BUSINESS WEEK ONLINE / COURTTV ONLINE:  MICROSOFT ON TRIAL
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FEB. 19, 1999
 
One Step Forward for Microsoft's Defense
It gets Compaq VP Rose to cast doubt on the arguments Justice made the day before

Point Microsoft? After two days of damaging cross-examination at the antitrust trial, Compaq exec John Rose recouped some ground on Friday, Feb. 19, under more gentle questioning from Microsoft's defense team, as the trial broke for the weekend.

Rebutting evidence that the government's lead trial lawyer, David Boies, unveiled in yesterday's proceedings, Microsoft counsel Richard Pepperman showed how Boies had ignored details that bolstered Microsoft's defense.

Pepperman's Exhibit A: The sworn deposition of former Compaq employee Celeste Sutherland Dunn, who was responsible for loading and formatting software on Compaq's computers. Boies had alleged that Microsoft had somehow tried to pressure Compaq into dropping the Netscape Navigator icon from the desktop display on its computers in favor of Microsoft's Internet Explorer icon. But Microsoft's defense is that America Online, not Microsoft, was the one pressuring Compaq about which browser icons to feature. In fact, according to Dunn's deposition, her department at one point kept Microsoft's Internet Explorer icon from the screen "to feature AOL."

Boies tried to show that Compaq's exclusion of the Netscape icon stemmed from a contract feud between Compaq and Microsoft that lasted from August, 1995, to June, 1996. "Indeed, controversy existed" between the two companies, Boies told reporters, when Compaq took 10 months to execute the agreement.

STALLING. But Microsoft claims confusion in the contract between Compaq and America Online that year caused the removal of the Netscape icon. "It was AOL trying to get Netscape off" the desktop, a Microsoft spokesman told reporters at the end of the day. Rose testified that Compaq was simply stalling while Microsoft accountants prepared the books for the August, 1995, "Frontline Partnership" with Compaq. But for the second time in as many days, Rose said he was "not aware" of who made the decision to keep the Internet Explorer and Microsoft Network icons off the screen.

Pepperman also revisited a 1996 Compaq E-mail that Boies used to infer Compaq was bullied by Microsoft. The E-mail said "Microsoft will be expecting an exclusive arrangement that would prevent us from putting Netscape on the desktop." The government's legal team took the statement as evidence of Microsoft's strong-arm tactics made possible by its market dominance. But under questioning from Microsoft, Rose played down the significance of the memo, saying the authors "were not overall representing the corporate strategy."

On Thursday, Judge Thomas Penfield Jackson felt compelled to ask his own questions of Microsoft's witness as Rose's testimony began to contradict the sworn depositions of two other Compaq employees. "Just who speaks for the company?" Jackson asked. Taking a cue from the judge, Rose presented himself as a more assertive and authoritative witness on Friday. And Jackson asked not a single question. All in all, as good a day as Microsoft's had in a while.

By Mica Schneider in Washington

BW STORIES ABOUT MICROSOFT
1998-99


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