Microsoft's Opening Statement

Attorney: Yes, it is true that Microsoft is a giant of the computer industry. Windows, Excel, Office Suite, and Word do have large market shares. This is not because MS is a monopoly. It is because they are good products, and MS is efficient and effective at what it does.

Through the use of witness testimony - backed by newspaper articles and Internet information - the defense intends to provide a reasonable doubt about MS' alleged monopolization as defined by the Sherman Anti-Trust Act of 1890. We will do this by proving three points:

First: Bigness is not necessarily bad. Even though MS is big, it does not mean MS is a monopoly.

Second: MS is a competitive firm. MS DOES NOT STIFLE COMPETITION as the prosecution would lead you to believe.

Third: Internet Explorer and the Operating System, Windows 98 are not only interconnected, but are in fact one in the same product. This does not mean to say that people do not have a choice in the Web Browsing market. In fact, they can choose any Internet browser that is on the market.

Attorney: The Defense would like to call Bob Cormack.

- Mr. Cormack, would you please state your job?

Cormack: I am an economist for the Bucks County Economic Development Council.

Attorney: On December 8, 1998, you contributed to an article for the Bucks County Courier Times Money Section. Could you please summarize this article?

Cormack: The article basically stated that mergers of large companies often help smaller businesses thrive. This network effect is twofold. First, through these mergers, highly qualified employees are downsized and become available to smaller businesses. Second, these newly merged companies have vast resources that allow for the further development of technology. Although the article focused on the Exxon/Mobile, First Union/CoreStates, travelers/Citicorp mergers, my assertions are valid for any merger made by any competitive firm in any market.

Attorney: What are the implications of your statement for this case?

Cormack: Basically since MS is a competitive firm in the software development market, the advantages produced by mergers in the petroleum refinery and banking markets are also present here.

Attorney: Thank you. You may step down.

The Defense would now like to call Bill Gates to the stand of the MS Corporation.

-Mr. Gates, the prosecutor asserts that your corporation illegally stifles competition and innovation in the software industry. What is your response to that?

Gates: They are wrong. Approximately 2.2 million independent software vendors (ISVs) in the United States, and 5 million worldwide, design products to work with Windows. Products designed for use on Windows make up about 30 percent of total packaged software revenues, with MS’s own applications accounting for only a fraction of that total. In silicon Valley alone, ISVs, system integrators, Web companies and computer training and education centers have total annual revenues of at least 425 billion and employ approximately 74,000 people. Nearly 40 percent of those companies are doing business related to MS Windows. In a survey of 200 randomly chosen ISVs, 91 percent thought Windows had created a positive impact on their business. (Value Added Providers and MS Certified Solution Providers) Computer services is a $300 billion industry, and more than $40 billion of that total is generated by business related to MS software. About 2.2 million people work in computer services (many in small, local companies that provide specialized services to their customers by using technology to find solutions to specific business challenges). Of that total, MS software generates more than 320,000 full- and part-time jobs and $16 billion in annual wages.

Attorney: You may step down. The Defense would like to call Jonathan Zuck, executive director from the association for competitive technology.

Mr. Zuck, you were involved earlier this year in a dispute involving MS. Could you please explain this situation to us?

Zuck: Well, earlier this year, Rob Glaser, CEO and chairman of RealNetwoks, asserted in front of a Senate Judiciary Committee that MS’s Windows’ Media Player disabled or "broke" RN’s G2 multimedia player.

Attorney: And this assertion, was it true?

Zuck: My findings were that the G2 player itself was the cause of the problem.

Attorney: Were your findings made by anyone else?

Zuck: Yes. Larry Selter, technical director of 2D Virtual Labs confirmed my statement.

Attorney: You may step down. The Defense would now like to call Yusuf Mehdi, MS’s director of Windows’s marketing.

Mr. Mehdi, what was MS’s response to Mr. Glaser’s false accusations?

Mehdi: Despite Mr. Glaser’s insult to our company, we sent a letter to him to try to work together to solve the problem.

Attorney: I would like to recall Mr. Zuck. Mr. Zuck, in light of Mr. Mehdi’s testimony, how would you characterize MS’s behavior?

Zuck: Their response was one that promotes competition. By helping out RealNetworks, MS hurt their own multimedia sales.

Attorney: I would like to call Metro Computing, an independent market-research group. Metro, the government asserts that MS is not a competitive firm. What is your opinion?

Metro: Well, to me, competitive prices imply a competitive firm.

Attorney: Are MS prices competitive?

