Microsoft Trial Update: DOJ Tries To Dismantle Microsoft's Setup Defense

WASHINGTON, D.C. -- U.S. Department of Justice attorney David Boies today systematically rebutted Microsoft Corp.'s claim that the antitrust case against it was based on a setup by rival Netscape Communications Corp.

Using E-mail and snippets of videotaped depositions, Boies sought to show that Microsoft targeted Netscape with unfair competitive tactics, seeking to grab the Windows browser market for itself.

Boies entered into evidence, over Microsoft objections, a handwritten note from Apple Computer Inc.'s chief financial officer to Netscape President James Barksdale, apologizing for the fact that Apple announced plans to bundle Microsoft's browser without even telling Netscape. Until that moment, in August 1997, Apple Macintoshes had shipped with Netscape's Navigator.

In his note, Apple Chief Financial Officer Fred Anderson wrote that his company needed to ensure that Microsoft would continue to provide Office for the Macintosh "or we were dead." The trading card, he noted, was making IE the default browser for the Mac.

That testimony reinforces what many thought at the time of the Macworld announcement in 1997. The feeling was that the quid pro quo for Microsoft's $150 million investment in Apple and continued development of Office for the Macintosh was the browser deal. Apple co-founder Steve Jobs made the announcement in Boston, standing under a giant screen showing a beamed-in image of Microsoft Chairman Bill Gates.

Netscape, a longtime Apple ally, was blindsided by the news.

Boies also hammered away at the notion, propagated by lead Microsoft attorney John Warden, that Netscape, Mountain View, Calif., set up a June 21, 1995, meeting with Microsoft in order to sic the antitrust cops on the Redmond, Wash.-based software giant.

He pointed to internal Microsoft E-mails laying out Microsoft's concerns about Netscape's growing Web presence. An E-mail from Microsoft Vice President Paul Maritz to Gates in early June 1995 noted that Microsoft's working goals were "to move Netscape out of the Win32 Internet client arena . . . to avoid a cold or a hot war with Netscape and keep them from sabotaging our platform."

Boies, who used the courtroom microphone to great effect, pointedly asked Barksdale if Netscape had hacked into Microsoft computers to plant such messages in advance of the June 21 meeting. Barksdale replied in the negative.

Boies also played a clip from Netscape Chairman Jim Clark, explaining his offer in early 1994 to sell an equity stake of his company to Microsoft. Warden charged that such an offer naturally led to the June 21, 1995, meeting. Asked in his deposition why he proposed that deal, Clark said: "It was a moment of weakness and fear on the part of a small company looking into the eyes of the world's most powerful software company."

In a memo to then-Microsoft Vice President Brad Silverberg, Clark noted that he had not told anyone at Netscape about his idea for a Microsoft stake.

The video of Netscape Vice President Marc Andreessen said that Microsoft had, in fact, proposed dividing the browser market "in a way that would have been profoundly and fundamentally crippling" to Netscape.