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FEB. 23, 1999
 
Tuesday's Glass Was Half-Full for Microsoft
In the afternoon session, Eric Engstrom refused to be intimidated, but that came after another shaky morning for Daniel Rosen

With the antitrust trial headed for a two-month hiatus, Microsoft's top multimedia guru kept the software giant's head above water in the afternoon session on Tuesday, Feb. 23. Eric Engstrom, general manager of the multimedia division, stood up to the same government grilling that has crossed up previous Microsoft witnesses. Litigators will take a two-month break in the trial beginning Feb. 26, with the proceedings expected to resume some time in late April.

Engstrom -- more relaxed than many of his predecessors on the witness stand -- prompted chuckles in the courtroom with a few lame techie jokes. He seemed visibly relieved that lead Justice Dept. litigator David Boise decided to sit the afternoon out as inquisitor. But under cross-examination from Justice attorney Philip Malone, Engstrom grew annoyed at one point with repeated questions on E-mails he had written.

"You are spending more time on this sentence than I did when I wrote it," Engstrom blurted out at one point, as Malone asked a third time if the words "big win" and "manipulating" in one of his E-mails showed monopolistic intentions. Presiding Judge Thomas Penfield Jackson responded to Engstrom, laughing, "I guess you've never been in a courtroom before."

OUTBID, NOT PREVENT. Engstrom was instrumental in 1997 negotiations with Intel Corp. He convinced the chipmaker to adopt the Microsoft multimedia package, DirectX, rather than a competing product from Sun Microsystems. Engstrom insisted that his effort to sell DirectX to Intel was nothing but an attempt to "win their business" and not an attempt to bully Intel out of buying the Sun product. He was only trying to outbid Sun, he said, not trying to to "prevent" it from working with Intel.

In another Engstrom-piloted deal, Microsoft purchased a company called Dimension X, which, at the time, was working with a third company, Marimba, that had ties to Netscape Communications Corp. In an E-mail, Engstrom said Microsoft could "achieve a big tactical win here" if the company acquired Dimension X. But under cross-examination, he denied there was any effort by Microsoft to hurt Netscape.

Engstrom wrote to his colleagues that the codes Dimension X used in its multimedia programs could be manipulated to respond only to DirectX and Microsoft's Internet Explorer. A master of coding and decoding, Engstrom dodged questions Malone threw his way suggesting that Microsoft had monopolistic notions. Engstrom later reminded Malone that none of the competitive edges he thought Microsoft could get from the deal were ever realized.

"HEROIC ENDEAVORS." In morning testimony on Feb. 23, Microsoft tried to restore the credibility of Daniel Rosen, general manager for new technology. Rosen took such a beating from Boies on Feb. 22 that Judge Jackson began the day by telling Microsoft attorney Michael Lacovara, who is in his mid-30s: "It's always inspiring to watch young people embark on heroic endeavors."

Lacovara made a little headway in refurbishing Rosen. He offered up an E-mail from a Microsoft colleague that seemed to buttress Rosen's testimony that he didn't believe Netscape was a competitive threat to Windows. Both Rosen and the other executive, Microsoft program manager Rich Wolf, were at a meeting with Netscape on June 21, 1995. Justice is charging that Microsoft proposed to Netscape at this meeting that the two companies illegally divide the browser market, but Rosen testified that Netscape had told him it didn't want to compete with Microsoft.

In the E-mail that Wolf wrote a day after the meeting, he said: "I do not think they have the intention of competing with us in defining a platform. They want to know what we are going to put in the Windows client and server so they can focus on adding value that does not conflict with what we are doing."

Wolf added that he didn't get the impression that Netscape intended to drop plans for a "broadbased" browser. Justice claims that Microsoft wanted Netscape out of the Windows browser market altogether. But Rosen said Wolf's note showed that Netscape didn't want to compete in operating systems, to which developers write applications, but still intended to offer a browser for Windows.

WINDOWS-DEPENDENT. When Boies got a chance to question Rosen again, he said Microsoft offered Netscape inducements to stop developing some of the same technologies that the giant was placing in Windows and to instead adopt Microsoft's platform. By abandoning these technologies, Netscape would have to depend on Windows and would become less of a threat to Microsoft's operating system.

In another attack on Rosen's credibility, Boies challenged the executive's claim that he never saw a test version of Netscape's browser for Windows 95 until after the June meeting. "You don't remember that, do you sir? You're just making that up," Boies said heatedly. Then Boies showed Rosen a Microsoft E-mail indicating that Rosen had received the test version in April, and Rosen conceded that he was at the meeting with Netscape executives when they handed it over.

Court resumes on Wednesday, Feb. 24, when Malone is expected to grill Engstrom about his dealings with Apple Computer. He'll likely refute testimony that government witness Avadis Tevanian Jr. gave last November. Tevanian, an Apple senior vice-president, told the court that Microsoft bullied his company into an August, 1997, deal involving multimedia software.

By Mica Schneider and Susan Garland in Washington

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