BUSINESS WEEK ONLINE / COURTTV ONLINE:  MICROSOFT ON TRIAL
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Profiles
 
 
OCT. 28, 1998, 8 p.m. ET
 
AOL'S Colburn Sticks to the Script
Despite attacks by Microsoft's attorney, Colburn insists Explorer and Navigator were about equal technologically

It was as if tough-guy actor Bruce Willis was making a cameo appearance at the Microsoft trial. On Oct. 28, David M. Colburn, a senior vice-president at America Online Inc., stood his ground under cross-examination by Microsoft attorney John Warden. Colburn's cool, deadpan delivery played to humorous effect under questioning from the staid, older, every-inch-the-lawyer Warden. The courtroom erupted in laughter when Warden asked whether Colburn's lunch-break phone call with his wife was substantive. "I may have to plead the Fifth Amendment," Colburn cracked.

The witness, who joined AOL in September, 1995, led negotiations that resulted in deals in March, 1996, between AOL and Netscape and AOL and Microsoft to adopt their respective browsers. In his written testimony, Colburn said AOL essentially chose Microsoft's Internet Explorer over Netscape's Navigator even though the two were more or less comparable technologically.

The reason for going with Explorer: Microsoft offered AOL prominent placement of its icon on the popular Windows 95 desktop. In return, Microsoft's Internet Explorer got virtual exclusivity on AOL's service. According to its deal with Microsoft, AOL couldn't promote Navigator. And it could ship Netscape's browser only in very limited circumstances constituting no more than 15% of AOL's total browser shipments.

BEAUTY CONTEST. Warden tried to show -- with a series of internal E-mails among AOL executives -- that the giant online service provider had chosen Microsoft because it had the better technology. While Colburn conceded that Microsoft's browser would take less time to integrate with AOL's software, he said Netscape had agreed to weave Navigator seamlessly with AOL on an expedited schedule. In the end, there would have been little difference between the performance of the two, Colburn said.

But Warden wasn't finished. He tried to assert that a Jan. 24, 1996, E-mail from AOL CEO Steve Case to Colburn illustrated conclusively that Case had decided Microsoft was the beauty contest winner. In the E-mail, Case wrote: "...from a pure technology standpoint, it does look like Microsoft may win this one."

Colburn replied that he is intimately familiar with Case's word usage, since he is in day-to-day contact with him, and that "Microsoft MAY win" was "hardly a ringing endorsement" from Case. Colburn added: "It was a close call on the technology. What put it [Internet Explorer] over the top was distribution [of AOL] on the [Windows] desktop."

Late in the day, Warden switched gears, attempting to show that AOL attempted to use some of the same anticompetitive tactics against Microsoft that Microsoft is accused of. He produced internal E-mails from AOL CEO Case to Netscape CEO James Barksdale suggesting that they join hands in the "fundamental imperative of attacking the common enemy." Case pointed out that Stalin teamed up with Roosevelt and Churchill, and that "the Grand Alliance beat Hitler."

BEAT 'THE BEAST.' Later, in an E-mail, Netscape's Marc Andreessen suggested to Case that they team up to "kick the s--t out of the Beast from Redmond that wants to see us both dead." Colburn conceded that Case was worried about the threat from Microsoft and the debut of its online service, Microsoft Network. Case wanted to "look to partners to put us on close to a competitive even keel," he explained.

Warden's most curious tactic was to ask Colburn whether AOL had proposed dividing markets with Netscape -- echoing earlier accusations against Microsoft for proposing that it divide up the browser market with Netscape.

In the 1996 browser deal with AOL, Netscape agreed not to enter the online service or Internet service business for a minimum of three years. Soon after, Netscape started developing its NetCenter home page, a so-called Internet portal, which Warden suggested was viewed by AOL as a threat to its own online service.

As evidence, Warden produced an E-mail from Colburn to AOL colleagues. In it, Colburn wrote that he wanted no promotion of Netscape's home page on AOL unless Netscape compensated AOL for the boost. But Colburn stuck to his story: He insisted that AOL's strategic relationship with Netscape revolved around the browser and had little to do with Netscape's NetCenter.

By Cathy Yang in Washington

BW STORIES ABOUT MICROSOFT
1998


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