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October 20, 1998 (A.M. Session) Back to Transcript Index

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1 UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

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______________________________

3 UNITED STATES OF AMERICA, :

PLAINTIFF, :

4 :

VS. : C. A. NO. 98-1232

5 :

MICROSOFT CORPORATION, ET AL. :

6 DEFENDANTS :

______________________________:

7 STATE OF NEW YORK, ET AL. :

PLAINTIFFS :

8 :

VS. : C. A. NO. 98-1233

9 :

MICROSOFT CORPORATION, ET AL. :

10 DEFENDANTS :

_______________________________

11 WASHINGTON, D. C.

OCTOBER 20, 1998

12 (A. M. SESSION)

13 TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE THOMAS P. JACKSON

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COURT REPORTER: PHYLLIS MERANA

20 6816 U. S. COURTHOUSE

3RD & CONSTITUTION AVE., N.W.

21 WASHINGTON, D. C.

281-6648

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FOR THE UNITED STATES: PHILLIP MALONE, ESQ.

2 DAVID BOIES, ESQ.

U. S. DEPT. OF JUSTICE

3 ANTITRUST DIVISION

SAN FRANCISCO, CA.

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FOR THE DEFENDANT: JOHN WARDEN, ESQ.

5 RICHARD J. UROWSKY, ESQ.

STEVEN L. HOLLEY, ESQ.

6 RICHARD PEPPERMAN, ESQ.

SULLIVAN & CROMWELL

7 125 BROAD STREET

NEW YORK, NEW YORK

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FOR THE STATE OF NEW YORK: STEPHEN HOUCK, ESQ.

9 ALAN R. KUSINITZ, ESQ.

N. Y. STATE DEPT. OF LAW

10 120 BROADWAY, SUITE 2601

NEW YORK, NEW YORK

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1 I N D E X

2 OPENING STATEMENT BY MR. WARDEN PAGE 4

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1 P-R-O-C-E-E-D-I-N-G-S

2 THE DEPUTY CLERK: CIVIL ACTION 98-1232 AND

3 98-1233, UNITED STATES VERSUS MICROSOFT CORPORATION AND THE

4 STATE OF NEW YORK, ET AL., VERSUS MICROSOFT CORPORATION.

5 PHILLIP MALONE, STEVEN HOUCK AND DAVID BOIES FOR

6 THE PLAINTIFF.

7 JOHN WARDEN, STEVEN HOLLEY, RICHARD UROWSKY AND

8 WILLIAM NEUKOM FOR THE DEFENDANT.

9 THE COURT: MR. WARDEN, YOU HAVE THE STAGE.

10 MR. WARDEN: THANK YOU, YOUR HONOR.

11 OPENING STATEMENT ON BEHALF OF MICROSOFT

12 MR. WARDEN: AS YOUR HONOR KNOWS, JOHN WARDEN OF

13 SULLIVAN AND CROMWELL FOR MICROSOFT. I WOULD LIKE TO

14 INTRODUCE MY COLLEAGUES AT THE COUNSEL TABLE, NOT ALL OF

15 WHOM YOUR HONOR HAS PREVIOUSLY MET AND MANY OF WHOM WILL

16 PLAY A PART IN THIS TRIAL FOR US.

17 OF COURSE, YOUR HONOR KNOWS BILL NEUKOM,

18 MICROSOFT'S GENERAL COUNSEL, WHO WILL BE THE CORPORATE

19 REPRESENTATIVE AT THIS PROCEEDING. ALSO FROM MR. NEUKOM'S

20 OFFICE ARE TOM BURT AND DAVID HEINER, WHOM YOU HAVE MET.

21 FROM SULLIVAN AND CROMWELL, YOU KNOW STEVE HOLLEY, AS WELL

22 AS RICHARD UROWSKY, WHO IS UPSTAIRS THIS MORNING ON THE 15

23 U.S.C. SECTION 30 APPEAL. IN ADDITION, WE HAVE TED EDEMAN,

24 MICHAEL LACOVARA AND STEPHANIE WHEELER.

25 THE COURT: I'M PLEASED TO HAVE YOU ALL.

 

 

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1 MR. WARDEN: THANK YOU.

2 AS YOUR HONOR KNOWS, WE FIRMLY BELIEVE THIS TRIAL

3 TO BE WHOLLY UNNECESSARY BECAUSE THE FACTS OF DECISIONAL

4 CONSEQUENCE ARE, IN OUR VIEW, UNDISPUTED. TODAY, HOWEVER, I

5 WILL PUT THAT POSITION ASIDE AND ADDRESS THE PROOF WE WILL

6 ADDUCE AT TRIAL.

7 WE WILL SHOW THAT MICROSOFT IS RIGHT ON THE FACTS

8 AS WELL AS THE LAW, AND RIGHT ON THE LARGER QUESTION OF HOW

9 TO PROMOTE INNOVATION, ECONOMIC GROWTH AND CONSUMER BENEFIT.

10 AS AN INITIAL MATTER, LET ME SAY THAT THE

11 GOVERNMENT'S CASE IS LONG ON RHETORIC AND SHORT ON

12 SUBSTANCE. THE EFFORT TO DEMONIZE BILL GATES IN THE OPENING

13 STATEMENTS IS EMBLEMATIC OF THIS APPROACH WHICH WRONGLY

14 CHARACTERIZES EVIDENCE OF TOUGH COMPETITION AS PROOF OF

15 ANTI-COMPETITIVE CONDUCT.

16 THE ANTITRUST LAWS ARE NOT A CODE OF CIVILITY IN

17 BUSINESS, AND A PERSONAL ATTACK ON A MAN WHOSE VISION AND

18 INNOVATION HAVE BEEN AT THE CORE OF THE VAST BENEFITS THAT

19 PEOPLE ARE REAPING FROM THE INFORMATION AGE IS NO SUBSTITUTE

20 FOR PROOF OF ANTI-COMPETITIVE CONDUCT AND ANTI-COMPETITIVE

21 EFFECTS.

22 THE EVIDENCE WILL SHOW THAT COMPANIES LIKE

23 MICROSOFT AND INTEL THAT DEVELOP COMPLEMENTARY PRODUCTS MUST

24 TALK TO EACH OTHER ON A ROUTINE BASIS TO PREVENT THE

25 CREATION OF TECHNICAL INCOMPATIBILITIES THAT ADVERSELY

 

 

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1 AFFECT THE OPERATIONS OF THEIR PRODUCTS AND, THUS,

2 CONSUMERS.

3 AS YOUR HONOR IS WELL AWARE, MICROSOFT OPERATING

4 SYSTEMS AT THE MOMENT RUN PRIMARILY ON INTEL

5 MICROPROCESSORS, AND MOST COMPUTERS THAT CONTAIN INTEL

6 MICROPROCESSORS USE MICROSOFT OPERATING SYSTEMS. THE

7 COMPANIES HAVE A SYMBIOTIC RELATIONSHIP. THAT DOES NOT

8 MEAN, HOWEVER, THAT THEY ALWAYS AGREE ABOUT EVERYTHING.

9 SOMETIMES THEY DISAGREE ABOUT HOW BEST TO ADVANCE THEIR

10 MUTUAL INTERESTS, BUT THE FACT THAT SUCH DISAGREEMENTS OCCUR

11 IS HARDLY EVIDENCE OF AN ANTITRUST VIOLATION. NOR IS IT A

12 VIOLATION THAT DISAGREEMENTS ARE RESOLVED BY ADOPTING A

13 COMMON PLAN TO DEVELOP NEW TECHNOLOGIES JOINTLY.

14 LIKE THE OPENING STATEMENTS, THE WRITTEN DIRECT

15 TESTIMONY OF THE GOVERNMENT'S WITNESSES RELIES HEAVILY ON

16 SNIPPETS OF MICROSOFT E-MAIL MESSAGES THAT ARE TAKEN OUT OF

17 CONTEXT. NOW, I HAVE NO INTENTION THIS MORNING -- AND TIME

18 WOULDN'T PERMIT -- TO RESPOND TO EACH OF THE DOCUMENTS

19 MR. BOIES REFERRED TO IN HIS OPENING. BUT I MARKED UP A

20 COUPLE OF EXAMPLES WHILE HE WAS SPEAKING TO THE COURT

21 YESTERDAY WHICH I THINK SUFFICE TO SHOW HOW MISLEADING IT

22 CAN BE TO RELY ON THESE SNIPPETS.

23 I WILL PUT THESE ON THE ELMO, AND SINCE I MARKED

24 UP THE ONES THAT WE HAD WITH EXHIBIT TABS ON THEM, THEY ARE

25 NOT -- THEY DON'T HAVE TABS. BUT THIS IS IN YOUR BINDER,

 

 

