Witness warns of "Microsoft world"

WASHINGTON--Because Microsoft controls 90 percent of the market for computer operating systems, it should be required to play by a different set of antitrust rules than weaker companies, said an economist testifying for the government.

Unless the court hearing the case against Microsoft holds the company to a stricter standard, "we're going to live in a Microsoft world," said Franklin Fisher of the Massachusetts Institute of Technology. "It might be a nice world, but it's not a world that is competitively driven."

The Justice Department and 19 states suing the world's largest software maker allege Microsoft is a monopolist that uses illegal tactics to force rivals and partners alike to favor its Windows operating system and Internet Explorer Web browser.

Under cross-examination by Microsoft attorney Michael Lacovara, Fisher said, "A monopolist has to restrict the acts it can engage in because of the possible anticompetitive consequences."

Monopoly power
Proving Microsoft is a monopolist is critical to the government's case. Microsoft denies the accusation, citing new alliances in the software industry and new technologies that could reduce its market power.

If U.S. District Judge Thomas Penfield Jackson decides Microsoft exercises monopoly power, he would then judge its competitive behavior under a stricter standard to see if the company violated antitrust laws. A judicial finding that Microsoft was a monopoly also would make it easier for companies claiming injury at the hands of Microsoft to win damages against it in private litigation.

Lacovara is expected to finish cross-examining Fisher this afternoon. Then Justice Department lead attorney David Boies begins the government's redirect examination of the economist.

The government's questions are expected to focus on data taken from Microsoft's Redmond, Washington headquarters that could show the company enjoys the unfettered ability to raise prices. The ability to increase prices with impunity is one element of the legal test for proving a company has a monopoly. This pricing discussion, however, is expected to take place in a closed-door court session at the request of Microsoft and computer makers who contend the information is proprietary and too sensitive for public viewing.

News organizations are fighting to view as much of the information as Jackson will allow.

Microsoft contends that Fisher's testimony contradicts views on antitrust law he voiced earlier in his career, when he was a witness for IBM during its antitrust trial. The company also says Fisher's current testimony shows he doesn't understand the modern software industry. This, the software giant contends, illustrates how "thin" the government's case is.

"This witness has basically served as an echo chamber for this case?not to bring any new facts to the table," Microsoft spokesman Mark Murray told reporters during a break in the trial. The 110 pages of written testimony from Fisher synthesized the government's accusations against Microsoft and the testimony of the government's first 11 witnesses.

Microsoft will start its defense with another MIT economist, Richard Schmalensee.