Microsoft Official Says Company Sought Cooperation
By STEVE LOHR
Published: January 27, 1999
WASHINGTON, Jan. 26— A senior executive of the Microsoft Corporation testified today that his company tried to convince its main rival in the Internet software market to become less of a head-on competitor.
Paul Maritz, the highest-ranking executive appearing as a witness at the Microsoft antitrust trial, portrayed the discussions with the Netscape Communications Corporation in 1995 as mainly an effort to find ''common ground'' between the two companies.
But the Government maintains that a June 1995 meeting was a crucial episode in its sweeping antitrust case. After Netscape rejected Microsoft's proposal, the Government contends, Microsoft embarked on what the prosecution regards as a pattern of practices intended to thwart competition.
David Boies, the Justice Department's lead trial lawyer, presented several Microsoft E-mails written shortly before the Netscape meeting saying that Microsoft wanted to make sure Netscape's software for browsing the World Wide Web did not become a technology ''platform'' for which software programmers would write applications -- making it a potential alternative to Microsoft's industry-standard Windows operating system.
In a June 1, 1995, E-mail, one Microsoft executive identified key goals as ''move Netscape out'' of Internet browser software for future versions of Windows and to ''avoid a cold or hot war with Netscape,'' adding, ''Keep them from sabotaging our platform evolution.''
When asked to comment on this E-mail and others, Mr. Maritz replied, ''We clearly had an agenda for making certain technologies common in the industry.''
But in some of the sharpest questioning since the trial began last October, Mr. Boies persistently asked an elusive Mr. Maritz about the implications of Microsoft's proposal. If Netscape had agreed to shift its focus away from software that Microsoft deemed mainstream to its strategic interests, he asked, would Netscape have become a ''less significant platform threat?''
That, Mr. Maritz conceded, was partly true. ''At one level, yes,'' he said.
But he noted Microsoft was mainly trying to get Netscape to agree to Microsoft's preferred set of basic Internet technologies and nothing in their talks would have prevented Netscape from competing in other Internet-related software, including multimedia software, groupware and Java, an Internet programming language.
The result, he said, could have been that Netscape would have become an even more formidable rival. If Netscape had focused less on the browser and more on software and services that compete less directly with Microsoft, for example, Mr. Maritz said Netscape might have a ''much more entrenched position within large corporations today.''
In short, Mr. Maritz said the result of Microsoft's proposal might have been to reduce competition in certain niches of the software business, but not to diminish competition overall.
William H. Neukom, Microsoft's senior vice president for law and corporate affairs, said words matter less than actions in antitrust law. ''After that meeting,'' he said, ''there was full-fledged competition between Microsoft and Netscape.''
Yet the Government replies that the head-to-head competition occurred only after Netscape rejected Microsoft's proposal. After the afternoon court session, Mr. Boies said, ''It is significant for our case that Microsoft has admitted seeking to persuade Netscape not to engage in platform competition.''
In the morning, the Government tried to raise questions about the credibility of Microsoft's current legal stance by accusing the company of engaging in a ''concerted effort'' to alter the words used to describe Internet software internally and in its public statements to suit the company's legal stance.
The Government pointed to company E-mail from early last year that said Microsoft had to make sure that the word ''browser'' was no longer used in referring to its Internet browsing software and that the ''legal staff'' be brought in to check the language.
The wording plays a role in the case because the Government contends that the software maker bundled its Internet Explorer browser into its Windows operating system to thwart competition in the Internet software market.
Microsoft replies that since the rise of the Internet the company had always planned to fold the software used to browse the World Wide Web into its operating system. The browser, Microsoft insists, is merely a feature of the operating system and not a stand-alone product.
In an E-mail in February 1998, a Microsoft executive, wrote that ''saying 'put the browser in the OS' is already a statement that is prejudicial to us,'' and went on, ''The name 'browser' suggests a separate thing.'' (OS stands for operating system.)
In another E-mail in February 1998, a Microsoft executive reported ''good progress'' in cleaning up the wording used on the company's Web site. ''We don't refer to it as a product or even a browser,'' he wrote. ''It's browsing software.''
By early 1998, Microsoft was already being sued by the Justice Department in a related case concerning a 1995 antitrust consent decree. Mr. Maritz emphasized that the change in the approved corporate vernacular was mainly to clearly explain the consumer benefits of tightly integrating the browser with the operating system.
Still, Mr. Maritz said the legal environment also played a role, necessitating the use of ''more precise language'' as ''this set of events was heating up.''