Microsoft Denies Netscape Claim

A Microsoft executive flatly denied charges that the company illegally offered in 1995 to divide the Internet software market with its biggest rival.

Daniel Rosen, in new testimony made public Wednesday, called the allegations "fiction, absurd and untrue," and said they were "either fabrications or the products of a fundamental misunderstanding."

Rosen, who helped organize a disputed meeting with Netscape Communications Corp., said he proposed then that Microsoft pay for Internet browser software that Netscape already had developed for computer operating systems other than Windows.

In 90 pages of written testimony, Rosen said he explained that Microsoft was planning to include its own browser software in Windows 95, which was under development.

"There was no proposed `market division.' ... I did not get any sense that the two men had rejected my idea, much less that they regarded it as illegal or improper," wrote Rosen, who insisted his discussions were "wholly and entirely consistent with lawful, commonplace business practices."

Netscape's chief executive officer, James Barksdale, testified earlier in the trial that Microsoft suggested at that meeting "a line be drawn" to illegally divide the market between Netscape's browser and Microsoft's.

Netscape co-founder Marc Andreessen, whose typed notes have emerged as important evidence for the government, wrote during the meeting that Microsoft "will own the Win95 (browser) market and that Netscape should stay away."

But Rosen said Barksdale "in his customarily charming but direct manner" insisted early during the meeting that Microsoft explain which software products it planned to bundle within Windows.

"He hoped one outcome of the meeting was to understand how much profit was left for a company like his in a partnership with Microsoft, and that he wanted to understand where the `line' was between applications and the Windows 95 platform," Rosen remembered.

Rosen denied that Microsoft sought to convince Netscape not to continue selling its popular browser for newer versions of Windows. He described the meeting as "no shouting, no table pounding. There were no threats.

"We wanted to persuade Netscape's engineers to develop browser and other software offerings on top of Windows 95," Rosen said.

Rosen also criticized the notes that Andreessen typed at the meeting using his laptop, saying his "strong impression at the time was that ... (Andreessen) was not paying attention to the meeting itself but was, instead, reading and replying to e-mail messages."

Andreessen's notes "are most certainly not an accurate or complete record of what happened at the meeting," Rosen said.

To speed the trial, the judge has asked witnesses from both sides to submit their testimony in writing in advance. Rosen will take the stand later this week.

Government lawyers were expected to begin questioning a senior Compaq Corp. executive. He is fighting efforts to portray his own company as a victim of Microsoft.

John T. Rose of Compaq Computer Corp. has already testified that Microsoft was correct in 1996 when it threatened Compaq over its move to hide on its computers easy access to Microsoft's Internet browser software.

Microsoft warned abruptly that it would stop selling its dominant Windows operating system to Compaq, which would have been disastrous for its business.

The government contends Microsoft actually was angry over Compaq's plans to sell its computers equipped with Netscape's rival browser, and that the episode illustrates what it describes as Microsoft's heavy-handed tactics toward computer makers.

Barksdale said previously that Compaq's sudden decision not to distribute Netscape's browser finally pushed him to take his complaints to the Justice Department.

"I think when Compaq canceled our agreement and took us out of the (computer maker) business, I said I had enough, and it's time to stop all this," said Barksdale, who called it "the incident that most unsettled me."

"Microsoft clearly used the power of its monopoly product to force a distributor to ship a separate new product," Barksdale charged.

But in written testimony released Tuesday, Rose explained that Compaq had removed easy access to Microsoft's browser under a separate agreement with America Online Inc. stipulating that AOL's Internet icons would be the only ones easily accessible. (Editor's note: CBS News is the broadcast news provider for America Online.)

Written By Ted Bridis, Associated Press Writer