October 19, 1998 5:35 PM PDT

Barksdale takes on MS in trial

WASHINGTON--Microsoft should be forced to separate its Internet Explorer browser from its Windows operating systems and should be barred from entering into any exclusive partnerships, according to Netscape Communications chief executive Jim Barksdale.

Made public late today, Barksdale's testimony in the antitrust case being brought against Microsoft by attorneys general from 20 states and the Justice Department (DOJ) also details a series of alleged steps that Microsoft took to freeze Netscape out of the market. Chief among them was a June 1995 meeting in which Microsoft manager Dan Rosen allegedly proposed dividing the browser market.

"I believe that the most appropriate remedy for the practices I have described...would be to order Microsoft to distribute Internet Explorer separately from its operating system products and be prohibited from forcing the 'bundling' of those two products or from entering into exclusionary contract relating to distribution of Internet Explorer," Barksdale said in written testimony.

His statement marks the first document to be released since the trial began. To speed up the trial, now set to last between six and ten weeks, all direct testimony will be entered into the recorder via the written word. The DOJ said it intends to release direct written testimony each afternoon before a witness is scheduled to take the stand.

Barksdale will take the stand for cross-examination tomorrow.

Most of the remarks contained in the more than 120 pages of Barksdale's comments are not new. Up until now, however, Barksdale has not detailed a remedy for Microsoft's alleged conduct.

Barksdale also provided new details regarding a June 1995 meeting between managers at the two companies. The pretense for the meeting was to "set up some sort of cooperative agreement," Barksdale testified.

Under the proposal, "Netscape would agree not to produce a Windows 95 browser that would compete with Internet Explorer [and] Microsoft would 'allow' Netscape to continue to produce cross-platform versions of its browser for the relatively small market of non-Windows 95 platforms: namely, Windows 3.1, Macintosh, and Unix."

Microsoft also suggested investing in Netscape and gaining a seat on its board of directors. In addition, the software giant also allegedly held out the possibility of making Netscape a "preferred" software maker, a status that would allow the company to receive valuable information about Microsoft programming interfaces earlier than competitors.

When Barksdale asked Rosen if Netscape's ability to get the specifications hinged on acceptance of the proposal, the Microsoft manager allegedly replied: "It certainly isn't independent."

Separately, Barksdale said that in September 1996 IBM told Netscape executives that its Windows 95 license contained restrictions preventing the PC maker from altering the startup screen. The new Windows licensing tactic worked to limit Netscape's ability to forge distribution agreements with PC makers, Barksdale said, so that even its "half dozen" agreements don't allow for mass distribution.

"No other distribution channel today can make up for the loss of the OEM [original equipment manufacturer] and ISP [Internet service provider] channels," Barksdale said, referring to efforts to pair with Net access companies that were similarly blocked.

Microsoft further blocked Netscape's efforts in the corporate sector, Barksdale testified. For example, the software giant offered to buy a 10 percent stake in a networking reseller owned by KPMG Peat Marwick and further offered $10 million for a new KPMG group that would sell Windows NT services.

Microsoft released a lengthly rebuttal to Barksdale's testimony.

In a statement, the software giant responded: "Mr. Barksdale's testimony is long on rhetoric, but short on facts. Throughout his 127 pages of testimony, Mr. Barksdale makes sweeping statements intended to paint Microsoft in a negative light, but these statements are often nothing more than self-serving accusations with no factual basis. In addition, much of Mr. Barksdale's testimony is simply hearsay, which may not even be admissible in court."

It added: "Mr. Barksdale's testimony misrepresents the facts of the June 21, 1995, meeting between Netscape and Microsoft officials. Microsoft has never attempted to divide any market in violation of America's antitrust laws. Microsoft's goal at the meeting was to show Netscape the advanced Internet and other technologies Microsoft was building into Windows 95, and to explore whether there were any opportunities for the two companies to work together in a strategic partnership to provide better technology solutions for consumers.

"While Mr. Barksdale tries to downplay Netscape's own mistakes, it's an irrefutable fact that Microsoft's browser technology provided both America Online and Intuit with major benefits that were simply not available using Netscape's browser."

Bloomberg and News.com's Jeff Pelline contributed to this report.

 

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