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1 GOVERNMENT'S EXHIBIT 43 AND -- I AM SORRY. THAT IS THE

2 WRONG DOCUMENT. THAT IS SUPPOSED TO BE THE SEPTEMBER 16TH

3 E-MAIL.

4 MR. BOIES DREW THE COURT'S ATTENTION TO THIS

5 SERIES OF E-MAILS CULMINATING IN THE TOP LINE: WE WILL DO

6 SOMETHING TO MAKE THIS HARD IN MEMPHIS, WINDOWS 95. I AM

7 SORRY. WINDOWS 98. THE FACT OF THE MATTER IS THAT WE

8 DIDN'T. THERE IS NO EVIDENCE THAT WE DID FROM A SINGLE

9 WITNESS AND MR. STORK, THE AUTHOR OF THE DOCUMENT, HAS

10 TESTIFIED THAT WE DID NOT.

11 NOW, I WILL DO GO TO WHAT HAS BEEN MARKED AS

12 GOVERNMENT'S EXHIBIT 277. AND THE PART I WILL REFER TO AND

13 HE REFERRED TO -- E-MAIL FROM BILL GATES TO ANDY GROVE, THE

14 C.E.O. OF INTEL. AND IT RELATES, AS YOUR HONOR HEARD

15 YESTERDAY, TO THE GROUP OF TECHNOLOGIES LOOSELY REFERRED TO

16 AS NATIVE SIGNAL PROCESSING.

17 MR. BOIES ASSERTED THAT THE E-MAIL EVIDENCED AN

18 ATTEMPT BY MICROSOFT TO PERSUADE INTEL NOT TO COMPETE IN

19 DEVELOPING SOFTWARE. BUT PORTIONS OF E-MAIL THAT MR. BOIES

20 DID NOT READ DESTROY THAT ASSERTION. AND I DRAW YOUR

21 ATTENTION TO THE SECOND PARAGRAPH OF THE GATES E-MAIL WHICH

22 IS ON DOWN IN THE DOCUMENT, BEGINNING: NSP MEANS A LOT OF

23 DIFFERENT THINGS. IT SAYS: WHAT IT MEANS IN TERMS OF

24 HARDWARE AND THE PROCESSOR BEING ABLE TO TAKE OVER MORE AND

25 MORE FUNCTIONS IS NONCONTROVERSIAL. WHAT IS A PROBLEM IS

 

 

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1 THE INCOMPATIBILITY AND OVERLAP OF SYSTEM SOFTWARE DONE

2 UNDER THAT LABEL, THE LABEL NSP. ACTUALLY, SOME OF THE

3 SOFTWARE ELEMENTS ARE OKAY. WE STILL SEEM TO HAVE A COMMON

4 VIEW OF VARIOUS OF THOSE ELEMENTS. EACH OF THESE HAS TO BE

5 IMPROVED. SO WITH OUR CURRENT RELATIONSHIP, WE WILL

6 PROBABLY DIVERGE ON EACH OF THESE. THE ONES THAT ARE A

7 MAJOR PROBLEM FOR WINDOWS 95 AND WINDOWS NT TODAY ARE -- AND

8 HE SPECIFIES CERTAIN ONES. AND HE SAYS THESE ARE

9 INCOMPATIBLE WITH WHERE WE ARE TAKING WINDOWS AND HAVE MANY

10 PROBLEMS WITH WINDOWS 95.

11 HE GOES ON LATER IN THE DOCUMENT TO A PARAGRAPH

12 THAT BEGINS, "STRUCTURALLY," THREE PARAGRAPHS LATER OR FOUR

13 PARAGRAPHS LATER: IT'S VERY HARD TO HAVE OUR PEOPLE WORKING

14 AS BEST THEY CAN TO ADVANCE PC SOFTWARE STANDARDS WITH A

15 GROUP OF 200 PEOPLE -- THOSE ARE THE INTEL PEOPLE -- FULLY

16 FUNDED, TO BASICALLY TRY TO DO THE SAME THING IN PARALLEL

17 WITH NO GUIDANCE TO COORDINATE WITH US AT ALL. THEY DON'T

18 SHARE WITH US BECAUSE OF INTEL'S IP, INTELLECTUAL PROPERTY

19 ATTITUDE. WE TRIED SHIPPING SOME INTEL CODE RELATIVE TO DCI

20 AND ENDED UP IN THIS APPLE LAWSUIT THAT'S BEEN VERY

21 DAMAGING.

22 HE GOES ON TO TALK AGAIN IN THE NEXT PARAGRAPH

23 ABOUT HOW, EVEN IF THIS IS FIXED TO RUN WITH WINDOWS 95, IT

24 WON'T WORK ON WINDOWS NT. AND THE EVIDENCE WILL SHOW THAT

25 MICROSOFT'S CONCERN ABOUT THIS PRODUCT WAS -- THAT THIS

 

 

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1 NSP -- WAS THAT PUTTING IT OUT AT THAT TIME WOULD CAUSE

2 PROBLEMS FOR BOTH MICROSOFT AND THE OEM'S BECAUSE IT DID NOT

3 WORK WITH AND HADN'T BEEN TESTED WITH WINDOWS 95. AND IF IT

4 WERE PREINSTALLED AND THEN SOMETHING WENT WRONG, THE OEM'S

5 AND MICROSOFT WOULD TAKE THE HEAT.

6 I URGE YOUR HONOR TO VIEW WITH CONSIDERABLE

7 SKEPTICISM THE CRAZY QUILT OF E-MAIL FRAGMENTS THAT SEEM TO

8 FORM THE CORE OF THE GOVERNMENT'S CASE AND TO DO THE SAME

9 WITH DEPOSITION EXCERPTS TAKEN OUT OF CONTEXT.

10 FOR EXAMPLE, YESTERDAY MR. BOIES PLAYED AN EXCERPT

11 FROM THE DEPOSITION OF MR. GATES IN WHICH MR. GATES SAID

12 THAT HE HAD FIRST LEARNED BY READING THE WALL STREET JOURNAL

13 THAT AN ALLEGATION HAD BEEN MADE THAT MICROSOFT HAD PROPOSED

14 OR DISCUSSED WITH NETSCAPE, IN THE SUMMER OF 1995, DIVISION

15 OF MARKETS. THERE IS NOTHING THAT WILL COME INTO EVIDENCE

16 THAT WILL IMPEACH THAT. THERE IS NO REPORT WITHIN MICROSOFT

17 OF PROPOSALS TO DIVIDE MARKETS. IF MR. BOIES INTENDED TO

18 IMPLY BY SHOWING THAT CLIP THAT MR. GATES DENIED KNOWING OF

19 DEALINGS BETWEEN MICROSOFT AND NETSCAPE, THE FACT THAT THERE

20 WERE DISCUSSIONS BETWEEN THE TWO PARTIES IN 1995, THAT WAS

21 WHOLLY UNFOUNDED. HE DIDN'T DENY THAT.

22 NOW I AM GOING TO TURN TO MICROSOFT'S ALLEGED

23 TYING OF WEB BROWSING SOFTWARE TO THE WINDOWS 98 OPERATING

24 SYSTEM, THE ALLEGATION THAT WAS AT THE CORE OF THE

25 GOVERNMENT'S CASE BACK IN MAY AND WAS THE PURPORTED SOURCE

 

 

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1 OF THE FICTITIOUS URGENCY THAT LED TO THE HIGHLY EXPEDITED

2 SCHEDULE WE HAVE HAD.

3 FROM RECENT PRESENTATIONS BY THE GOVERNMENT, YOU

4 WOULD NEVER KNOW THE CENTRAL ROLE THAT THAT TYING ALLEGATION

5 ONCE PLAYED IN THE CASE. INSTEAD, WE NOW HEAR AND HEARD

6 YESTERDAY A GREAT DEAL, FOR EXAMPLE, ABOUT PREDATORY

7 PRICING, WHICH IS NOWHERE IN THE COMPLAINTS AND FOR GOOD

8 REASON. SUCH A CLAIM WOULD BE FRIVOLOUS, GIVEN THE

9 CONTRIBUTION THAT INTERNET EXPLORER TECHNOLOGIES MAKE TO

10 WINDOWS, A PRODUCT WHICH IS NOT KNOWN TO BE A MONEY-LOSER

11 FOR MICROSOFT.

12 IN ADDITION, AS YOUR HONOR KNOWS, PART OF A

13 PREDATORY PRICING CLAIM IS RECOUPMENT, AND WE HAVE HAD NO

14 ATTEMPT TO EXPLAIN HOW ANYONE COULD EVER RECOUP SUPPOSED

15 LOSSES ON A PRODUCT THAT IS FOREVER FREE.

16 NOW, AS TO THE TYING ALLEGATION, WHICH IS WHAT

17 STARTED THIS CASE OFF, TOGETHER WITH THE BACKGROUND NOISE

18 ABOUT ALL THESE CONTRACTS THAT ALLEGEDLY LOCK UP

19 DISTRIBUTION, THE EVIDENCE WILL CONFIRM WHAT MICROSOFT HAS

20 BEEN SAYING ALL ALONG, NAMELY THAT INTERNET EXPLORER

21 TECHNOLOGIES ARE AN INTEGRAL PART OF THE OPERATING SYSTEM

22 AND CANNOT BE REMOVED FROM WINDOWS 98 WITHOUT SERIOUSLY

23 DEGRADING IT.

24 THE GOVERNMENT'S WARD, NETSCAPE, AGREES WITH

25 MICROSOFT ON THIS FUNDAMENTAL POINT. UNLIKE MR. BOIES, I AM

 

 

