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  U.S. Signals Broader Approach To Microsoft Case

By Rajiv Chandrasekaran
Washington Post Staff Writer
Friday, October 9, 1998; Page G01

BOSTON, Oct. 8—Government lawyers signaled today that they intend to expand the emphasis of their antitrust case against Microsoft Corp. beyond the earlier focus of Internet software. The move came as a federal judge here handed the company a stinging pretrial defeat, rejecting its bid to obtain recordings and notes of candid interviews that two professors conducted with executives at rival Netscape Communications Corp.

Government lawyers disclosed they will call a senior executive from Sun Microsystems Inc. and a top official of Apple Computer Inc. as witnesses in the trial, which is scheduled to begin later this month. The government intends to use their testimony to bolster its argument that Microsoft has engaged in a broad pattern of anti-competitive behavior, according to sources close to the case.

When the Justice Department and 20 states filed their antitrust lawsuit against Microsoft in May, much of it was focused on allegations that Microsoft is using a monopoly in its Windows operating system to dominate the market for browsers, software that people use to explore the Internet.

Now, in the wake of a pro-Microsoft ruling from a federal appeals court in June, the government lawyers appear to be placing greater emphasis on other parts of their suit, particularly allegations that Microsoft has engaged in a variety of illegal acts to maintain its monopoly with Windows, the software that runs about 90 percent of the world's personal computers.

The witness from Sun, James Gosling, was one of the creators of Sun's Java programming technology. Many in the computer industry have seen Java as a potential threat to Windows because it enables programmers to write one version of software that can run on many different operating systems.

Gosling has been a witness in an pending suit by Sun against Microsoft over Java. He has told a judge in California that Microsoft has tried to confuse programmers by creating a competing version of Java designed to work better with Windows.

The witness from Apple, Avadis Tevanian, will testify about Microsoft's alleged efforts to persuade Apple to keep its popular QuickTime multimedia software out of the Windows market, according to sources familiar with the government's case. In exchange for staying away from Windows, Microsoft promised to work with Apple on other video-related software, an offer Apple refused, the sources said.

A Microsoft spokesman last night accused the government of "trying to rewrite its case at the last possible minute."

"Any objective reading of their May filing shows that the heart and soul of that complaint is the browser allegation," spokesman Mark Murray said. "They're now expanding their case."

Each side has been limited to 12 witnesses, but they were allowed to change two of them today. Gosling and Tevanian replace an executive from Boeing Co. and an economist from the University of Texas.

Microsoft replaced one of its marketing executives and a computer science professor from Massachusetts Institute of Technology with Jeff Raikes, its director of worldwide sales, and Thomas Reardon, a software developer. Reardon attended a controversial June 1995 meeting with Netscape executives in which, the government contends, Microsoft urged Netscape to illegally divide the market for browsing software instead of competing.

In another notable development today, a federal judge here ruled that two business professors do not have to give the company notes and tapes that they generated in researching a book about Netscape.

Microsoft had subpoenaed the material to help defend itself against a government antitrust lawsuit, which alleges, among other things, that the software giant has illegally injured Netscape.

A Microsoft spokesman had called the book a "major bombshell against the government's case" because it quotes Netscape officials as saying the company had mismanaged the competition with Microsoft. Company officials had suggested that evidence gathered from the notes and tapes would be a key part of its defense.

But U.S. District Judge Richard G. Stearns quashed the subpoena, saying that Microsoft first should have tried to talk to many of the 44 Netscape executives interviewed by the authors. "I just don't see a showing that the information sought is not available from other sources," Stearns said.

The judge also questioned Microsoft's ability to prepare material from the notes and tapes as evidence in the limited time left before the antitrust trial begins. It is scheduled to start next week in Washington. "I do not think that [Microsoft's] showing is all that compelling," said Stearns, who speculated that the material would be considered inadmissible "hearsay" evidence.

David B. Yoffie of Harvard Business School, one of the authors, called the hearing "a victory for academic freedom." He and collaborator Michael A. Cusumano of MIT acknowledged that their book could aid in Microsoft's defense. But they said that Netscape's missteps do not excuse Microsoft's alleged anti-competitive actions -- a point also made by government lawyers in the antitrust suit.

A lawyer representing Microsoft, Thomas J. Sartory, argued to the judge that the tapes of the authors' interviews with executives such as James Barksdale, Netscape's chief executive and a witness for the government at the antitrust trial, were made "in a context where he was encouraged to be forthcoming, frank, candid and truthful -- and he wasn't prepared by lawyers."

"There is no substitute for that evidence," Sartory told the judge. "We can't get that evidence any other way."

Jeffrey Swope, an attorney for Cusumano, argued that business executives would stop talking to academic researchers if the professors were forced to hand over the material. "The idea that information Netscape gave to the professors would end up in Microsoft's hands is not just chilling, it's freezing," he said.

The company plans to appeal the ruling, sources familiar with the matter said late tonight.

The book is titled "Competing on Internet Time: Lessons From Netscape and the Battle With Microsoft."

Staff writer Elizabeth Corcoran in Washington contributed to this report.

© Copyright 1998 The Washington Post Company

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