Originally created 02/17/99

Government plays video to rebut Microsoft claims

WASHINGTON -- The government played its own courtroom video demonstration Tuesday to show that restrictions Microsoft Corp. placed on the world's largest Internet provider make it annoyingly complicated for most consumers to use a competitor's software.

Microsoft's video, shown to the judge last week, glossed over the process "to save time," which it said took only 10 minutes.

The government said Tuesday the procedure could take more than an hour, depending on how fast a user connects to the Internet.

"It's not nearly as easy as their video portrayed it to be," Justice Department lawyer David Boies said outside court. "They clearly were trying to shorten the tape."

U.S. District Judge Thomas Penfield Jackson appeared perplexed, confessing to a "conceptual problem" with parts of the procedure.

As part of its antitrust case, the government contends Microsoft imposed illegal restrictions on America Online Inc. as part of a March 1996 deal for AOL to distribute Microsoft's Internet software to its millions of subscribers.

The restrictions prevent AOL from actively promoting rival Internet browser software from Netscape Communications Corp. and prohibit AOL from distributing Netscape's browser to more than 15 percent of its customers.

AOL, which is buying Netscape for $4.3 billion, has more than 15 million subscribers, far more than any other service. Its agreement to distribute Microsoft's browser lasts until January 2001.

Microsoft denies government claims that it wields its enormous influence within the high-tech industry to coerce other companies into accepting restrictive agreements.

Microsoft's witness, executive Brad Chase, acknowledged that AOL's agreement includes "limitations on their ability to promote Netscape" but asserted that more than one in five AOL subscribers actually used Netscape's browser.

"It is relatively easy to download Netscape Navigator, either from the Internet or from AOL," spokesman Mark Murray said. "If the government doesn't think those steps were clear enough, perhaps it ought to call AOL or Netscape into their offices."

Microsoft's next witness, a senior executive for Compaq Computer Corp., is trying to undermine the government's portrayal of the nation's computer makers as victims of an overzealous Microsoft.

In written testimony released Tuesday, John T. Rose disputed the government's characterization of several disagreements with Microsoft, including one that threatened the future of Compaq, the world's largest maker of personal computers.

Rose, for example, acknowledged that Compaq was wrong in 1996 when it removed easy access to Microsoft's Internet software included within its Windows operating system.

Microsoft objected and threatened to stop allowing Compaq to include Windows on its computers, which would have been catastrophic for Compaq's business. The government has used the episode at trial to illustrate what it considers to be Microsoft's heavy-handed tactics toward the nation's computer makers.

But Rose explained that Compaq removed the icon for Microsoft's browser software under a 1995 agreement with America Online stipulating that AOL's Internet icons would be the only ones easily accessible to consumers.

Rose, who was senior vice president and responsible then for all Compaq's desktop computers, told the judge he wasn't aware of the company's obligation to America Online until after Microsoft complained. Microsoft was correct to object, he said.

"The removal of the Microsoft icons was contrary to an understanding I had reached with Microsoft in August 1995," Rose said.


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