Microsoft Trial
Microsoft witness rebuts heart of case Integration of browsing in Windows good for consumers
By Rex Nutting, CBS MarketWatch
Microsoft's plans to make its Windows operating system more Internet-friendly came long before the founding of rival Netscape Communications, a top Microsoft software developer testified Wednesday.
In written testimony released to the public in advance of his appearance on the witness stand in the antitrust trial in U.S. District Court in Washington, James Allchin said combining Web browsing software into the operating system gives "very substantial benefits" to consumers and to other software developers.
Allchin is Microsoft's (MSFT) third witness of 12 scheduled. He will take the stand when the company's lawyers finish their redirect examination of Paul Maritz, another top Microsoft executive, likely on Thursday.
The integration of Internet Explorer browsing software into Windows is a key element in the government's case against the software giant. The government claims that Microsoft has illegally tied the two products together, forcing computer makers and end users to buy both products if they want to have Windows.
More than 90 percent of new personal computers run on some form of the Windows operating system. The government has said Microsoft's attempts to dominate the market for browsing software were based, in part, on a desire to maintain its monopoly in operating systems, which theoretically could be eroded by widespread use of browsing software and Java programs.
The government claims that Microsoft did not decide to integrate the two programs into one (and, in effect, give away Internet Explorer) until after it failed to reach a market-division arrangement with Netscape (NSCP). Giving away Internet Explorer forced Netscape to also give away its browser, depriving it of most of its revenue.
Allchin denied both aspects of the government's case. First, Allchin said, combining the two products into one has been a great benefit to consumers.
"Things work better if they are designed and built as a unit," he said. "Indeed, 'integration' is a holy grail of software development."
"The design of Windows 98 - and many of the benefits that flow from it - depends upon Internet Explorer technologies being part of the operating system," Allchin said.
"There is no neat distinction between operating system software and the software that runs on top of it," Allchin said.
"I am not a lawyer or an economist, but I do not understand how a company's efforts to improve its products can ever be 'anticompetitive,' " he said.
The tying allegation may be the weakest part of the government's case, because the court of appeals has already signaled in a related case that the law must presume that integration is lawful unless no consumer benefits can be seen.
Allchin also testified that Microsoft's decision to integrate browsing into the operating system ws unrelated to the threat posed by Netscape, which has figured so prominently in the case.
"When Netscape was little more than a gleam in the eyes of its founders, Microsoft had already decided that future versions of its operating system software should include Web browsing capabilities," Allchin said. He said the key decisions were made in 1994, long before the controversial June 1995 meeting in which Microsoft allegedly threatened to cut off Netscape's air supply if it didn't agree to divide the market.
Written By Rex Nutting, CBS MarketWatch