Originally created 02/18/99

Microsoft exec accuses AOL of aiding government case



WASHINGTON -- America Online renewed its contract to use Microsoft's Web browser because it wanted to bolster the government's antitrust claims against the software giant, a Microsoft executive alleged Wednesday.

AOL is required by contract to promote Microsoft's browser over the one made by rival Netscape, but it recently gave up the chance to get out of that obligation.

Microsoft Vice President Brad Chase contended during his testimony in the antitrust trial that the decision was prompted by AOL's desire to help the Justice Department, which claims Microsoft has illegally smothered its competition.

With more than 15 million subscribers, AOL is the world's largest Internet provider. Chase said that if AOL were to switch its Internet browser, Microsoft's browser market share would plunge to about 30 percent while Netscape's would soar to more than 70 percent.

"That kind of shift would be inconsistent with AOL's desire to support the government in this case," Chase said.

AOL will switch to Netscape eventually, Chase predicted, because of a $4.3 billion proposal to buy the company and make use of its emerging technology.

In its antitrust lawsuit, the government alleges that Microsoft wielded its monopoly power to wipe out its competition. It claims Microsoft intimidated AOL into turning against Netscape.

In his written testimony and while on the witness stand, Chase has argued that AOL chose Microsoft because of its superior technology -- and not because it promised to provide easy access to AOL in its Windows operating system.

David Colburn, an AOL executive who testified earlier in the trial, said Microsoft promised to put an AOL icon on the Windows desktop, the first screen a person sees after turning on a computer. Desktop placement -- and its potential to attract thousands of customers -- was the main reason AOL signed its 1996 contract with Microsoft, Colburn said.

But Chase disagreed. He recounted on Wednesday his meeting Colburn for lunch a week after the contract was signed to discuss why AOL chose Microsoft over Netscape.

Colburn told him that Microsoft had the better technology, Chase recalled. Microsoft's executives also were easier to deal with and didn't continually change their conditions, while Netscape was "arrogant and they would put a deal on the table and put a deal off the table," he said.

Earlier Wednesday, Microsoft released the written testimony of another upcoming witness, executive Daniel Rosen, who attended a controversial June 1995 meeting that is at the center of the government's case.

The gathering of Microsoft and Netscape officials was the setting of an alleged attempt by Microsoft to illegally divide the Internet software market.

Rosen called the charges "fiction, absurd and untrue." The executive, who helped organize the meeting, said he had proposed that Microsoft pay for the browser that Netscape had developed for computer operating systems other than Windows.

Rosen said Microsoft already was planning to include its own browser software in Windows 95, which was under development.

"There was no proposed `market division.' ... I did not get any sense that the two men had rejected my idea, much less that they regarded it as illegal or improper," wrote Rosen.

Notes of the meeting, which have emerged as important evidence for the government, were typed by Netscape co-founder Marc Andreessen on his laptop.

Rosen criticized the notes, however, and suggested that Andreessen "was not paying attention to the meeting itself but was, instead, reading and replying to e-mail messages."

Andreessen's notes "are most certainly not an accurate or complete record of what happened at the meeting," Rosen said.

Rosen takes the stand after the current witness, John Rose, an executive at Compaq Computer Corp., the world's largest maker of personal computers, completes his testimony.

During his cross-examination by the government Wednesday, Rose testified that more than 90 percent of his company's computers come equipped with Windows. Compaq has no alternative but to buy Windows because it runs more than 70,000 application programs, he said.



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