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  Microsoft Calls Antitrust Suits 'Groundless'

By Rajiv Chandrasekaran
Washington Post Staff Writer
Wednesday, July 29, 1998; Page C09

Microsoft Corp. told a federal judge yesterday that two broad antitrust lawsuits brought against it by the Justice Department and 20 state attorneys general are "completely groundless." The software giant also countersued the states, contending that portions of their suit violate the firm's federal copyright protections.

The government suits, filed in May and scheduled for trial in September, allege that Microsoft engaged in a pattern of illegal business practices designed to protect its monopoly in personal computer operating systems and crush its competitors, specifically Netscape Communications Corp., which makes rival software for "browsing" the Internet.

But Microsoft, in its first formal legal responses to the cases, maintained that it decided to include Internet "browsing" technology in its popular Windows operating system software in 1993, before Netscape was founded. Microsoft spokesman Mark Murray called the government's case a "chronological impossibility."

Microsoft's documents, one responding to the federal case and the other to the states', each had 142 paragraphs, most of them listing Microsoft's response to a specific claim in the suits: In almost every case it began with the word "Denies."

A Justice Department spokeswoman, Gina Talamona, said Microsoft's response "contains mistakes and mischaracterizations." She said the department remains "confident in our case."

At the center of the government's case is the allegation that Microsoft, based in Redmond, Wash., is unfairly using its market power with Windows, the software that runs on more than 90 percent of the world's personal computers, to dominate other markets. In particular, government lawyers contend that Microsoft is using Windows to unfairly distribute its Internet Explorer browsing software.

The government wants Microsoft to either strip Internet Explorer out of its Windows 98 software or include a Netscape browser alongside Internet Explorer. Microsoft argues that browsing technology is a central feature of Windows and one that cannot easily be removed.

Among the more sensational pieces of evidence the government plans to introduce at the trial is Netscape executives' account of two 1995 meetings with Microsoft officials in which, the Netscape executives contend, Microsoft offered to divide their shares of the browser market. The Justice Department has said Microsoft's actions amounted to an "illegal conspiracy."

Microsoft yesterday denied that anything illegal transpired at the meetings. Instead, Microsoft said in the court filings yesterday, the gatherings were held "to explore ways in which the two companies could work together to improve their respective products."

"Microsoft has never attempted to divide the market for Internet browser software," the company added.

Microsoft also told the judge, Thomas Penfield Jackson of U.S. District Court in Washington, that its share of the browser market is growing not because of Internet Explorer's inclusion in Windows, but because of technological superiority. "Internet Explorer has won the vast majority of comparative reviews against Netscape over the past two years," the company wrote.

Microsoft's contention that it decided to include Internet technology in Windows in 1993 has been viewed skeptically by some industry analysts, who note that company executives said little about the Internet at the time. Murray said Microsoft would provide evidence supporting its claim at the trial.

In its counterclaim, Microsoft is asking the judge to throw out claims brought under state laws. It said that such claims are preempted by federal copyright protections under the U.S. Constitution. Microsoft also is asking the judge to make the states pay for the company's attorneys' fees in defending itself against the state claims.

Even if it wins the counterclaim, the states' lawsuit would still proceed because it also alleges violations of federal antitrust laws.

Iowa Attorney General Tom Miller, who is helping to coordinate the states' suit, disputed Microsoft's interpretation of federal copyright laws. "The copyright laws of the United States do not give any exemption or immunity from state antitrust laws," he said.

Robert H. Bork, a former federal judge who is advising Netscape in the case, said the conclusion that Microsoft is violating federal antitrust laws "is inescapable."

"If Microsoft is successful in this predation [of the browser market] . . . Microsoft will retain its operating system monopoly and be well on the way to achieving its goals of becoming the only gateway to the Internet and spreading its power to other markets," Bork wrote in a white paper released yesterday, titled "The Case Against Microsoft."

Yesterday's Microsoft filing was the first in a series of legal briefs both sides are scheduled to give the judge.

© Copyright 1998 The Washington Post Company

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