U.S. Antitrust Witness’ View Challenged
An attorney for Microsoft Corp. on Wednesday attacked the credibility of a government witness who testified that America Online Inc.’s recent purchase of Netscape Communications Corp. won’t challenge Microsoft’s software monopoly.
Microsoft attorney Michael Lacovara confronted witness Franklin Fisher with written analyses of the deal to show that Microsoft faces competition from a host of rivals offering everything from affordable hand-held devices to computer software that can run on any electronic device connected to the Internet.
The Justice Department, 19 states and the District of Columbia contend Microsoft has achieved a monopoly with its Windows computer operating system and has used that to stifle competition in emerging technologies such as Web browsers, which allow computer users to surf the Internet.
In a tense exchange with Fisher, who is an economics professor at the Massachusetts Institute of Technology, Lacovara cited a Goldman, Sachs & Co. “fairness opinion” produced for America Online that suggested that AOL intends to directly compete with Microsoft. The Goldman Sachs opinion argued that part of the “strategic rationale” for the deal was to extend Netscape’s browser “to be a more comprehensive desktop application . . . with the goal of becoming user’s de facto [computing] environment.”
Lacovara introduced no evidence to show that AOL and Netscape endorsed the Goldman Sachs opinion or are actually developing a computing “environment” to compete with Microsoft’s Windows. But Lacovara drew what seemed to be an acknowledgment from Fisher about potential threats faced by Microsoft from a broader technology market that extends beyond operating system software.
In testimony earlier in the day, Lacovara also challenged Fisher’s claim that the average price of personal computers is $950. Fisher had used the figure, which he got from the consulting firm PC Data Corp., in some of his economic analyses. But Lacovara pointed out that the PC Data number does not include the cost of a computer monitor and represents the average price of personal computers bought at retail, not through the common mail order, Internet and other direct channels.
Fisher conceded that the $950 figure is probably too low. He said that it would not make much difference in his overall analysis, however.
The paper trail unearthed by Lacovara, however, did not appear to impress Judge Thomas Penfield Jackson, who at one point told Lacovara that he had offered enough documents and that he should move on.
Jackson commented, however, that some of the documents Lacovara offered “call into question the accuracy” of Fisher’s forecasts for the PC industry.
Lacovara said he will conclude his cross-examination of Fisher today. Next after Fisher on the stand is expected to be Garry Norris, a manager at IBM Corp.
