Citing internal e-mail from America Online Inc., lawyers for Microsoft Corp. yesterday sought to show that despite AOL's public claims that it did not dare compete with Microsoft and its Windows monopoly, AOL privately considered such efforts.
AOL executives talked about dumping Microsoft's Internet Explorer browser and at one point discussed designing an "AOL PC" that would use no Microsoft software, the company's lawyers argued in the day's session of the Microsoft antitrust trial.
Their arguments came out in often tense questioning of AOL executive David M. Colburn, whom Microsoft designated a "hostile witness."
In a bench conference with government and Microsoft attorneys yesterday afternoon, after Colburn had been on the stand for more than three hours, U.S. District Judge Thomas Penfield Jackson voiced skepticism about aspects of Microsoft attorney John L. Warden's questioning.
"Mr. Warden, I confess I'm not sure where you're going here," Jackson said, according to a transcript of the bench conference. "I think you have long since exhausted this witness's personal knowledge" of AOL's purchase of Netscape Communications Corp. and other issues Microsoft feels are relevant to the case.
The judge also expressed an interest in hearing from AOL chief executive Steve Case about the issues raised by Microsoft but said he didn't "blame" Microsoft for not calling him as a witness.
Microsoft hopes that the hostile questioning of Colburn, who had testified for the government earlier in the trial, will serve as a powerful lead-off punch in two weeks of rebuttal arguments.
But government attorneys appeared to feel buoyed by Colburn's courtroom performance, taking the unusual step of not asking the witness any questions in open court.
"I think that the witness was clear in his testimony -- and helpful" to the government, the government's lead trial attorney, David Boies, said outside the courtroom.
Microsoft officials played down the judge's comments, saying they believe that the internal AOL and Netscape documents they presented yesterday strongly bolster their case.
In its antitrust suit, the government contends that Microsoft has used illegal business tactics to maintain a monopoly of its Windows software in the personal computer operating systems market.
The government also alleges that Microsoft has used its clout with Windows, which runs on 90 percent of the world's new PCs, to crush rivals, including Netscape. To make that argument, the government has cited a business deal between AOL and Microsoft in which Microsoft promised to promote AOL's software in Windows if AOL agreed to distribute Microsoft's browser.
Microsoft argues that the union of AOL and Netscape demonstrates that competition is alive and well in the technology industry and that the $10 billion price that Netscape fetched shows it wasn't harmed by any of Microsoft actions.
The software giant also maintains that AOL is engaged in a variety of efforts that directly threaten Windows, which, Microsoft argues, undercuts the government argument that Windows is an unassailable monopoly product.
Using the internal AOL documents, Warden asserted yesterday that AOL considered ditching the Microsoft browser for the Netscape one -- which would have caused Netscape's market share to overtake Microsoft's -- but decided against it because of public-relations concerns.
Warden confronted Colburn with a Sept. 20, 1988, e-mail message written by Case, in which the AOL chief executive wrote that "we shouldn't assume we need or want to maintain [Internet Explorer] as primary browser."
But Boies pointed to a response written by AOL's president, Robert Pittman: "I do think [Microsoft] is too strong to throw them out of the tent -- they can hurt us if they think they have no other option. I think we need to stay in business with them."
Colburn, who was wearing cowboy boots and sporting a multiday stubble, said that while AOL officials briefly considered the merits of switching to the Netscape browser, even though they would soon own it through the Netscape acquisition, they opted to stay with Microsoft's because of the Windows promotion. "We did the analysis, and it didn't make sense to leave the [Internet Explorer] browser," he said.
Warden, however, argued that AOL eventually plans to use the Netscape technology, in conjunction with AOL's own software, to create a "de facto" operating system that competes with Windows. He introduced an internal AOL e-mail discussing the merits of the Netscape deal that listed as a "basic strategic rationale" to make a combination of the AOL and Netscape software "the effective [operating system] used by most PCs."
In a feisty exchange, Colburn played down suggestions in some of the documents that AOL and Sun Microsystems Inc. are working on an "AOL PC" that would provide users access to the AOL service but would not use Microsoft software. "I think we've had some limited discussions with folks -- relatively few -- but it's never come to fruition in any way," he said. "It's just too hard to do."