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1 HAPPY TO HAVE THE COURT FOCUS ON THE LETTER THAT PROVES THIS

2 POINT. ON MARCH 6, 1998, MORE THAN TWO MONTHS BEFORE THE

3 COMPLAINTS IN THIS CASE WERE FILED -- AND YOUR HONOR HAS

4 SEEN THIS DOCUMENT BEFORE -- NETSCAPE'S COUNSEL WROTE THE

5 ASSISTANT ATTORNEY GENERAL, JOEL KLEIN, IN A LETTER

6 ADDRESSED, DEAR JOEL, CONCERNING THE RELIEF NETSCAPE WOULD

7 LIKE TO SEE EMBODIED IN ANY CONSENT DECREE, SIGNED BY

8 MICROSOFT. THE LETTER STATES THAT NETSCAPE IS, QUOTE,

9 TOTALLY UNABLE TO PROVIDE EXAMPLES OF FILES THAT CAN OR

10 CANNOT BE DELETED FROM WINDOWS 98 SINCE, AS WE DISCUSSED

11 THIS WEEK, IT IS SIMPLY NOT POSSIBLE TO DELETE ANY PORTION

12 OF IE OR OF THE BROWSER FUNCTIONALITY FROM WINDOWS 98, AS

13 PRESENTLY CONFIGURED, WITHOUT SEVERELY INTERFERING WITH THE

14 OPERATING SYSTEM.

15 ANY ATTEMPT AT ANY STAGE OF THIS PROCEEDING TO

16 ANALOGIZE A FUNCTIONALITY SO DESCRIBED TO THE

17 ANESTHESIOLOGIST THAT WALKS ON HIS OWN LEGS IN AND OUT OF

18 THE OPERATING ROOM IN JEFFERSON PARISH IS RIDICULOUS.

19 MICROSOFT COULD NOT HAVE MADE THE POINT MORE CLEARLY ITSELF

20 THAN NETSCAPE'S COUNSEL MADE IT TO JOEL KLEIN. AND THIS IS

21 NOT A TECHNICALLY UNSOPHISTICATED LAWYER GETTING HIS FACTS

22 MIXED UP. HE IS SPEAKING ON BEHALF OF HIS CLIENT, AND EACH

23 OF THE SENIOR EXECUTIVES OF NETSCAPE DEPOSED BY MICROSOFT

24 HAS TESTIFIED THAT THEY REGARD INTERNET EXPLORER TO BE AN

25 INTEGRATED ELEMENT OF WINDOWS 98.

 

 

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1 WE EXPECT THERE TO BE NO COMPETENT EVIDENCE THAT

2 WINDOWS 98 IS ANYTHING BUT A SINGLE INTEGRATED PRODUCT THAT

3 PROVIDES BOTH END USERS AND SOFTWARE DEVELOPERS WITH A WIDE

4 RANGE OF BENEFICIAL FEATURES. ONE OF THOSE FEATURES IS THE

5 ABILITY TO LOCATE AND VIEW INFORMATION ON THE INTERNET.

6 HOWEVER, THE VERY SOFTWARE CODE IN WINDOWS 98 THAT PERFORMS

7 THAT FUNCTION ALSO PERFORMS OTHER FUNCTIONS THAT HAVE NO

8 NECESSARY CONNECTION TO WEB BROWSING.

9 THIS IS LIKE THE INDUSTRIAL ROBOT REFERRED TO BY

10 JUDGE RANDOLPH IN THE COURT OF APPEALS THAT BOTH WELDS AND

11 RIVETS. IE CODE IN WINDOWS 98 PERFORMS MULTIPLE TASKS SO

12 THAT IT CANNOT BE REMOVED; THAT IS NOT AN OPTION.

13 THE GOVERNMENT HAS NO ANSWER TO THE FACT THAT IE

14 TECHNOLOGIES ARE RELIED ON BY OTHER PARTS OF WINDOWS 98, AS

15 WELL AS BY INDEPENDENT SOFTWARE DEVELOPERS WHO WANT TO

16 INCORPORATE SUPPORT FOR INTERNET STANDARDS, SUCH AS HTML,

17 INTO THEIR PRODUCTS.

18 JIM ALLCHIN FROM MICROSOFT WILL BE ONE OF OUR

19 WITNESSES, AND HE WILL EXPLAIN THE MANY WAYS IN WHICH

20 WINDOWS 98 ITSELF DEPENDS ON INTERNET EXPLORER TECHNOLOGIES,

21 INCLUDING, MOST OBVIOUSLY, THE FACT THAT THE NEW USER

22 INTERFACE FOR THE OPERATING SYSTEM AS A WHOLE IS SUPPLIED BY

23 THOSE TECHNOLOGIES. IN ADDITION, WE WILL PRESENT TESTIMONY

24 FROM MIKE DEVLIN, FROM RATIONAL SOFTWARE, WHO WILL EXPLAIN

25 HOW HIS COMPANY'S PRODUCTS AND THOSE OF OTHER INDEPENDENT

 

 

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1 SOFTWARE DEVELOPERS RELY ON THE INTERNET EXPLORER

2 TECHNOLOGIES IN WINDOWS 98 TO OBTAIN CRUCIAL FUNCTIONALITY

3 AND HOW THOSE SOFTWARE DEVELOPERS WOULD BE ADVERSELY

4 AFFECTED IF IE TECHNOLOGIES WERE REMOVED FROM THE OPERATING

5 SYSTEM.

6 WE WILL ALSO DEMONSTRATE THE MANY BENEFITS THAT

7 FLOW TO CONSUMERS FROM THE INTEGRATED DESIGN OF WINDOWS 98,

8 INCLUDING SUBSTANTIAL IMPROVEMENTS AND EASE OF USE. BECAUSE

9 THE GOVERNMENT IS FORCED TO ACKNOWLEDGE THAT INTERNET

10 EXPLORER TECHNOLOGIES CANNOT BE REMOVED ON A WHOLESALE BASIS

11 FROM WINDOWS 98, IT RESORTS TO SEMANTIC GAMES. THEIR

12 WITNESS, PROFESSOR FELTEN, WILL TESTIFY THAT HE SPENT SIX

13 WEEKS ATTEMPTING TO HIDE EVERY MEANS OF END USER ACCESS TO

14 WEB-BROWSING FUNCTIONALITY IN WINDOWS 98, BUT HE DIDN'T

15 SUCCEED. AND IN THE PROCESS OF TRYING, HE MANAGED TO SCREW

16 UP THE OPERATING SYSTEM. PROFESSOR FELTEN DOES NOT EVEN

17 CLAIM TO HAVE REMOVED INTERNET EXPLORER TECHNOLOGIES FROM

18 WINDOWS 98. SO HIS FAILED EFFORT TO HIDE THEM ONLY PROVES

19 MICROSOFT'S POINT.

20 GLENN WEADOCK, WHO WAS HERE BACK IN JANUARY,

21 ANOTHER OF THE GOVERNMENT'S EXPERTS, WILL TESTIFY THAT,

22 DESPITE HIS BEST EFFORTS, HE TOO WAS UNABLE EVEN TO HIDE ALL

23 OF THE MANY WAYS IN WHICH CONSUMERS CAN ACCESS WEB-BROWSING

24 FUNCTIONALITY IN WINDOWS 98. BUT THE ULTIMATE SEMANTICIST,

25 PROFESSOR FARBER, WILL ADVANCE THE PROPOSITION THAT THERE IS

 

 

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1 A COGNIZABLE DIFFERENCE BETWEEN THE PRODUCT THAT MICROSOFT

2 MARKETS AS WINDOWS 98 AND WHAT HE REGARDS AS THE KERNEL OF A

3 TRUE OPERATING SYSTEM FUNCTIONALITY THAT'S HIDDEN SOMEWHERE

4 INSIDE THAT PRODUCT.

5 NOW, PROFESSOR FARBER SAYS IT'S FINE FOR MICROSOFT

6 TO INCLUDE IE TECHNOLOGIES IN THE PRODUCT CALLED WINDOWS 98,

7 BUT IT'S NOT ALL RIGHT FOR THEM TO INCLUDE THEM IN THE SMALL

8 SUBSET OF THE PRODUCT THAT HE CHOOSES TO CALL AN OPERATING

9 SYSTEM.

10 THIS PRODUCT, AS HE DEFINES IT, DOES NOT INCLUDE

11 BASIC COMPONENTS LIKE A USER INTERFACE AND A FILE SYSTEM.

12 THAT TESTIMONY FALLS OF ITS OWN WEIGHT. AND SUCH MUSINGS

13 FROM THE ACADEMY ABOUT THE THEORETICAL DEFINITION OF AN

14 OPERATING SYSTEM HAVE NO DECISIONAL SIGNIFICANCE.

15 AS JOHN ROSE FROM COMPAQ WILL EXPLAIN, ORDINARY

16 CONSUMERS WHO BUY COMPUTERS AT WAL-MART HAVE NO INTEREST IN

17 PIECING TOGETHER AN OPERATING SYSTEM FROM A GRAB BAG OF

18 SEPARATELY MARKETED COMPONENTS, UNLIKE CERTAIN ELECTRICAL

19 ENGINEERS, RESEARCH SCIENTISTS OR WHATEVER WHO GET THEIR

20 KICKS OUT OF DOING THAT. THEY WANT THEIR NEW MACHINE TO

21 COME OUT OF THE BOX -- CONSUMERS DO -- AND JUST WORK. AS

22 YOUR HONOR KNOWS, IT'S OUR POSITION WE'RE FULLY ENTITLED TO

23 PROVIDE THE CONSUMER WITH WHAT THEY WANT.

24 UNDER THE STANDARDS APPLICABLE HERE, THE

25 GOVERNMENT MUST SHOW THAT WHATEVER BENEFITS RESULT FROM THE

 

 

