December 17, 1998

In Browser Wars, Microsoft Finds Itself Standing Alone

WASHINGTON -- The Microsoft Corporation is finding itself increasingly isolated within the computer industry over its view of the natural relationship between Internet software and operating systems, testimony presented today in Federal court showed.

While testimony of executives from companies that develop operating systems demonstrated that most now include Internet software with their products, it also made it clear that only Microsoft tied the two together in a way that prevented them from being separated.

The Government insists that Microsoft does this to trump its main competitor in Web browsing software, the Netscape Communcations Corporation. Microsoft argues that embedding its browser in its Windows operating system is a product innovation it has every right to make.

The dispute is central to the Government's antitrust suit against Microsoft.

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Is Microsoft too powerful a player in the computer industry?

Today, just before a holiday recess, the Justice Department played videotaped depositions from four computer industry executives and made public transcripts from four others.

"Everyone who testified said consumers want to be able to choose which Web browser they use, or maybe to have no Web browser at all," said David Boies, the Government's lead trial lawyer.

Microsoft did not dispute the fact that no one else integrated a Web browser with an operating system. "But from a legal standpoint, that's irrelevant," said a spokesman, Mark Murray. "The Government does not have the right to dictate how we design our products."

In testimony offered today, executives of other companies said they saw none of the technical advantages that Microsoft says it sees in integrating its browser into Windows. They said they preferred allowing their customers to decide what they want.

While Sun Microsystems, for example, ships its own browser, Hot Java, with the company's Solaris operating system, "our licensee partners decide whether or not to include it," said Curtis Sasaki, a group marketing manager for Sun.

Executives from several other companies that manufacture operating systems -- including Caldera Inc., the Santa Cruz Operation and Network Computer Inc. -- offered similar testimony.

All the companies said the issue was important to them because many of their business customers did not want a Web browser on their machines. And those that wanted any browser, they said, wanted only one because installing a second browser wasted valuable disk space and increased technical support costs.

"Most companies would just prefer to support one browser," said John Kies, a senior product manager for Packard Bell NEC. "And most corporations would prefer not to have any items in the user interface that they're not ready to support."

His company would have been happier, he said, if Microsoft had not integrated its browser into Windows 98.

Among the depositions made public this evening was one from Philip Barrett, an executive with Real Networks Inc. who was a senior executive with Microsoft until September 1994. His testimony undercut Microsoft's assertion in recent months that the company made the decision to develop a Web browser and integrate it with Windows in April 1994, before Netscape even existed.

Mr. Barrett said he attended the meeting where Microsoft says the decision was made -- a retreat at the Shumway Mansion in Kirkland, Wash., but heard no discussion of developing a browser, much less of integrating it with Windows.

"This is not consistent with my memory of the meeting," he said.

Mr. Barrett said that such a discussion could have taken place out of his earshot. But he added that he heard no mention of such a strategy during the following five months -- even though the project would have come to him.

When asked about an August newspaper article quoting a Microsoft executive as saying, "Phil Barrett, a Windows executive, was assigned to work on the browser," Mr. Barrett said that assertion was not true.

The trial adjourned today for a holiday recess and will reconvene on Jan. 4. But before leaving the bench, the presiding judge, Thomas Penfield Jackson, denied a request by Microsoft for the right to subpoena records from America Online, Netscape and Sun about America Online's plan to acquire Netscape and to cooperate with Sun.

Two browsers are not better than one, executives say.

Microsoft cites the deal as evidence that competition remains fierce in the software industry, and thus the Government suit is irrelevant.

Judge Jackson said, "We are aware of what might be a very significant change in the playing field in so far as this industry is concerned."

But rather than using subpoenas, he said that Microsoft should assess the deal based on a reading of the large batch of records that Justice Department regulators would acquire as part of their regulatory review of the acquistion.

On another front, Microsoft said today that it would appeal a preliminary injuction issued Nov. 17 in which a Federal judge in California, ruling in a contract dispute between Microsoft and Sun, ordered Microsoft to make its version of the Java programming language compatible with Sun's version within 90 days.

Although Microsoft has already brought its version of Java into compliance with the order, the company said it was appealing because it was "confident that Microsoft has developed the best Java implementation within the terms of our contract with Sun and in the best interests of Java developers and consumers."

Microsoft licenses Java from Sun, which developed and owns the language.

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