Microsoft Destruction of Evidence Alleged
A former Microsoft Corp. manager has alleged that Microsoft destroyed or withheld evidence in 1992 that was relevant to an ongoing antitrust investigation of the software company, and the government is considering introducing the allegation as evidence in its current trial, according to industry and government sources.
The deposition of Stefanie Reichel, a former Microsoft account manager in Germany, could introduce a new dimension to the landmark antitrust case, which experts have said is the biggest business trial in more than a decade.
Reichel gave her deposition in a lawsuit brought by Caldera Inc. against Microsoft in 1996. Reichel is said to have been a key participant in an aggressive Microsoft campaign in Europe to establish its software as the dominant PC operating system.
One of the company’s tactics was to get German computer maker Vobis Microcomputing to switch to Microsoft’s operating system software, MS-DOS, rather than use the rival DR-DOS product now made by Caldera. At the time, 1991, Vobis was shipping DR-DOS on all its computers.
Reichel said the destroyed or withheld documents referred to Microsoft’s altering of preview versions of its Windows 3.1 software to make it more dependent on Microsoft’s own MS-DOS and less compatible with DR-DOS. Within a year, Microsoft succeeded in having its MS-DOS software bundled with more than 90% of Vobis’ computers.
In 1992, Microsoft--which says it keeps old e-mail messages on its U.S. computers for at least 15 years--removed all the PCs in Reichel’s sales office on which the incriminating files were allegedly stored. Reichel was told the action was being taken to upgrade the German computers, according to Wendy Goldman Rohm, who wrote of the incident in her best-selling book, “The Microsoft Files.”
Government lawyers confirmed that they have subpoenaed Reichel’s deposition. But they said they are undecided about whether to introduce the document. They also said it was unlikely they would call Reichel to testify.
The government could seek to use Reichel’s testimony in two ways: It could seek a highly unusual obstruction of justice charge against Microsoft. Or it could try to use her allegation to support “a pattern and practice” of sabotage by Microsoft, legal experts said.
Proving relevance of Reichel’s testimony could prove to be a big hurdle, however, one expert said. But this same expert, who declined to be identified because he is involved in the case, noted that U.S. District Judge Thomas Penfield Jackson has frequently let both sides freely and publicly introduce evidence, whose admissibility the judge will decide later in the trial.
Charles F. Rule, a Microsoft legal consultant who is former head of the Justice Department’s antitrust division, was critical of the government’s effort to introduce her deposition. “The government has, I think, despaired of coming up with concrete evidence of exclusionary or predatory practices,” Rule said. “The government is all over the lot raising issues that weren’t even in their original complaint and that are highly inflammatory and misleading.”
The trial continued Wednesday as Apple Computer Inc. executive Avadis Tevanian, questioned by a Microsoft lawyer, stuck by his accusation that the software giant had “sabotaged” Apple’s multimedia software, called Quicktime, in an effort to establish dominance for its own competing technology.
The subpoena of Reichel’s deposition is another example of how both Microsoft and the Justice Department continue to seek a “smoking gun” that could make their case. In recent days, both Microsoft and the U.S. have introduced scores of documents unearthed during other lawsuits against the company. Besides the Caldera case, Sun Microsystems Inc. has brought a breach of contract lawsuit against Microsoft over the development of Sun’s Java computer-programming language.
Earlier this week, the Justice Department introduced e-mails obtained in the Sun case suggesting that Microsoft was trying to usurp control of Java because it ran on virtually any PC and, therefore, posed a threat to Windows 95 and 98, which run only on computers using microprocessors from Intel Corp.
Reichel is described by sources as an uncooperative witness in the Caldera trial. She is said to be an admirer of Microsoft and briefly dated company Chairman Bill Gates in the early 1990s. And she has hired Los Angeles attorney Carl E. Douglas, the former law partner of celebrity lawyer Johnnie L. Cochran Jr. to resist Justice Department attempts to get her to cooperate against Microsoft.
The government has sought to portray Microsoft as a corporate predator that uses its market-leading Windows software to protect its dominance in the computer industry, so it is unclear how valuable Reichel’s testimony would be.
But although the government’s case focuses largely on Microsoft’s alleged leveraging of its Windows 95 and 98 software monopoly, the government has begun sifting through a mountain of sales and marketing data dating back to the 1980s in an effort to bolster the testimony of its two economic experts: Frederick Warren-Boulton and Franklin Fisher.
A former chief economist for the antitrust division at the Justice Department, Warren-Boulton has long been convinced that Microsoft illegally tied its Windows software to its underlying DOS operating system. He has written extensively about Microsoft’s alleged use of exclusionary pricing and technical compatibility to gain market share for its software.
When he appears as a witness later this month, Warren-Boulton is expected to testify that Microsoft is using the same practices to extend its Windows monopoly into Web browser and other Internet software.
Though Warren-Boulton and Reichel would appear to strongly reinforce each other, it would be difficult--but not impossible--to add Reichel as a witness in the Microsoft trial.
