• PC World
• » Tech Industry

Two days of oral arguments in the U.S. antitrust case against Microsoft have opened, with Microsoft's attorneys arguing on Monday that the company never prevented Netscape from selling its browser anywhere in the market.

In 1998 Netscape enjoyed "unfettered access to consumers," Microsoft attorney Richard Urowsky told the seven-judge panel of the U.S. Court of Appeals for the District of Columbia on Monday. In particular, users downloaded 60 million copies of Navigator out of a total 160 million copies sold that year, he said.

"There is no evidence that there was any impediment to the distribution of Navigator in the marketplace," Urowsky said. "Netscape was able to offer its software literally to every PC user worldwide."

Bundling Internet Explorer with Windows was not anticompetitive because it improved the product's functionality and did not impede the distribution of Navigator, Urowsky added. He said Microsoft's deals with PC vendors, requiring Windows to start up uninterrupted, was not anticompetitive but an attempt to protect its copyright.

Urowsky spoke first in the opening day of Microsoft's appeal of last year's antitrust ruling by the U.S. District Court. Besides ruling that Microsoft abused its monopoly power, the court ordered the company broken up, a remedy sought by the government. Bringing the case are the U.S. Department of Justice and representatives of 19 states and the District of Columbia.

Maintaining Its Monopoly?

The appellate court opened the debate with the question of whether Microsoft's actions constituted monopoly maintenance in violation of the U.S. Sherman Antitrust Act. The issues of "tying," the remedy, and post-trial statements by the district court judge will be covered Tuesday.

The government contends Microsoft used its monopoly power to stifle competition, taking extraordinary steps and spending extraordinary amounts of money to prevent consumer access to Netscape's product.

Jeffrey Minear, senior litigation counsel for the U.S. Department of Justice, argued that Microsoft's internal documents reveal it considered Navigator a threat to its dominance in the operating system market even though Navigator is not an operating system. Microsoft took action because it feared that if Navigator became widely adopted, the tasks that it carried out as middleware could eventually overtake the tasks of the operating system, Minear argued.

The seven appellate judges, all of whom posed questions during the morning session, showed a thorough understanding of not only the case but also the relationship among software companies, PC vendors, and developers. At one point, at least two justices wondered whether the end result of the case might be that Microsoft's monopoly would be replaced by another monopoly, perhaps Netscape combined with the technology of Sun Microsystems, because ultimately consumers want to have just one choice.

Netscape: A Fair Fight?

The issue of product "tying" came up during arguments by the attorney representing the other plaintiff, the states, and D.C.

A key point of the government's case is not whether Microsoft could combine Windows and IE, but whether Microsoft's practice forced PC vendors to bundle IE.

"We are not standing in the way of any combination; we are standing in the way of the forcing," Roberts said.

Microsoft documents presented in the trial show that the company knew its browser was not good enough on its own, so it pushed for its installation on PCs to gain customers, Roberts said. Starting in 1998, Netscape steadily lost market share, particularly after Microsoft stopped charging for IE. Microsoft now has 87 percent of the browser market, Roberts said.

But PC vendors chose which browser to offer not from competition, but because of illegal tying, Roberts said. The government contends the products involved are separate, and combining them forecloses competition.

Judges Query, Compare

Not all the judges bought Roberts's argument.

"Mere tying does not foreclose Netscape from being a competitor," said Chief Justice Harry Edwards said. He thinks the district court records don't include underlying facts to support the foreclosure claim, he added.

Some vendors ship PCs with two browsers, noted Judge Stephen Williams. But that can confuse customers, boosting support calls and eroding profits, Roberts responded.

Citing Urowsky's statement Netscape's 60 million downloads, Justice Douglas Ginsburg noted that "must mean at the very least a significant number in the millions ... downloaded Netscape and used it." If such a significant number of users downloaded Navigator and then chose to use IE, "this is highly suggestive data" that Navigator got a chance to compete against Microsoft's browser, he added.

The justices will hear additional oral arguments of the appeal on Tuesday. The next session will cover the proposed remedy and Jackson's conduct since the trial, including comments he has made publicly criticizing Microsoft management.

• See more like this:
• Microsoft,
• antitrust,
• DOJ,
• court,
• appeal