MS/DOJ: Govt. to Rest After Document Blitz

The U.S. government and 19 states prepared to rest their broad antitrust case against Microsoft Corp. this afternoon after their lead economist testified that consumers have been harmed by lack of choice in the Internet browser market and higher costs to Microsoft's competitors.

The government also notified U.S. District Court Judge Thomas Penfield Jackson that it would submit 365 documents and numerous excerpts of videotaped depositions from Microsoft officials and others as evidence. Reporters are expected to gain access to the information, which includes an hour-long deposition segment from Microsoft founder Bill Gates, starting later today.

The government's 12th and final witness, Franklin Fisher, an economist at the Massachusetts Institute of Technology, concluded his fifth day of testimony this morning, attempting to clarify statements he made in court yesterday that consumers "on balance" have not yet been harmed by what he believes are Microsoft's anticompetitive and predatory acts.

Fisher stated today that Microsoft's act of offering its browser for no charge initially may have had positive impacts on consumers by cutting costs of software and computers but that the lack of competition that he said resulted is currently denying consumer's choice in the browser market. He added that Microsoft's actions, including pressuring some computer manufacturers to keep rival browsers off PCs, has raised the costs for rivals and that has also contributed to lack of consumer choice.

But Fisher appeared blind-sided when Microsoft attorney Michael Lacovara informed him that the largest computer manufacturer in the nation, Compaq Computer Corp., now ships Netscape Communications Corp.'s Communicator browser with all new models. Lacovara said he found the information on Compaq's Web site last night. While Fisher admitted that he should have looked for such information before testifying, he said it did not change his testimony.

"It's an interesting fact but basically Microsoft succeeded in thwarting the threat from Netscape," as a potential platform threat, Fisher testified. "Netscape, in that sense, no longer is a big player. It may not matter anymore."

Outside the courthouse, Microsoft spokesman Mark Murray said the government ended its case on a weak note. "The government flip-flopped back and forth on the question of consumer harm," he said. "Everyone in the industry knows that what Microsoft has done has led to lower prices, more choices and faster innovation for more consumers."

He said Fisher "took a torpedo below the waterline" when confronted about Compaq's bundling of Netscape's browser with new PCs. But he said other manufacturers, such as Sony, have been shipping multiple browsers for a longer period of time.

The government's lead attorney, David Boies, said the fact that Compaq has started shipping the Netscape browser during the trial does not have an impact on the anticompetitive effects of Microsoft's actions. "The fact that in the middle of the trial, Microsoft's frontline partner, Compaq, decides to add Netscape does not at all affect the anticompetitive effect that has occurred in terms of stifling competition."

(Elizabeth Wasserman is the Washington bureau chief for The Industry Standard.)

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