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1 INTEGRATED DESIGN OF WINDOWS 98, COULD EQUALLY BE ACHIEVED

2 BY OEM'S OR END USERS. THEY HAVE NO SUCH EVIDENCE. INDEED,

3 VARIOUS OF THE GOVERNMENT'S WITNESSES WILL INSTEAD OPINE

4 THAT WEB BROWSING SOFTWARE SHOULD BE VIEWED IN THE ABSTRACT

5 AS AN APPLICATION RATHER THAN AS AN ELEMENT OF AN OPERATING

6 SYSTEM. THESE ARE OPINIONS OF PEOPLE IGNORANT OF THE

7 INTERNAL ARCHITECTURE OF WINDOWS 98 AND HAVE NO EVIDENTIARY

8 VALUE. NETSCAPE MAY HAVE DESIGNED ITS WEB BROWSING SOFTWARE

9 AS AN APPLICATION, BUT MICROSOFT DID NOT AND IT HAD NO

10 OBLIGATION TO ADOPT THE SAME APPROACH.

11 THE TESTIMONY OF MICROSOFT WITNESSES WILL SHOW

12 THAT THE INTEGRATION OF SUPPORT FOR INTERNET STANDARDS IN

13 WINDOWS 98 OCCURRED AT THE INITIAL DESIGN STAGE WITH THE

14 SAME SOFTWARE CODE, AS I HAVE SAID, PERFORMING MULTIPLE

15 FUNCTIONS, AND THAT THE OPERATING SYSTEM WAS DEVELOPED AND

16 TESTED ON THAT INTEGRATED BASIS.

17 OUR EVIDENCE, PRINCIPALLY PRESENTED THROUGH PAUL

18 MARITZ AND JIM ALLCHIN, WILL ESTABLISH THAT INTERNET

19 EXPLORER IS NOT A STAND-ALONE WEB BROWSER THAT HAS SIMPLY

20 BEEN BOLTED ON TOP OF WINDOWS 98. BECAUSE THE RELEVANT

21 INTEGRATION OCCURRED AT THE DESIGN STAGE, THE DEMONSTRABLE

22 CONSUMER BENEFITS THAT RESULT FROM THAT INTEGRATION CANNOT

23 BE REPLICATED BY OEM'S OR END USERS. IT'S THAT SIMPLE.

24 WE DO NOT UNDERSTAND THE GOVERNMENT TO BE

25 CONTENDING THAT THE INCLUSION OF IE TECHNOLOGIES IN WINDOWS

 

 

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1 98 PROVIDES NO CONSUMER BENEFITS, BUT IF THAT CONTENTION IS

2 MADE, IT WILL BE UNDERMINED BY THE GOVERNMENT'S OWN

3 WITNESSES.

4 FOR EXAMPLE, JOHN SOYRING OF IBM BELIEVES THAT

5 HAVING A SINGLE USER INTERFACE FOR VIEWING BOTH INFORMATION

6 STORED LOCALLY ON HARD DISKS OR FLOPPY DISKS AND INFORMATION

7 STORED REMOTELY ON NETWORK SERVERS AND THE INTERNET IS

8 BENEFICIAL TO CONSUMERS. HE IS THE GOVERNMENT WITNESS. HE

9 IS PLAINLY RIGHT ABOUT THAT, AS ARE OTHERS OF THE

10 GOVERNMENT'S WITNESSES.

11 IN SUM, THE WEB-BROWSING FUNCTIONALITY IN

12 WINDOWS 98 IS NOT AN ADD-ON LIKE A FLASH ON A CAMERA OR A

13 CAR RADIO, BUT AN INTEGRAL FEATURE OF THE PRODUCT, LIKE THE

14 SHUTTER IN A CAMERA OR THE TRANSMISSION IN AN AUTOMOBILE.

15 MOREOVER, INTERNET EXPLORER TECHNOLOGIES IN WINDOWS 98

16 PROVIDE PROGRAMMING INTERFACES THAT INDEPENDENT APPLICATION

17 DEVELOPERS USE TO OBTAIN FUNCTIONALITY FROM THE OPERATING

18 SYSTEM TO MAKE THEIR PRODUCTS BETTER.

19 THE GOVERNMENT HAS TRIED TO INJECT MOTIVE INTO THE

20 DISCUSSION OF INTEGRATION. IN OUR VIEW, MOTIVE IS

21 IRRELEVANT ONCE THE FACT OF INTEGRATION, AS OPPOSED TO MERE

22 BUNDLING, IS SHOWN, ALONG WITH CONSUMER BENEFITS, PLAUSIBLE

23 IN NATURE, FLOWING FROM THAT INTEGRATION. NONETHELESS, WE

24 WILL REBUT ANY SHOWING THE GOVERNMENT SEEKS TO MAKE ON THIS

25 POINT, AND THE EVIDENCE WILL SHOW BOTH THAT THE INTEGRATION

 

 

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1 OF WEB-BROWSING FUNCTIONALITY INTO WINDOWS MADE GOOD

2 SENSE -- INDEED, HAVING AN ENTIRELY SEPARATE MECHANISM FOR

3 BROWSING THE WEB, LOCATING AND VIEWING INFORMATION ON THE

4 INTERNET, WOULD HAVE BEEN MISGUIDED -- AND THAT MICROSOFT

5 INTENDED TO PROVIDE CONSUMERS WITH SEAMLESS ACCESS TO

6 INFORMATION WITHOUT REGARD TO WHERE THE INFORMATION WAS

7 STORED LONG BEFORE ANYONE HAD EVER HEARD OF NETSCAPE. THE

8 GOVERNMENT CANNOT DENY THAT MICROSOFT EXECUTIVES WERE

9 DISCUSSING PUBLICLY THE VISION OF INFORMATION AT YOUR

10 FINGERTIPS WHILE MARK ANDREESEN, NETSCAPE'S CO-FOUNDER, WAS

11 STILL A STUDENT AT THE UNIVERSITY OF ILLINOIS.

12 MOREOVER, THE EVIDENCE WILL SHOW THAT MICROSOFT'S

13 EFFORT TO DEVELOP THE FIRST VERSION OF INTERNET EXPLORER,

14 CODE NAME O'HARE, WAS UNDERTAKEN BY THE TEAM DEVELOPING

15 WINDOWS 95, CODE NAME CHICAGO, BEFORE NETSCAPE RELEASED THE

16 FIRST BETA TEST VERSION OF NAVIGATOR IN OCTOBER, 1994. THE

17 GOVERNMENT'S ASSERTION THAT CHICAGO AND O'HARE WERE NOT

18 CLOSELY RELATED IS REBUTTED BY THE CODE NAMES THEMSELVES AS

19 WELL AS NUMEROUS CONTEMPORANEOUS DOCUMENTS.

20 THE FACT THAT MICROSOFT MAY HAVE BEEN SPURRED INTO

21 ACCELERATING ITS EFFORTS TO BUILD SUPPORT FOR INTERNET

22 STANDARDS INTO WINDOWS BY THE RAPID COMMERCIAL SUCCESS

23 UNDOUBTEDLY ACHIEVED BY NETSCAPE IS PRECISELY HOW THE

24 COMPETITIVE PROCESS IS SUPPOSED TO WORK. THE E-MAILS THE

25 GOVERNMENT RELIES ON DON'T SHOW THAT MICROSOFT IS A

 

 

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1 MONOPOLIST THAT CAN AFFORD TO IGNORE UPSTARTS LIKE NETSCAPE,

2 BUT THAT MICROSOFT IS FORCED TO RESPOND TO COMPETITIVE

3 CHALLENGES FROM MANY QUARTERS.

4 THE GOVERNMENT CANNOT COME TO THIS COURT AND

5 SERIOUSLY CONTEND THAT MICROSOFT SHOULD HAVE ITS HANDS TIED

6 BEHIND ITS BACK, UNABLE TO RESPOND TO CHANGES IN THE

7 MARKETPLACE. THAT BENEFITS NO ONE, PARTICULARLY CONSUMERS.

8 THE GOVERNMENT SIMPLY REFUSES TO COME TO GRIPS WITH THE FACT

9 THAT, ALTHOUGH THE FIRST TWO VERSIONS OF INTERNET EXPLORER

10 WERE INCLUDED IN WINDOWS 95 AS SUPPLIED TO OEM'S -- THAT'S

11 1.0 AND 2.0 -- AND ALTHOUGH INCLUSION IN THE OPERATING

12 SYSTEM, ACCORDING TO THE GOVERNMENT, SUPPOSEDLY CONFERS

13 INSUPERABLE ADVANTAGES, THE VAST MAJORITY OF CONSUMERS

14 CONTINUED TO USE NETSCAPE'S WEB BROWSING SOFTWARE UNTIL

15 MICROSOFT HAD DRAMATICALLY IMPROVED INTERNET EXPLORER, IN

16 PART BY FURTHER INTEGRATING IT INTO WINDOWS. THAT'S WHEN

17 CONSUMERS BEGAN USING MICROSOFT'S TECHNOLOGY FOR WEB

18 BROWSING IN LARGE NUMBERS.

19 EVIDENCE THAT MICROSOFT VIEWED CHANGES IN CONSUMER

20 DEMAND AS POTENTIAL THREATS TO ITS FUTURE BUSINESS SUCCESS

21 ADDS NOTHING TO OUR ANALYSIS. IN FACT, IF MICROSOFT WAS

22 REALLY THE MONOPOLIST THE GOVERNMENT'S POSITS, IT WOULD NOT

23 BE THREATENED BY ANYONE BECAUSE IT WOULD CONTROL PRODUCTIVE

24 CAPACITY AND THUS COULD EXCLUDE OTHER COMPANIES FROM THE

25 SOFTWARE BUSINESS WITHOUT DIFFICULTY.

 

