MS/DOJ - Microsoft likened Real's threat to Netscape's

A lawyer for the states suing Microsoft questioned a company executive's testimony that Microsoft does not view RealNetworks Inc.'s media player technology as a threat to Windows, making reference to internal messages by Microsoft executives that compared the battle between Microsoft and RealNetworks to the one between the software giant and Netscape Communications Corp.

In his written direct testimony prepared before his appearance at the Microsoft remedy hearing Thursday, Will Poole, vice president of Microsoft's Windows New Media Platforms Division, said RealNetworks' media players "are not potential substitutes for the full platform capabilities of the Windows operating system."

The U.S. Court of Appeals for the District of Columbia Circuit last year upheld a lower court's decision that Microsoft illegally maintained its monopoly in the PC operating system market through anticompetitive behavior toward Sun Microsystems Inc. and Netscape, and that their platform products threatened Microsoft's dominance on the desktop. This hearing before U.S. District Judge Colleen Kollar-Kotelly is for the nine states and District of Columbia suing Microsoft and the company to present remedies for Microsoft's anticompetitive behavior.

Last November the U.S. Department of Justice and nine other states reached a settlement agreement with Microsoft, but the holdout states are seeking tougher limitations on the company's business practices. They believe remedies should be applied that address Microsoft's actions toward other companies with products that pose potential platform threats, such as media players. If the states can convince the judge that RealNetworks is a threat to the Windows platform, then the judge may consider remedies that address Microsoft's behavior toward makers of competing media players.

John Schmidtlein, an attorney for the litigating states, asked Poole if he thought RealNetworks presents a platform threat to Microsoft. The executive answered that he did not. Schmidtlein went on to display evidence that showed internal Microsoft discussions about RealNetworks' threat.

The attorney asked Poole if he was aware of Microsoft executives comparing the company's battle with RealNetworks to its battle with Netscape. "I think at least one executive said that in an e-mail somewhere," Poole answered, adding that Microsoft views the battles as similar in some ways, but different in others.

Showing the court an e-mail message sent in 1999 from one of Poole's staffers to Microsoft top executives -- including Chairman and Chief Software Architect Bill Gates and Chief Executive Officer Steve Ballmer -- Schmidtlein pointed out a sentence that referred to the "platform battle between Microsoft and RealNetworks."

Displaying another internal document regarding Microsoft's media player strategy, Schmidtlein asked if the company wanted to integrate its media player deeper into Windows. "It's already pretty deep," Poole answered. He then asked if Microsoft wanted to broaden its competition with RealNetworks from a narrow part of Windows -- meaning the media player -- to Windows in general. Poole responded that was correct.

Demonstrating Microsoft's view of increasing competition from RealNetworks, Schmidtlein showed the court an e-mail message written in 2000 by a Microsoft employee regarding IBM Corp.'s decision to include RealNetworks' media player with its version of Unix. The message, addressed to Microsoft's European country managers, urged them to convince their employees to view RealNetworks as a "major threat" and to consider Microsoft's media player as an "ice pick" into Sun's customer base.

When asked what was meant by an ice pick, Poole responded that Windows Media Player was a way to "chip away" at the large market share that companies like Sun and IBM have in the enterprise.

Poole's testimony will continue on Monday.

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