The New York Times
November 19, 1998


Microsoft Accuses I.B.M. of Attempted Collusion


WASHINGTON -- In a series of attacks in Federal court Wednesday, the Microsoft Corporation accused I.B.M. of engaging in many of the same practices that led the Federal Government and 20 states to file antitrust charges against Microsoft.

While cross-examining John Soyring, director of network computing software for the International Business Machines Corporation, a Microsoft lawyer produced an e-mail message in which John M. Thompson, I.B.M.'s software chief, last year proposed to the leaders of Sun Microsystems Inc. and the Netscape Communications Corporation a strategy for a joint campaign against Microsoft.

Thompson urged the others to help him enlist Oracle and Novell in the effort "to put Microsoft on the defensive." The e-mail was written in response to a plan by Microsoft to establish its own version of the Java programming language.

On Tuesday, a Federal judge in California gave Microsoft 90 days to make its version of Java compatible with the standards set by Sun, which invented and licenses the language.

But in court today, Microsoft's lawyer, Steven Holley, used Thompson's memo to contend that I.B.M. had been attempting collusion with several other companies to disadvantage Microsoft.

"We must clearly explain to our customers that Internet Explorer is Microsoft's primary weapon to kill 100 percent pure Java," Thompson wrote. Internet Explorer is Microsoft's World Wide Web browser, and it uses Microsoft's version of Java -- not the "100 percent pure" version authorized by Sun.

Holley asked Soyring, "Do you think it is appropriate for five of the leading computer companies in the world to meet and collude" against Microsoft?

Soyring said he had not been involved in the discussions and knew nothing about them. But the disclosure was potentially useful to Microsoft because the Government, in its antitrust suit, accuses Microsoft of illegally colluding with several other companies, including America Online and Apple Computer, to the disadvantage of Netscape, Microsoft's chief competitor in the market for Internet software.

The Government made public today the written testimony of Frederick R. Warren-Boulton, the next witness in the case, who will take the stand on Thursday. Warren-Boulton, an economist and former Justice Department official, makes a long and detailed academic and political argument that Microsoft is a monopolist, as antitrust law defines the term, and is therefore engaging in several activities that appear to violate antitrust laws.

"The price to consumers from Microsoft's maintenance of its PC operating system monopoly and its creation of a new monopoly in Internet browsers through its exclusionary practices is substantial," he wrote. "The price paid for personal-computer systems likely will be higher than it otherwise would have been," and "Microsoft's conduct will slow or halt the natural tendency of the marketplace to provide alternative technologies." As a result, he said, "Microsoft's operating system monopoly would be further entrenched."

Warren-Boulton has held a number of prominent academic and political positions. But perhaps most interesting for someone arguing for antitrust enforcement against Microsoft is that he was chief economist for the antitrust division of the Justice Department during the Reagan Administration, when the Government chose to pursue few antitrust cases.

In a statement today, Microsoft contended that "Warren-Boulton's testimony is clearly that of an ivory tower consultant with little or no direct experience in the day-to-day business and competitiveness of the U.S. software industry."

Several times during the trial, Microsoft has used the tactic of accusing its accusers of similar practices. The company argues that the computer industry plays by different rules than the rest of corporate America and that Federal prosecutors do not understand those rules.

But Justice Department lawyers say the argument means nothing to them; if other companies are violating the law, they should be prosecuted, too.

In court today, Holley tried to make the case that I.B.M. was "integrating" the company's own Web browser, Web Explorer, with I.B.M.'s personal-computer operating system, O/S2 Warp.

A key charge in the suit is that Microsoft illegally integrated Internet Explorer in the Windows operating system in an attempt to disadvantage Netscape.

As part of his argument against I.B.M., Holley introduced into evidence the packaging for commerical copies of OS/2. Advertising copy on the box states, "IBM's WebExplorer is built in," and "Internet access has been integrated into OS/2 Warp."

"Why does it say that?" Holley asked.

Soyring replied that the phrases were simply marketing language, not an accurate technological description. Unlike Internet Explorer, he added, Web Explorer can be loaded into an OS/2 computer, and taken out again, without impairing the functioning of the operating system.

Still, Holley's questions, and similar questions he asked an Apple Computer executive early this month, may prove useful in showing that many other companies believe that including a Web browser along with an operating system is a useful and even essential marketing step.