Metro: Well, the typical street price of Microsoft has fallen by 47 percent since 1991 compared with an 18 percent decline in the street price of Corel’s WordPerfect. The street price of MS Excel has dropped by 42 percent, compared with a 40 percent decrease in the street price of Lotus 1-2-3. The price of most desktop operating systems - such as Windows - has remained low and relatively stable during the 1990s, with the exception of Unix derivatives such as Sun’s Solaris, IBM’s AIZ and SCO’s UnixWare, which were priced high when they entered the market and still carry premium price tags. Compared with other desktop operating systems, Windows 98 is good value. The street price of a Windows 98 upgrade in currently $89, compared with about $100 for Be’s BeOS; $110 for the OS/2 Warp 4.0 upgrade’ and $430 for Sun’s Solaris 2.6. Apple’s Macintosh OS, the only operating system available to Mac user, has a street price of about $85. Any comparison of the price of the Windows operating system over time must take into account that, until the launch of Windows 85, PC users wanting a graphical user interface had to have DOS on their computers as well as Windows. Factor in the cost of a DOS upgrade, and the price of Windows has remained little changed since 1990. But while the price has held steady, the functionality of Windows has increased immensely. Each new version has included numerous new features and improvements. Windows 98, for example, includes the Web-based WebView user interface; a more efficient file system; faster launching of applications; complete Internet integration; USB support; self-maintenance; improved reliability and troubleshooting; support for multiple monitors; better and faster 3D graphics, improved game support; and Web TV support.

Attorney: You may step down. The defense would like to call Chief Technological Adviser for Microsoft.

The prosecution asserts that the Windows OS and the Internet Explorer are two separate products, are they correct?

Tech Advisor: No, they are not. These two are components of the same product. I make this assertion because they are part of a dynamic linkable library. The OS and IE are two parts of a system that freely exchanges information among parts. That is they share the same language. This language is the code used so that the different parts of Windows function together. Without this library the system fails to even boot.

Attorney: So the two are not bundled together, as the prosecution would lead you to believe?

Tech Adviser: No, Internet Explorer as part of the Operating System is analogous to tires on a car. The car’s manufacturer puts a certain size tire on a car because he feels that that tire is best suited for the car. Similarly, Internet Explorer - - especially on Windows 98- - is an integral part of the product much like the tires on a car are an integral part of the car.

Attorney: Does Microsoft limit customer’s choice by including IE with Windows?

Tech Adviser: Hardly. Ultimately, the decision as to what browser one uses comes down to the people’s choice. If in the case of the car, people prefer a bigger, smaller, wider, or even different brand of tire, they have the choice to change it. It is the same with the web browser. IE is part of the product because we at MS feel that it is the best fit for Windows. If consumers do not agree they can change it. We at MS believe that people choose not to switch from MS’s IE to say Netscape’s Navigator because we supply as good of - - if not a better browser.

Attorney: You may step down. The defense would now like to call 4 different witnesses to show the progression of IE as compared to Netscape’s Navigator. The defense calls Joshua Quittner writer for Time Magazine.

Mr. Quittner what was your opinion of Internet Explorer 1.0?

Quittner: Basically it stunk. It was a somewhat clunky browser. And nearly all competitors were better than it.

Attorney: Thank you may step down. The defense would like to call Walter Mossburg, writer for the Wall Street Journal to the stand.

Mr. Mossburg, what was your opinion of IE 2.0?

Mossburg: Well, the clear victory on the day of its release was Netscape Navigator, which managed to at that time to stay ahead of IE. But it was a much-improved IE.

Attorney: At that time it was better?

Mossburg: Yes, but with the release of IE 3.0 my opinion changed. IE 3.0 was a better browser than Navigator 3.0 because it was easier to use and had a cleaner, more flexible user interface.

Attorney: Thank you, you may step down. The defense would now like to call Michael Himowitz, writer for Fortune magazine.

Mr. Himowitz, what was your opinion bout IE 4.0?

Himowitz: The browser was fast, efficient and so chock full of improvements that it beat Navigator hands down.

Attorney: Thank you, you may step down. The defense would now like to call David Lidsky, writer for PC Magazine.

Mr. Lidsky, what was your opinion about IE 4.0?

Lidsky: The browser provided the best web experience and promises to be the best for tomorrow.

In conclusion, the defense believes that it has planted the seed of reasonable doubt. Through the use of Mr. Cormack’s we have shown how major mergers in industry actually promote competitiveness instead of hinder it, as the prosecution would lead you to believe. Through the use of Mr. Gate’s testimony we have shown how Microsoft positively influences both the advancement of technology and the job market, not stifle competition as the prosecution would lead you to believe. Through the testimony of Mr. Zuck and Mr. Medhi we have shown how Microsoft works with companies to develop products compatible with Microsoft technology, not kill competition, as the prosecution would lead you to believe. Through the testimony of Metro Computing we have shown that the prices of Microsoft’s products are competitive, not monopolistic, as the prosecution would lead you to believe. Through the testimony of a MS tech Adviser we have shown how the OS and IE are parts of one product – Windows – much like a tire and an engine are parts in a car, not that the are "bundled" together, as the prosecution would lead you to believe. And finally, through the testimony of Mr. Quittner, Mr. Mossburg, Mr. Himozitz and Mr. Lidsky we have proven that the decline in market share of Netscape Navigator and the increased market share of Internet Explorer is due to the superior quality of IE, not the monopolistic "bundling" of Windows as the prosecution would lead you to believe.

Ladies and Gentleman of the jury, thank you for your time.