The DOJ cannot take a position here that is diametrically opposite to the position it took before" it signed the consent decree.

Now, in the last filing scheduled before a December 5 hearing, the government last week attempted to poke holes in those defenses by introducing yet more evidence.

"Following the commencement of the United States' investigation and the filing of this contempt action, Microsoft seeks to rewrite this history--to disavow everything it has told millions of consumers--by attempting to characterize Internet Explorer as an 'integrated' component of Windows 95, rather than a separate product," the government's brief alleged.

Among the exhibits attached to the brief were:

• an April 1994 email to Steven Sinofsky, an executive in charge of Microsoft's office products unit, in which he is told that applications such as Mosaic would be supplied by third parties. (Mosaic was the only browser application on the market at the time.)

• a June 1994 email in which Sinofsky states, "We do not currently plan on any other client software, especially something like Mosaic."

• a January 1995 draft press document covering Microsoft's licensing of Mosaic, which states flatly that "there are no plans to ship...the Mosaic software in the Windows 95 box when it ships in August of this year."

• a December, 1996 email from a Microsoft executive referring to IE as an "add-on to Windows" and suggesting the company "leverage" the operating system's market share.

The presence of independent attorneys who specialize in antitrust law said these types of conflicting perspectives are to be expected, especially in cases of such high profile.

"I don't think it's particularly atypical that you would start out with such radically different pictures of the world," said Jonathan Steinberg, a litigator at Irell & Manella in Los Angeles. "If you look at the early pleadings in any case, you're looking through opposite ends of the telescope. What tends to happen is that, as matters get pursued, certain factual accounts start to crumble."