The show must go on. As expected, Judge Thomas Penfield Jackson denied Microsoft's motion to dismiss the federal antitrust suit on Wednesday, Jan. 13. The dismissal was made "without predjudice," meaning Jackson could reconsider later. So the trial's second half officially got under way with Justice's lead attorney, David Boies, questioning Richard Schmalensee, dean of Massachusetts Institute of Technology's Sloan School of Management, a tight-lipped and testy first witness for Microsoft. The topic: How to define a monopoly.

If the first day's action set the tone for what follows, Act II of U.S. v. Microsoft is going to be long and contentious. In addition to grilling Schmalensee on his written testimony, the Justice team kept busy with procedural challenges and managed to bring in some more testimony from Microsoft Chairman Bill Gates -- this time, not on videotape. After learning that Schmalensee had spoken with Microsoft lawyers during a break, Boies asked Judge Jackson to slap the defendent on the wrist for communicating with a witness under oath. Jackson instructed Microsoft to refrain from doing so.

The Gates testimony came in a batch of new documents introduced by Justice to refute Microsoft's testimony. The Gates material deals with how Microsoft assessed Netscape's business model, the integration of the Internet browser with the Windows operating system, and how Microsoft hoped to gain market share.

"AIMLESS." Even in print, the unhelpful and stubborn Gates of video fame shone through. In one exchange, Justice asked the chairman, "Mr. Gates, do you understand that the issue of whether or not browsers are separate products or are not a separate product from the operating system is an issue in this case?" Gates responded: "I don't consider myself someone who could say if that's an issue in this case or not." Microsoft characterized the deposition as "aimless and devoid of any consumer interest."

Boies made slow headway with Schmalensee, who has worked with Microsoft since 1992, when the company first came under government scrutiny. Much of Schmalensee's testimony deals with the monopoly and pricing questions, which are key to deciding whether Microsoft actually could and did limit choice or force consumers to pay more for software. Schmalensee argues that Microsoft isn't a monopoly because the industry it is part of changes so quickly. Part of his argument rests on measuring Microsoft's share of the broader software market, not just personal-computer operating systems. Schmalensee says Microsoft faces significant threats from non-PC "platforms" and from such products as Sun's Java programming language. In fact, Schmalensee didn't even try to gauge the OS market, because he said he didn't see any use in doing so.

Boies tried to focus the discussion on operating systems and tried to undermine Schmalensee's assertion that Microsoft is under constant threat. He asked the MIT professor about what other companies he thought might truly compete with Microsoft in operating systems. Boies referred Schmalensee to his deposition, in which he wrote that other operating systems including Linux, which is available for free, are not viable alternatives for computer makers. Schmalensee said that while that was true now, it was difficult to know what might happen in the future. In fact, he pointed to articles that estimate some 7 million to 8 million computer users had Linux installed and that about 40 companies offered it.

It was in reference to the market breakdown between Linux-based servers and PCs that Boies asked Schmalensee whether he had discussed his testimony with the Microsoft lawyers. That exchange led to an intense discussion at the end of the day among the judge and lawyers from both sides. Microsoft argued that Justice's witnesses had spoken with their counsel, but the judge apparently plans to restrict discussion between Microsoft lawyers and witnesses -- mostly Microsoft employees -- says Microsoft spokesman Mark Murray.

Earlier in the day, Justice finished the testimony of MIT economics professor Franklin M. Fisher, ending the presentation of its side of the case. Fisher was asked again about potential harm to the consumer that Microsoft might have caused. The professor reiterated a point he made yesterday that could be a problem for Justice's case: that much of the harm to consumers from Microsoft's actions could actually come in the future. Still, he did stress that because Microsoft charges PC makers different prices, consumers may be forced to pay higher prices to the PC maker to offset that cost. And he said consumers were harmed because Microsoft's licensing agreements with PC makers and Internet service providers restricted browser choices.

By Heather Green in Washington