A key issue in the antitrust case brought by the Justice Department and 19 states is whether Microsoft illegally "welded" its Internet Explorer browser into Windows 98 to crush competition from rival Netscape Communications' Navigator browser. The software giant has argued that its browser is so tightly woven into Windows that it is impossible to isolate those software files that provide Web-browsing capability.
The test results were surrendered as senior Microsoft executive Paul Maritz testified that the software giant faces "the real possibility of being eclipsed" by competition spawned by a technological revolution in Internet access and the development of small computer-chip driven devices.
Complying with an order from U.S. District Judge Thomas Penfield Jackson, Microsoft produced an email from David D'Souza, a company software engineer, which said his tests found more than a thousand common functions, but nearly 700 specific to browsing and 152 specific to the operating system.
Microsoft tested the software code to determine if it could refute earlier testimony by a government expert who had demonstrated a program that he said hid Internet browsing functions in the Windows desktop. Princeton University computer scientist Edward Felten had testified it was possible to identify the software code for different functions.
With the trial now in its fourth month, Jackson ordered Microsoft to give government attorneys Desouza's detailed test results for their cross-examination next week of James E. Allchin, a Microsoft vice president.
In written testimony, Allchin called Felten's program to hide Internet functions a "Rube Goldberg mechanism" that "seriously degrades the performance and functionality of the operating system in numerous respects."
Microsoft shares rose 5.375 to 174 today, approaching the company's 52-week high of 174.4375.
"May not be useful"
In his October 21, 1998, email, D'Souza told Allchin that his test "may not be useful" as rebuttal evidence because "arguably, based on Felten's testimony, this list could be used to "separate" the file "into two parts."
Justice Department lawyer David Boies said the government hopes to show that "a very substantial portion of the code that performs browsing function alone has been welded to the operating system."
Boies said that will help the government prove its charge that Microsoft illegally tied Internet Explorer to Windows to force its installation on personal computers.
Microsoft tried to withhold the results because "they recognized the harmful character of the document," Boies said.
Microsoft's general counsel, William Neukom, told reporters that D'Souza's test actually helps the company's case because most of the code is shared by operating and browsing functions. "We don't have anything to hide," Neukom said.
In court, defense attorney Steven Holley argued that the test results were not covered by Jackson's discovery order. He quickly retreated when Jackson suggested the government was entitled to use them to cross-examine Allchin.
"I am not trying to hide the ball here," Holley told the judge.
"Then I think it should be produced,'' Jackson replied.
New products
In his testimony, Maritz tried to show that the company faced so much competition that Microsoft couldn't be classified as a monopoly. Competition comes from a new generation of products such as 3Com's Palm Pilot organizer or dashboard computers that allow motorists to program their route on an automobile trip.
"You can't carry a PC in your pocket, you can't put a PC in the dashboard of your car," Maritz said.
"A lot of what Windows did for people could become devalued and in part could be replaced," he added. "We stand the real possibility of being eclipsed."
Further, the growth of the Internet allows competitors like Sun Microsystems and Netscape, which America Online plans to acquire for $4.2 billion, to deliver software directly to consumers over telephone or cable TV lines, Maritz said.
Boies disputed Maritz's argument, telling reporters that Microsoft's "paid economist" had conceded there was no viable competitor to the Windows operating system, which powers 90 percent of the world's personal computers.
"Remember him telling me the most dangerous competitor is the one you don't know?" Boies said, recalling his cross-examination of the economist. "When you get to that level of speculation, what you've got is monopoly power."
"The mere fact that at some unforeseen time in the future some unforeseen competitor may arise to give some unforeseen threat to Microsoft is not enough to show they do not have present-day real-world monopoly power," Boies added.
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