 

19

1 THOSE ARE NOT THE FACTS. THOSE ARE NOT THE FACTS.

2 INSTEAD, MICROSOFT WILL SPEND MORE THAN $3 BILLION ON

3 RESEARCH AND DEVELOPMENT DURING ITS CURRENT FISCAL YEAR IN

4 ORDER TO KEEP PACE WITH ITS MANY AGGRESSIVE COMPETITORS.

5 THAT I SUBMIT, YOUR HONOR, IS HARDLY WHAT MR. HOUCK REFERRED

6 TO YESTERDAY AS THE QUIET LIFE OF A MONOPOLIST.

7 NOW I TURN TO THE SECOND ASPECT OF THE CASE AS

8 ORIGINALLY BROUGHT IN MAY, NAMELY THE CONTRACTS THAT

9 MICROSOFT ENTERED INTO WITH ISP'S, ICP'S, AND ON-LINE

10 SERVICES, THE LATTER BEING EXEMPLIFIED BY AOL. THE

11 GOVERNMENT CONTENDS, AS THE COURT KNOWS, THAT THESE

12 AGREEMENTS ARE UNLAWFUL EXCLUSIVE DEALING AGREEMENTS UNDER

13 BOTH SHERMAN 1 AND SHERMAN 2.

14 THESE CONTRACTS WERE ENTERED INTO WHEN MICROSOFT

15 HAD A SINGLE-DIGIT USAGE FIGURE FOR ITS WEB BROWSING

16 SOFTWARE. IN OTHER WORDS, MICROSOFT'S WEB BROWSING SOFTWARE

17 WAS USED BY LESS THAN 10 PERCENT OF THOSE BROWSING THE WEB.

18 THESE CONTRACTS WERE, THEREFORE, ACTUALLY NOT ONLY

19 COMPETITIVELY UNOBJECTIONABLE, BUT PRO-COMPETITIVE BECAUSE

20 THEY HELPED TO REDUCE NETSCAPE'S OVERWHELMING DOMINANCE AND

21 GAVE CONSUMERS A CHOICE.

22 THE NOTION THAT CONTRACTS THAT REDUCE

23 CONCENTRATION CAN BE ATTACKED AS ANTI-COMPETITIVE SHOWS HOW

24 FAR THE GOVERNMENT HAS DEPARTED FROM FUNDAMENTAL PRINCIPLES

25 OF ANTITRUST ANALYSIS. THOSE PRINCIPLES, AS THE COURT IS

 

 

20

1 WELL AWARE, FOCUS ON HARM TO COMPETITION AND NOT ON LOST

2 SALES OF PARTICULAR COMPANIES, LIKE NETSCAPE.

3 THERE IS REMARKABLY LITTLE IN THE GOVERNMENT'S

4 EVIDENCE OF ANY ADVERSE EFFECT ON CONSUMERS OF THE

5 CHALLENGED MICROSOFT CONTRACTS. I HEARD NOTHING ABOUT THAT

6 YESTERDAY BECAUSE -- AND THERE CAN'T BE ANYTHING SAID ABOUT

7 IT BECAUSE THESE CONTRACTS RESULTED IN THE RAPID AND

8 WIDESPREAD DISTRIBUTION OF NEW TECHNOLOGIES TO CONSUMERS AT

9 VERY ATTRACTIVE PRICES. THAT, AFTER ALL, IS WHAT THE

10 ANTITRUST LAWS ARE ALL ABOUT.

11 AS TO THE FORM OF THESE CONTRACTS, AS YOUR HONOR

12 KNOWS, THEY SPEAK FOR THEMSELVES. THEY ARE

13 CROSS-PROMOTIONAL AGREEMENTS, COMMON IN ALL CONSUMER

14 BUSINESSES, AND ALL ARE SHORT-TERM. NONE IS TRULY

15 EXCLUSIVE. AND WITH THE EXCEPTION OF THE AOL AGREEMENT, TO

16 WHICH I WILL RETURN SHORTLY, THEY ARE ALL WITH DISTRIBUTORS,

17 NOT CONSUMERS. FIRST, AS TO THE ICP AGREEMENTS, WE WILL

18 SHOW THROUGH THE TESTIMONY OF THE RESPONSIBLE MICROSOFT

19 EXECUTIVE, WILL POOLE, THAT THEY WERE, IN ACTUALITY, OF VERY

20 LITTLE COMMERCIAL CONSEQUENCE.

21 FIRST, WE HAD SUCH CONTRACTS WITH ONLY 31 OF THE

22 THOUSANDS OF CONTENT PROVIDERS THAT HAVE COMMERCIALLY

23 SIGNIFICANT WEB SITES. AND NONE OF THE 31 -- NONE OF THESE

24 PEOPLE IS A MAJOR DISTRIBUTOR OF WEB BROWSING SOFTWARE. AS

25 A RESULT, THE NOTION THAT THEY FORECLOSED ANYTHING IS

 

 

21

1 RIDICULOUS.

2 SECOND, THE CHANNEL BAR, TO WHICH THE ICP

3 AGREEMENTS RELATE, PROVE NOT TO BE VERY POPULAR WITH

4 CONSUMERS AND IS BEING PHASED OUT FOR THAT REASON. IN FACT,

5 BILL HARRIS OF INTUIT WILL TESTIFY THAT THE CHANNEL BAR WAS

6 A DISAPPOINTMENT TO INTUIT, MICROSOFT AND THE ENTIRE

7 INDUSTRY.

8 AS TO THE INTERNET SERVICE PROVIDER AGREEMENTS, WE

9 WILL SHOW THROUGH THE TESTIMONY OF THE RESPONSIBLE MICROSOFT

10 EXECUTIVE, CAMERON MYHRVOLD, THAT EACH AND EVERY ONE OF THE

11 ISP'S IN OUR REFERRAL SERVICE -- REFERRAL SERVER WAS FREE TO

12 PROVIDE NETSCAPE'S WEB BROWSING SOFTWARE TO CUSTOMERS WHO

13 ASKED FOR IT, AND THEY ALL HAVE, IN FACT, DONE SO. NOR WAS

14 A DEAL WITH MICROSOFT NECESSARY FOR THESE ISP'S TO GET ONTO

15 THE WINDOWS DESKTOP. DEALS WITH OEM'S COULD ACHIEVE THE

16 SAME RESULT. CUSTOMERS OF ISP'S GET THEIR WEB BROWSING

17 SOFTWARE THROUGH A VARIETY OF CHANNELS, WHICH EXPLAINS THE

18 FACT THAT MORE THAN HALF OF THE CUSTOMERS OF THE ISP'S AND

19 THE WINDOWS 95 REFERRAL SERVER USE NETSCAPE NAVIGATOR.

20 MOREOVER, THESE CONTRACTS COVERED ONLY 11 OF THE

21 MORE THAN 3,000 SERVICE PROVIDERS WHO PROVIDE INTERNET

22 ACCESS IN THE UNITED STATES AND, AS YOUR HONOR KNOWS, ALL

23 FIVE REGIONAL BELL OPERATING COMPANIES, WHO HAVE OBVIOUS

24 CONTACT WITH ALL OF AMERICA, HAVE PROMOTION AND DISTRIBUTION

25 CONTRACTS WITH NETSCAPE.

 

 

22

1 THE EVIDENCE GOES FURTHER, HOWEVER. IT WILL SHOW

2 THAT WE DIDN'T REMOVE ANY ISP FROM THE REFERRAL SERVER FOR

3 FAILING TO ACHIEVE THE TARGET LEVEL OF INTERNET EXPLORER

4 DISTRIBUTION SPECIFIED IN ITS CONTRACT, EVEN THOUGH A NUMBER

5 OF THEM ARE WELL BELOW THE TARGETS BECAUSE THEY DISTRIBUTED

6 LARGE NUMBERS OF NETSCAPE'S WEB BROWSING SOFTWARE INSTEAD.

7 FINALLY, WE DIDN'T HAVE THESE PEOPLE TIED UP IN

8 KNOTS, AS THE GOVERNMENT APPARENTLY WOULD HAVE THE COURT

9 BELIEVE. FIVE OF THE ELEVEN WHO HAD CONTRACTS WITH US ALSO

10 APPEAR IN NETSCAPE'S REFERRAL SERVER. OUR CONTRACTS WERE

11 CLEARLY NOT EXCLUSIVE AND CERTAINLY NOT EXCLUSIONARY.

12 NOW, YOUR HONOR KNOWS THAT A LOT OF THIS HAS BEEN

13 WAIVED AND IS EXPIRING AND THAT'S SIMPLY BECAUSE THEY BECAME

14 A LIGHTENING ROD FOR CRITICISM OF MICROSOFT, MUCH OF WHICH

15 WAS INSTIGATED BY NETSCAPE, AND WHILE THESE CONTRACT

16 PROVISIONS WERE HELPFUL, THEY WEREN'T CRITICAL TO ANYTHING.

17 THE COMPANY ELECTED IN APRIL 1988 TO WAIVE THEM. AND THE

18 ONES THAT HAVEN'T EXPIRED EVEN SINCE THEN SOON WILL, AND

19 THEY ARE NOT BEING RENEWED. THE NEW CONTRACTS FOR ISP'S AND

20 THE WINDOWS 98 REFERRAL SERVER DO NOT CONTAIN PROVISIONS OF

21 THE TYPE THE GOVERNMENT HAS CHALLENGED. THERE WILL BE NO

22 EVIDENCE THAT MICROSOFT HAS ANY INTENTION OF ENTERING INTO

23 ADDITIONAL CONTRACTS OF THE TYPE CHALLENGED, SO THIS ISSUE

24 IS TRULY MOOT AND, THE EVIDENCE WILL SHOW, WAS MUCH ADO

25 ABOUT NOTHING IN THE FIRST PLACE.

 

