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Tech Law Journal |
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| News, records, and analysis of legislation, litigation, and regulation affecting the computer, internet, communications and information technology sectors | |
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IN THE UNITED STATES DISTRICT COURT
DEFENDANT MICROSOFT CORPORATION’S DESIGNATION Pursuant to Scheduling Order No. 6, entered on March 31, 1999, as modified by the Court’s Order of April 26, 1999, defendant Microsoft Corporation hereby identifies its three rebuttal witnesses. Microsoft’s rebuttal witnesses will be: 1. David Colburn, Senior Vice President, Business Affairs, America Online, Inc. 2. Gordon Eubanks, President and Chief Executive Officer, Oblix, Inc. 3. Richard L. Schmalensee, Gordon Y. Billard Professor of Economics; Dean, Sloan School of Management, Massachusetts Institute of Technology. Descriptions of the prospective testimony of Messrs. Colburn and Eubanks and of Dean Schmalensee, as required by Paragraph 5 of Scheduling Order No. 6, follow: DAVID COLBURN Microsoft intends to subpoena David Colburn of America Online, Inc. ("AOL") to testify as a hostile witness on rebuttal. As Scheduling Order No. 6 requires, Microsoft here provides a summary of the subjects on which it intends to examine Mr. Colburn: 1. The history of the negotiations among AOL, Sun Microsystems, Inc. ("Sun") and Netscape Communications Corporation ("Netscape") prior to the public announcement that AOL would acquire Netscape and enter into a strategic partnership with Sun, including but not limited to, (a) the dates on which those negotiations began, (b) the subjects addressed in those negotiations, (c) representations made by Netscape during those negotiations, and (d) the dates on which representatives of the Department of Justice were informed of those negotiations. 2. Netscape’s development of a componentized or embeddable browser for potential use in AOL’s client software, including the dates on which AOL began testing such software and communications between AOL and Netscape regarding AOL’s potential use of such software. 3. AOL’s plans with regard to the use of non-Microsoft technologies as a basis for AOL client software, including plans to replace Microsoft technologies following the current (AOL 4.0) generation of client software. 4. The dates on which and context in which AOL disclosed to Sun, Netscape, the Department of Justice and others its plans with regard to the use of non-Microsoft technologies as a basis for AOL client software. 5. AOL’s plans to develop internet access devices that operate on platforms other than desktop computers or to develop substitutes for desktop computers. 6. AOL’s plans to develop new web browsing software, either on its own or in partnership with others, including Sun. 7. AOL’s projections for the distribution and use of its client software and of the client software distributed in connection with the Netcenter portal site. 8. AOL’s plans to broaden the scope of services or functions provided or supported by AOL client software. 9. AOL’s perception of the nature and scope of the competition between it and Microsoft. 10. The completeness and candor of prior testimony given by Mr. Colburn in his deposition prior to the trial of this action and during his prior testimony to the Court. GORDON EUBANKS Microsoft also will call Gordon Eubanks, President and Chief Executive Officer of Oblix, Inc. in Mountain View, California as a rebuttal witness. Mr. Eubanks expects to provide testimony as to the following: 1. The rapid pace of change in the software business, and the inability of anyone to predict the directions in which computer and communication technology would evolve over the last ten years. 2. The existence of paradigm shifts in the software industry, such as the change from character-based to graphical user interfaces or the rapid emergence of the Internet, and the adverse effect such changes can have on incumbent market leaders. 3. The increasing importance of communication bandwidth, and the prospect that it will decrease the importance of computing platforms and increase the importance of the means by which users are connected to networks. 4. The lack of an accepted definition of what constitutes an operating system and the expansion of the concept of an operating system through the addition of new features and functions to take account of new hardware capabilities and the demands of software developers. 5. The importance of standard operating systems to the evolution of the personal computer industry, and the benefits to consumers of a high volume, low cost model of supplying hardware and software to consumers, which contrasts with the low volume, high cost models used in supplying mainframes, minicomputers and UNIX-based servers. 6. The need for developers building mass market software products to have a stable and consistent development platform that provides the system services they need to make their products function properly. 7. The need for modern operating systems to provide support for Internet standards like HTML for document display and TCP/IP and HTTP for network communication so that developers are not forced to provide support for such basic functions in their products. 8. The ability of developers to supply products that compete with elements of Windows based on the extensive information provided by Microsoft to developers about the application programming interfaces of its operating systems. 9. The benefits to consumers of having integrated software products that include features and functionality that could be (and often are) provided by separately available products. 10. The relative performance of Microsoft and other operating system vendors in supplying information to, or otherwise supporting, developers who write products to run on top of those operating systems. 11. The ability of developers to write for operating systems other than Windows and the circumstances in which it is beneficial to them to do so. 12. The need for operating system vendors to communicate frequently with developers creating complementary products to discuss issues such as interoperability, the utilization of new system services, the contract development of elements of the operating system, etc. RICHARD L. SCHMALENSEE Microsoft understands that Plaintiffs may call Professor Franklin Fisher as a rebuttal witness. If so, Microsoft intends to present testimony that responds to Professor Fisher’s rebuttal testimony and to any exhibits, studies or other materials that Professor Fisher may introduce in the course of that testimony. Without the benefit of knowing the nature or basis for his testimony at this time, it is not possible for Microsoft to summarize the portion of the rebuttal testimony that will respond to Professor Fisher. In addition to responding to Professor Fisher, Dean Schmalensee’s testimony will: 1. Update many of the analyses (includes tables and exhibits) in Dean Schmalensee’s filed and oral testimony, including:
2. Show that many events that have taken place in the computer industry since Dean Schmalensee left the witness stand in late January confirm his view that this industry, and the aspects of this industry that are relevant to the Plaintiffs’ allegations, is intensely competitive, subject to sudden paradigm shifts, and other unpredictable changes in the competitive landscape. These events include:
3. Demonstrate that there is widespread empirical evidence of price discrimination among companies that do not have monopoly power or even significant market power. 4. Show that Windows includes numerous functions that previously were provided by separate programs and utilities at much higher cost and less convenience to users. 5. Show that most consumers (including ISP subscribers) do not obtain their Web-browsing software from ISPs and that that those who did continued to obtain Netscape’s Web-browsing software from their ISPs even during the period of Microsoft’s alleged anticompetitive contracts. 6. Analyze the implications of the acquisition of Netscape by AOL and the related alliance of AOL and Sun for the issues raised by the Plaintiffs. Dean Schmalensee’s analysis may rely on ongoing depositions and discovery related to AOL’s acquisition of Netscape and alliance with Sun. 7. Show that Professor Fisher’s "parity analysis" does not provide reliable evidence that Microsoft’s contracts with ISPs excluded Netscape from distributing its Web-browsing software. In particular, Dean Schmalensee will show that Professor Fisher’s assertion that alternative weights do not make a material difference is incorrect. 8. Show why Microsoft’s inclusion of browsing functionality in Windows 9x has not raised the cost to OEMs of including other browsers from Netscape or others. Dated: New York, N.Y. May 3, 1999
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