Microsoft Faces Future Rivals, Witness Says
Microsoft Corp.’s top economic witness at its antitrust trial said Thursday that the main reason the software giant kept its prices down was the possibility of competition in the long run.
“Current competitors are not the primary constraint on Microsoft pricing,” Massachusetts Institute of Technology economics professor Richard Schmalansee said on his second day of cross-examination by the government.
The Justice Department and 19 states have charged that Microsoft holds monopoly power in the operating system for personal computers and has illegally sought to preserve and extend that power. One important antitrust test of monopoly power is whether other companies have the ability to constrain prices.
Schmalansee said Microsoft faces “some short-run impact from existing competitors,” but even under intense questioning he did not identify them. Schmalansee did identify 3Com Corp., Apple Computer Inc., America Online Inc. and the Linux and BeOS operating systems as potential competitors. He said they pose broad threats, but he refused to be pinned down on whether they pose a threat to Microsoft’s dominance in personal computer operating systems.
In another court action Thursday involving Microsoft, an angry federal judge in Seattle admonished Microsoft lawyers for language recently added to contracts for temporary workers that would waive their right to any future court-ordered additional pay or benefits.
U.S. District Judge John C. Coughenour called the contract language “outrageously arrogant” and dismissed Microsoft lawyers’ defense that it covers only future work for the company. Coughenour said damages typically continue to accrue right up to trial.
Contract workers filed a class-action lawsuit against Microsoft in 1992 over their status, claiming the company treated them as full-time workers in every regard except compensation. The case was referred back to U.S. District Judge Carolyn Dimmick in Seattle. Last fall, she limited the scope of the case to include only people who worked at Microsoft from 1987 to 1990. The plaintiffs’ lawyers have appealed that ruling, but in the meantime filed a new class-action lawsuit to cover those excluded from the earlier lawsuit.
In a third case in San Francisco, Microsoft appealed a federal judge’s order to rewrite parts of its Windows 98 operating system to conform with Sun Microsystems Inc.’s version of the Java programming language. U.S. District Judge Ronald Whyte ordered Microsoft in November to change Internet Explorer 4.0 and other software that incorporates Java programming, or stop shipping the products within 90 days.