 

23

1 NOW I SAID I WOULD COME BACK TO AOL, WHICH IS A

2 SPECIAL SITUATION IN MANY RESPECTS. THAT IS A DISTRIBUTION

3 CONTRACT; THAT IS, AOL IS A CONSUMER HERE. THE CONTRACT

4 SPEAKS FOR ITSELF, AGAIN, AND IT BEARS EMPHASIZING THAT,

5 CONTRARY TO WHAT MIGHT HAVE BEEN IMPLIED BY THE PLAINTIFFS,

6 THIS CONTRACT IS ALSO, IN ACTUALITY, SHORT-TERM BECAUSE THE

7 PROVISIONS WITH RESPECT TO AOL'S UTILIZATION OF INTERNET

8 EXPLORER CAN BE TERMINATED AT AOL'S OPTION ON OR BEFORE

9 JANUARY 1 OF 1999, IN OTHER WORDS, TEN WEEKS FROM NOW.

10 THE EVIDENCE WITH RESPECT TO THIS AGREEMENT FROM

11 ALL SOURCES, AOL, NETSCAPE, AND MICROSOFT, WILL SHOW THAT

12 NETSCAPE AND MICROSOFT COMPETED HEAD TO HEAD TO SUPPLY WEB

13 BROWSING TECHNOLOGY TO AOL FOR INCLUSION IN WHAT JIM

14 BARKSDALE OF NETSCAPE, THE FIRST GOVERNMENT WITNESS, REFERS

15 TO AS AOL'S PROPRIETARY CLIENT. IN OTHER WORDS, NETSCAPE

16 AND MICROSOFT SOUGHT TO CONVINCE AOL TO USE THEIR RESPECTIVE

17 TECHNOLOGIES IN AOL'S PROPRIETARY BROWSING PRODUCT.

18 MICROSOFT WON THAT COMPETITION, AND THERE CANNOT BE ANYTHING

19 INSIDIOUS ABOUT THAT.

20 NOW, THE GOVERNMENT HAS AND WILL FOCUS ON ONLY ONE

21 ASPECT OF MICROSOFT'S VICTORY, THE SUPPOSEDLY HUGE

22 IMPORTANCE TO AOL OF PLACEMENT ON THE WINDOWS DESKTOP. BUT

23 THE EVIDENCE, YOUR HONOR, WILL SHOW THAT AOL WAS ALREADY

24 PRESENT ON THE WINDOWS DESKTOP BY VIRTUE OF AGREEMENTS WITH

25 LEADING COMPUTER MANUFACTURERS. ALREADY THERE.

 

 

24

1 IN ADDITION, THE EVIDENCE WILL SHOW THAT THE

2 NUMBER OF SUBSCRIBERS AOL HAS OBTAINED OVER THE LAST TWO

3 YEARS BY VIRTUE OF ITS PLACEMENT IN THE ON-LINE SERVICES

4 FOLDER OF WINDOWS 95 AND WINDOWS 98 IS VERY MODEST IN

5 RELATION TO ITS TOTAL SUBSCRIBER BASE. BASED ON THE

6 TESTIMONY OF BRAD CHASE OF MICROSOFT AND EVIDENCE FROM AOL,

7 IT WILL BE CLEAR THAT AOL TOOK ITS BUSINESS TO MICROSOFT ON

8 THE MERITS, HOWEVER DEFINED, QUALITY OF TECHNOLOGY,

9 RECEPTIVENESS TO AOL'S NEEDS, ASSISTANCE WITH CUSTOMIZATION

10 AND ALLOWING AOL TO MAINTAIN ITS ONLY BRANDING.

11 THIS EVIDENCE WILL BE SUPPORTED IN FACT, AS I HAVE

12 SAID, BY EVIDENCE TO THE SAME EFFECT FROM NETSCAPE ITSELF.

13 WHEN AOL DECIDED TO BASE ITS CLIENT SOFTWARE ON MICROSOFT'S

14 TECHNOLOGY, INTERNET EXPLORER 3.0 HAD REACHED THE POINT

15 WHERE IT PROVIDED A SERIES OF MODULAR COMPONENTS THAT COULD

16 BE INTEGRATED INTO AOL'S PROPRIETARY CLIENT. NETSCAPE

17 NAVIGATOR, ON THE OTHER HAND, WAS A MONOLITHIC BLOCK OF WHAT

18 MANY REFERRED TO IN THE DOCUMENTS AS SPAGHETTI CODE THAT

19 WOULD HAVE BEEN DIFFICULT AND TIME-CONSUMING FOR AOL TO

20 CUSTOMIZE, PARTICULARLY SINCE NETSCAPE'S ENGINEERS EXPRESSED

21 LITTLE INTEREST IN ASSISTING AOL IN UNDERTAKING THAT

22 CUSTOMIZATION.

23 IN OCTOBER 1998, AS WE STAND HERE TODAY, MORE THAN

24 TWO YEARS LATER, NETSCAPE HAS YET TO RELEASE A COMPONENTIZED

25 VERSION OF ITS WEB BROWSING SOFTWARE THAT IS EASY FOR THIRD

 

 

25

1 PARTIES TO INCORPORATE INTO THEIR PRODUCTS.

2 THIRD, WITH REGARD TO MICROSOFT'S LICENSE

3 AGREEMENTS WITH COMPUTER MANUFACTURERS OR OEM'S, THE

4 GOVERNMENT HAS CLEARLY FALLEN DOWN THE RABBIT HOLE. THESE

5 CONTRACTS ALSO SPEAK FOR THEMSELVES. IT IS UNDISPUTED.

6 THERE WON'T BE ANY EVIDENCE TO THE CONTRARY THAT MICROSOFT

7 DOES NOT EVEN PURPORT TO LIMIT THE ABILITY OF COMPUTER

8 MANUFACTURES TO PREINSTALL WHATEVER SOFTWARE THEY LIKE ON

9 TOP OF WINDOWS 98. IF THEY THINK IT ADDS VALUE, THAT IS

10 THEIR BUSINESS. THAT INCLUDES NETSCAPE'S WEB BROWSING

11 SOFTWARE OR ANYTHING ELSE. AND THE EVIDENCE WILL SHOW THAT

12 COMPUTER MANUFACTURES CONTINUE TO INSTALL WEB BROWSING

13 SOFTWARE ON TOP OF WINDOWS 98. IN FACT, THE NEW SONY VAIO

14 HAS FOUR DIFFERENT KINDS OF WEB BROWSING SOFTWARE INSTALLED,

15 INCLUDING NETSCAPE'S.

16 NEXT, AS THE COURT LEARNED FROM DAVID COLE BACK IN

17 JANUARY OF THIS YEAR, MICROSOFT'S LICENSE AGREEMENTS WITH

18 THE COMPUTER MANUFACTURES DO NOT EVEN PURPORT TO PREVENT

19 THEM FROM MAKING NETSCAPE'S WEB BROWSING SOFTWARE THE

20 PREFERRED OR DEFAULT BROWSER THAT IS LAUNCHED AUTOMATICALLY

21 WHEN A USER SEEKS TO ACCESS INFORMATION ON THE INTERNET.

22 MR. BOIES TALKED ABOUT AN INTEREST EXPRESSED BY A

23 SMALL NUMBER OF COMPUTER MANUFACTURES IN REMOVING THE ICON

24 ON THE WINDOWS DESKTOP THAT PROVIDED ONE MEANS OF ACCESSING

25 WEB BROWSING IN WINDOWS 95. HE DID NOT SAY, BECAUSE HE

 

 

