MS/DOJ: E-mails call cross-platform 'disease'

The government took some last steps to strengthen its antitrust case against Microsoft by releasing some Microsoft e-mails including one that called cross-platform applications a "disease" that threatened the company.

While the latest documents were being released, Microsoft began its cross-examination of government economist Franklin Fisher yesterday, attacking the credibility of research data he used and quizzing him about the amount of time he spent preparing for the case.

Fisher is the government's twelfth and final witness in the U.S. vs. Microsoft antitrust case. Once his testimony is completed, it will be Microsoft's turn to call its witnesses.

But before that happens, Microsoft will again seek dismissal of the case-a motion neither side sees as having much chance of success with District Court Judge Thomas Penfield Jackson.

Microsoft's first witness will be economist Richard Schmalensee, interim dean of the Sloan School of Management at the Massachusetts Institute of Technology, and a former student of Fisher's. Schmalensee is expected to take the stand next week.

In his 110-page written testimony, Fisher argued that Microsoft is a monopoly whose anticompetitive conduct is a threat to innovation. But a significant part of Microsoft's cross-examination had little to do with the arguments Fisher made and a lot to do with the amount of time he spent working on his testimony.

Microsoft attorney Michael Lacovara introduced a series of invoices from Fisher's consulting firm dating back to when the lawsuit was filed. The invoices totaled about 30 hours at $500 an hour.

"I read extremely fast," Fisher said, at one point.

Lacovara also sought to discredit Fisher, who was the economist defending IBM in its more than decade-long antitrust case, by citing two earlier court decisions where Fisher's expert testimony was criticized.

In one antitrust case, Columbia Broadcasting System vs. American Society of Composers, the judge chastised Fisher as being only "cursorily acquainted" with the music licensing field. Lacovara, through his questions, was also challenging Fisher's expertise in the software and computer markets.

But Fisher, who has testified in many antitrust cases, seemed unfazed by the criticism, and told Lacovara that "you know what's going to happen on re-direct?" -- indicating that the government would probably cite cases where the opposite was true.

Before Fisher took the stand, the government introduced a series of e-mails by Microsoft officials that showed their fear of cross-platform applications.

Jim Allchin, Microsoft's senior vice president of personal and business systems, was so worried that he sent a memo in February 1997 to Bill Gates, CEO and chairman of Microsoft, with the subject heading: "Losing a Franchise-The Microsoft Windows Story (a new Harvard Case study)."

"I'm sure this subject got your attention," Allchin wrote to Gates. "It's what I worry about every day when I shower, run, eat, etc."

Allchin warned Gates that the company was working cross-wise on some key issues.

"The cross-platform vision and keeping Windows as the platform and the center of innovation fall into this category," he wrote. "In my opinion, Windows is in the process of being exterminated here at Microsoft."

"I assume the argument is that we have to do things cross-platform because Netscape is (or says it will). So, we move our innovations cross-platform and dilute Windows," Allchin wrote. "The alternative is to say 'NO' and push even harder on Windows."

Allchin complained that the company's "current path" on Internet Explorer 4 "will not be very integrated into Windows."

"I consider this cross-platform issue a disease within Microsoft," Allchin wrote.

Gates, writing back to Allchin, said, "Cross-platform demand is not coming from statistics. It is coming from the free-lunch syndrome we have allowed to develop."

"All of a sudden people think that there is no drawback to being cross-platform," Gates wrote. "No drawback in size, speed, interface, richness, testability. To some degree this is true because machines have enough memory now that a 'duplicate runtime' is not overwhelming," he said in reference to Java.

"I can say I am more scared than you are but that is not what will help us figure out where we should go," Gates wrote.