Microsoft defends tactics, Gates Firm says government strives to 'demonize' leader's lawful actions; Antitrust

WASHINGTON — WASHINGTON -- Stinging from the government's opening statement, a defiant Microsoft Corp. forcefully defended its chairman, Bill Gates, in federal court yesterday, asserting that the no-holds-barred tactics of his company are not only common in the computer industry but also good for the economy.

Microsoft's opening salvo in the sweeping antitrust lawsuit was crafted as much for public opinion as for the court. The company faces weeks of being portrayed as an alleged commercial predator.


The government's case, which opened Monday in U.S. District Court in Washington, amounts to a litany of episodes of Microsoft's having used its market power to bully and bend competitors, partners and customers to its will.

Yesterday, Microsoft's legal team sought to frame these episodes as part of rough-and-tumble capitalism.


"The antitrust laws are not a code of civility in business," said John Warden, Microsoft's lead lawyer.

In his opening statement, Warden angrily accused the government of trying to "demonize Bill Gates," whom he described as "a man whose vision and innovation have been at the core of the benefits that society is reaping from the information age."

The Justice Department and 20 states suing Microsoft, Warden said, are misinterpreting routine business meetings in the computer industry as anti-competitive conspiracies.

The government's case focuses largely on the Internet software market and the business practices Microsoft used in its fight against Netscape Communications Corp., the early leader in the browser software used to navigate the World Wide Web.

A key charge, for example, is that Microsoft prodded Netscape to illegally divide up the browser market in a June 1995 meeting -- a charge based mainly on the accounts of Netscape executives.

"Netscape's account of this meeting was fantastical," Warden said. "None of the histrionics, shouting and table pounding occurred. It's fantasy."

In Microsoft's view, the government's case is wrongheaded because it does not understand the computer industry, especially the necessity of cooperation among companies so that sophisticated technology products work with each other. Just as the line between one software product and another often blurs, the company argues, so does the line between competition and cooperation; rivals in one area routinely cooperate in another.

Microsoft will attempt to cast doubt on several of the government's allegations by characterizing meetings as efforts at cooperation by companies that, understandably, do not always agree.


The government, for example, has alleged that Microsoft tried to pressure both Intel Corp. and Apple Computer Inc. to refrain from Internet software efforts that conflicted with Microsoft's plans -- and to support Microsoft in the browser war.

"Those proposals and threats claimed by the government," Warden said, "will be shown by evidence to have been garden-variety commercial discussions between companies developing complementary products. They are of no antitrust consequence."

As the defendant, Microsoft does not have to prove that it behaved innocently or even ethically. Instead, the role of Microsoft's legal team is to cast doubt on the government's case -- both its specific allegations of bullying tactics and its broad theme that the economy and consumers are ultimately harmed by Microsoft's behavior.

In the afternoon court session, the Microsoft defense moved to the cross-examination of the government's leadoff witness, James Barksdale, president and chief executive of Netscape. To speed up the trial, Judge Thomas Penfield Jackson ordered direct testimony from witnesses submitted in writing beforehand. Thus, courtroom questioning of witnesses began with cross-examination.

With Barksdale on the stand, Microsoft's legal tactics soon became apparent. Warden sought to portray Netscape as a rival that went running to the Justice Department as a business tactic. His questions pressed the view that software makers are constantly adding features to their products and that many companies have large market shares without being branded a monopolist -- central themes of Microsoft's defense.

Pub Date: 10/21/98