26

1 COULD NOT, THAT ANY COMPUTER MANUFACTURE EXPRESSED AN

2 INTEREST IN REMOVING INTERNET EXPLORER TECHNOLOGIES

3 THEMSELVES FROM THE OPERATING SYSTEM. AND IT IS A FAR CRY

4 FOR US TO PREVENT THE REMOVAL OF OUR ICON -- THAT IS FAR,

5 FAR DIFFERENT THAN TO ATTEMPT TO PRECLUDE THE INSTALLATION

6 OF OTHER THINGS THE OEM WANTS, INCLUDING ICONS FOR OTHER

7 SOFTWARE MANUFACTURERS.

8 MORE IMPORTANTLY, AND MOST IMPORTANTLY PERHAPS,

9 OUR LICENSE AGREEMENTS WITH THE OEM'S DO NOT IN ANY WAY

10 RESTRICT THE ULTIMATE CONSUMER'S CHOICE OF WEB BROWSING

11 SOFTWARE OR ANY OTHER SOFTWARE. THUS -- AND THIS POINT, I

12 THINK IS IMPORTANT IN LIGHT OF THE GOVERNMENT'S VIEW OF THE

13 MATTER ON THE SUMMARY Judgment ARGUMENT -- OUR AGREEMENTS

14 WITH OEM'S DO NOT SEEK IN ANY SENSE TO ENLARGE UPON OR

15 EXTEND OUR LEGALLY GRANTED COPYRIGHT IN OUR OWN OPERATING

16 SYSTEM. NOR, PURSUANT TO THESE CONTRACTS OR OTHERWISE, IS

17 THERE ANY SENSE IN WHICH WINDOWS 98 IS DENIED TO ANYONE.

18 THE EVIDENCE WILL SHOW THE OPPOSITE, THAT MICROSOFT MAKES

19 HUGE QUANTITIES OF INFORMATION ABOUT ITS OPERATING SYSTEMS

20 AVAILABLE TO SOFTWARE DEVELOPERS BECAUSE IT IS IN

21 MICROSOFT'S BUSINESS INTEREST TO HAVE AS MANY PRODUCTS AS

22 POSSIBLE COMPATIBLE WITH ITS OPERATING SYSTEMS. NETSCAPE IS

23 A SIGNIFICANT BENEFICIARY OF THAT POLICY.

24 IN ADDITION TO THESE DISPOSITIVE FACTS, THE

25 RESPONSIBLE MICROSOFT EXECUTIVE, JOACHIM KEMPIN, WILL

 

 

27

1 TESTIFY AS TO MICROSOFT'S EFFORTS TO MAINTAIN MUTUALLY

2 BENEFICIAL RELATIONSHIPS WITH COMPUTER MANUFACTURERS. AND

3 PAUL MARITZ WILL TESTIFY ABOUT THE VALID BUSINESS REASONS

4 FOR MICROSOFT'S SEEKING TO PRESERVE THE INTEGRITY OF ITS

5 OPERATING SYSTEMS AS THEY MOVE THROUGH THE DISTRIBUTION

6 CHANNEL INTO THE HANDS OF CONSUMERS.

7 THE CLAIM THAT PREVENTING OEM'S FROM

8 DECONSTRUCTING WINDOWS 98 PROHIBITS THEM FROM BRANDING THEIR

9 MACHINES OR DIFFERENTIATING THEM FROM THEIR COMPETITORS'

10 MACHINES WILL BE DEBUNKED BY A VIDEO DEMONSTRATION OF

11 INITIAL BOOT SEQUENCES FOR SEVERAL DIFFERENT KINDS OF

12 PERSONAL COMPUTERS. AND INTERESTINGLY, THE MOST EFFECTIVE

13 BRANDING OF THESE NEW MACHINES IS MADE POSSIBLE BY THE VERY

14 INTERNET EXPLORER TECHNOLOGIES THAT THE GOVERNMENT WANTS

15 MICROSOFT TO REMOVE FROM WINDOWS 98.

16 WE WILL ALSO PRESENT THE TESTIMONY OF JOHN ROSE OF

17 COMPAQ, THE WORLD'S LARGEST MANUFACTURER OF PERSONAL

18 COMPUTERS BY A SUBSTANTIAL MARGIN, AS TO HIS COMPANY'S LONG

19 AND PRODUCTIVE RELATIONSHIP WITH MICROSOFT. IN CONTRAST, I

20 NOTE, THE GOVERNMENT WILL PRESENT NO WITNESS FROM A COMPUTER

21 MANUFACTURER WHO LICENSES WINDOWS 98 FROM MICROSOFT; THAT

22 IS, NO WITNESS WHO IS INVOLVED IN THAT LICENSING PROCESS,

23 HAVING CHOSEN FOR SOME INEXPLICABLE REASON, TO DEVOTE 5 OF

24 ITS 12 WITNESS SLOTS TO EXPERTS, MANY OF WHOM REPEAT THE

25 SAME TESTIMONY.

 

 

28

1 NOW I NOTE THAT, ENTIRELY ASIDE FROM THE

2 FOREGOING -- EVERYTHING I HAVE SAID UP TO THIS POINT -- ALL

3 OF THE CHARGES OR CLAIMS OR ALLEGATIONS THAT I HAVE THUS FAR

4 ADDRESSED, WHICH AMOUNT TO VIRTUALLY ALL OF WHAT WAS

5 ACTUALLY IN THE COMPLAINTS FILED IN MAY, WILL BE DESTROYED

6 AS WELL BY, ONE, OUR PROOF, THROUGH EVIDENCE FROM NETSCAPE

7 ITSELF AND FROM INDUSTRY DATA SOURCES, THAT NETSCAPE, FAR

8 FROM BEING FORECLOSED IN ANY SENSE OF THE WORD, HAS HAD

9 UNHINDERED ACCESS TO MORE THAN AMPLE CHANNELS OF

10 DISTRIBUTION OF ITS SOFTWARE, SO MUCH SO THAT NETSCAPE

11 ITSELF DESCRIBES ITS WEB BROWSING SOFTWARE AS UBIQUITOUS.

12 AND SECOND, THE GOVERNMENT'S COMPLETE FAILURE TO

13 PROVE THAT ANY OF THE CONTRACTS THEY ATTACK HAVE LOCKED UP A

14 SUFFICIENT PERCENTAGE OF CONSUMER DEMAND TO REQUIRE A MORE

15 EXTENSIVE ANALYSIS OF THEIR REASONABLENESS UNDER THE LAW.

16 THE EVIDENCE ON THIS POINT -- THE ABSENCE OF SUBSTANTIAL

17 FORECLOSURE -- IS EXTREMELY IMPORTANT AND COULD NOT BE

18 CLEARER. IT IS FATAL TO EACH AND EVERY ONE OF THE CLAIMS

19 ASSERTED IN THE COMPLAINTS, ALL OF WHICH DEPEND ON PROOF OF

20 SUBSTANTIAL FORECLOSURE OF COMPETITION.

21 FROM NETSCAPE'S OWN DOCUMENTS AND THE TESTIMONY OF

22 MR. BARKSDALE, MICROSOFT WILL PROVE THE FOLLOWING FACTS:

23 ONE, NETSCAPE EXPECTS TO DISTRIBUTE MORE THAN 100 MILLION

24 COPIES OF ITS WEB BROWSING SOFTWARE DURING ITS "NETSCAPE

25 EVERYWHERE" CAMPAIGN, WHICH COMES TO ROUGHLY

 

 

29

1 THREE-AND-A-HALF COPIES FOR EVERY HOME USER OF THE INTERNET

2 IN THE UNITED STATES.

3 TWO, NETSCAPE ANTICIPATES THAT THE 11,000

4 PARTICIPANTS IN ITS SO-CALLED UNLIMITED DISTRIBUTION

5 CAMPAIGN WILL DISTRIBUTE BETWEEN 150 MILLION AND 170 MILLION

6 COPIES OF NETSCAPE'S WEB BROWSING SOFTWARE THIS YEAR ALONE.

7 THAT'S HALF AS MANY COPIES AS THERE ARE USERS OF THE

8 INTERNET IN THE WORLD.

9 IN MAY 1998, THE MONTH THIS CASE BEGAN, MORE THAN

10 2 MILLION COPIES OF NETSCAPE'S WEB BROWSING SOFTWARE WERE

11 ELECTRONICALLY DOWNLOADED FROM THE INTERNET. IN NETSCAPE'S

12 OWN TERMINOLOGY, THAT FIGURE SKYROCKETED TO NEARLY 4 MILLION

13 COPIES IN JUNE, AND NETSCAPE HAS PUBLICLY ANNOUNCED THAT

14 MORE THAN 12 MILLION COPIES WERE ELECTRONICALLY DOWNLOADED

15 IN JULY AND AUGUST.

16 THE EVIDENCE WILL ALSO SHOW THAT NETSCAPE HASN'T

17 BEEN LOCKED OUT OF THE SPECIFIC DISTRIBUTION CHANNELS THAT

18 ARE THE FOCUS OF THE GOVERNMENT'S CLAIMS. NETSCAPE IS ABLE

19 TO AND DOES DISTRIBUTE ITS WEB BROWSING SOFTWARE THROUGH

20 COMPUTER MANUFACTURERS, INCLUDING MAJOR OEM'S SUCH AS

21 FUGITSU, GATEWAY 2000, IBM, PACKARD BELL/NEC, AND SONY.

22 NETSCAPE ALSO IS ABLE TO AND DOES DISTRIBUTE ITS WEB

23 BROWSING SOFTWARE THROUGH THOUSANDS OF DIFFERENT ISP'S,

24 INCLUDING SOME OF THE LARGEST IN THE COUNTRY.

25 MOREOVER, AS WE WILL DEMONSTRATE, HUNDREDS OF

 

 

30

1 THOUSANDS OF ICP'S HAVE "NETSCAPE NOW" BUTTONS ON THEIR WEB

2 SITES THAT ENABLE BROAD DISTRIBUTION OF NETSCAPE'S SOFTWARE

3 VIA ELECTRONIC DOWNLOADING FROM THE INTERNET. THEY ALSO

4 HAVE SUBSTANTIAL DISTRIBUTION IN A VERY, VERY SIGNIFICANT

5 CHANNEL THE GOVERNMENT DOES NOT EVEN MENTION, DIRECTLY TO

6 CORPORATE CUSTOMERS. AND THE EVIDENCE WILL SHOW THAT AS

7 MANY AS 90 PERCENT OF THE FORTUNE 1000 COMPANIES USE

8 NETSCAPE'S WEB BROWSING SOFTWARE. IN FACT, A STUDY OF WEB

9 BROWSING SOFTWARE BY ZONA RESEARCH RELEASED JUST LAST WEEK

10 STATES THAT NETSCAPE'S SHARE OF CORPORATE USAGE OF BROWSING

11 SOFTWARE HAS BEEN INCREASING IN RECENT MONTHS, A FACT THAT

12 COMPLETELY UNDERMINES THE GOVERNMENT'S CASE.

13 NOW LET ME TURN TO THE TWO FINAL COMPONENTS OF THE

14 CASE AS PLED, JAVA AND THE ALLEGED PROPOSED MARKET DIVISION

15 WITH NETSCAPE. JAVA IS REFERRED TO IN THE GOVERNMENT'S

16 COMPLAINT IN AN ALMOST INDIRECT WAY. IT'S REFERRED TO AS A

17 MOTIVATION FOR MICROSOFT TO ELIMINATE COMPETITION FROM

18 NETSCAPE OR, IF NOT ELIMINATING NETSCAPE, AT LEAST MICROSOFT

19 SEEKING DOMINANCE IN WEB BROWSING SOFTWARE. THE NOTION

20 BEING, IN PARAGRAPHS 8 AND 68 OF THE COMPLAINT, THAT

21 NON-MIRCOSOFT BROWSERS ARE PERHAPS THE MOST SIGNIFICANT

22 VEHICLE FOR DISTRIBUTION OF JAVA TECHNOLOGY OR JAVA VIRTUAL

23 MACHINES, AND WE WANTED TO STOP -- ALLEGEDLY STOP NETSCAPE

24 FROM PERFORMING THAT DISTRIBUTION FUNCTION BECAUSE JAVA, IN

25 TURN, IS CLAIMED TO POSE A THREAT TO THE WINDOWS OPERATING

 

 

31

1 SYSTEM BECAUSE OF THE SUPPOSED ABILITY THAT IT OFFERS TO RUN

2 PROGRAMS ON ANY OPERATING SYSTEM WITHOUT MODIFICATION.

3 NOW, THERE ARE A FEW STARK FACTS THAT WILL SHOW

4 THAT THIS IS PURE UNADULTERATED NONSENSE. FIRST, MICROSOFT

5 IS THE WORLD'S LARGEST DISTRIBUTOR OF JAVA VIRTUAL MACHINES.

6 THEY ARE INCLUDED IN EVERY COPY OF WINDOWS 98 AND

7 WINDOWS NT, AS WELL AS IN A NUMBER OF OTHER POPULAR

8 MICROSOFT PRODUCTS. WE ARE THE LARGEST DISTRIBUTOR OF WHAT

9 WE ARE ALLEGEDLY TRYING TO CHOKE OFF NETSCAPE SO IT WON'T

10 DISTRIBUTE.

11 SECOND, MICROSOFT'S JAVA VIRTUAL MACHINE IS THE

12 FASTEST, MOST COMPATIBLE JAVA VIRTUAL MACHINE IN EXISTENCE.

13 IT IS SO GOOD, IN FACT, THAT NETSCAPE ITSELF, THE GREAT JAVA

14 DISTRIBUTOR OF THE PLAINTIFFS, HAS PUBLICLY ACKNOWLEDGED THE

15 SUPERIORITY OF MICROSOFT'S IMPLEMENTATION, AS HAVE MANY

16 INDEPENDENT REVIEWERS.

17 NOW, IN THE FACE OF THOSE TWO ABSOLUTE FACTS, THE

18 GOVERNMENT HAS SORT OF MOVED OVER TO EMPHASIZING THE CHARGE

19 THAT MICROSOFT SET ABOUT TO POLLUTE JAVA, TO DESTROY ITS

20 CROSS-PLATFORM APPEAL. NOW, AS YOUR HONOR KNOWS, THE

21 QUESTION OF CONTRACT RIGHTS BETWEEN SUN, JAVA'S DEVELOPER,

22 AND MICROSOFT, ITS LICENSEE, IS THE SUBJECT OF ANOTHER CASE

23 PENDING BEFORE ANOTHER DISTRICT COURT IN CALIFORNIA. WE

24 DON'T BELIEVE THIS POLLUTION CLAIM IS EVEN PROPERLY PART OF

25 THIS CASE. BUT LEAVING THAT ASIDE, AS A MATTER OF ANTITRUST

 

 

32

1 LAW, THE POLLUTION CLAIM IS, ONCE AGAIN, NONSENSE. THE

2 EVIDENCE, INCLUDING THE TESTIMONY OF BOB MUGLIA OF

3 MICROSOFT, WILL SHOW THE JAVA VIRTUAL MACHINE IN WINDOWS

4 RUNS ANY PROGRAM WRITTEN IN SO-CALLED 100 PERCENT PURE JAVA;

5 THAT IS, JAVA AS SUN DEFINES IT FOR MARKETING PURPOSES.

6 THERE WON'T BE -- THERE IS NO WAY OF DISPUTING THAT. AND

7 THE EVIDENCE WILL SHOW IT RUNS THOSE PROGRAMS FASTER AND

8 BETTER THAN ANY OTHER JAVA VIRTUAL MACHINE, INCLUDING SUN'S

9 OWN.

10 NOW, WHAT IS THIS ALLEGED POLLUTION? SIMPLY THIS

11 AND NOTHING MORE. MICROSOFT HAS ALSO CREATED TOOLS THAT

12 ENABLE SOFTWARE DEVELOPERS TO WRITE PROGRAMS IN JAVA THAT

13 MAKE DIRECT CALLS TO WINDOWS IN ORDER TO OBTAIN NEEDED

14 FUNCTIONALITY FROM THE UNDERLYING OPERATING SYSTEM. WE RUN

15 PURE JAVA PERFECTLY, BETTER THAN ANYONE ELSE. WE HAVE

16 CREATED ADDITIONAL TOOLS SO THAT PEOPLE CAN WRITE PROGRAMS

17 IN JAVA AND ALSO CALL WINDOWS DIRECTLY. MICROSOFT HAS NOT

18 SOUGHT TO REQUIRE ANYONE TO TAKE ADVANTAGE OF THAT OPTION,

19 THE OPTION TO USE THESE TOOLS THAT WE HAVE CREATED THAT MAKE

20 DIRECT CALLS TO WINDOWS, AND SOFTWARE DEVELOPERS CREATING

21 JAVA APPLICATIONS ARE VERY WELL AWARE OF THE CONSEQUENCES OF

22 CHOOSING TO USE THOSE TOOLS.

23 PROVIDING THIS OPTION TO SOFTWARE DEVELOPERS DOES

24 NOTHING MORE THAN GIVE THEM AN ADDITIONAL COMMERCIAL CHOICE

25 THAT THEY CAN ELECT TO EXPLOIT OR NOT EXPLOIT. THAT IS THE

 

 

33

1 VERY ESSENCE OF COMPETITION, PERIOD, END OF STORY. IT'S

2 AMAZING THAT THE GOVERNMENT DOESN'T ACCEPT THIS SIMPLE FACT.

3 AS TO THE ALLEGED MARKET DIVISION THAT MICROSOFT

4 SUPPOSEDLY PROPOSED TO NETSCAPE ON JUNE 21, 1995 AND WHICH

5 FEATURED SO EXTENSIVELY YESTERDAY, THE FIRST AND UNDISPUTED

6 FACT IS THAT NOTHING OF THE KIND WAS AGREED TO OR EVER

7 OCCURRED. SECOND, THE EVIDENCE WILL SHOW THAT NETSCAPE'S

8 ACCOUNT OF THAT MEETING, UNCRITICALLY ACCEPTED BY THE

9 GOVERNMENT, IS FANTASTICAL. WHETHER THAT FANTASY AROSE FROM

10 THE NAIVETE OF ITS AUTHOR, MARK ANDREESEN, AND WAS THEN

11 PROMOTED BY HIS COLLEAGUES AS A MEANS OF ENLISTING THE

12 GOVERNMENT AS NETSCAPE'S PROTECTOR IN THE COMPETITIVE BATTLE

13 WITH MICROSOFT, OR WHETHER IT WAS CONCOCTED FROM THE VERY

14 BEGINNING FOR THAT PURPOSE, WE CANNOT ESTABLISH. BUT THE

15 EVIDENCE WILL SHOW IT WAS ONE OR THE OTHER.

16 THAT EVIDENCE, ALTHOUGH CONSTRAINED BY THE

17 LIMITATION ON THE NUMBERS OF WITNESSES AT TRIAL, WILL ALSO

18 SHOW THAT NETSCAPE'S CLAIMS OF REPEATED THREATS, ACCOMPANIED

19 BY HISTRIONICS, SHOUTING, AND TABLE-POUNDING, ARE BASELESS.

20 THAT VERSION OF EVENTS IS ENTIRELY INCONSISTENT WITH WHAT

21 PRECEDED AND FOLLOWED THE JUNE 21 MEETING. AND THESE EVENTS

22 PRECEDING AND FOLLOWING JUNE 21 MAKE IT QUITE CLEAR THAT

23 MICROSOFT WAS DOING NOTHING MORE THAN EXPLORING WHETHER SOME

24 SORT OF COLLABORATIVE EFFORT WITH NETSCAPE COULD BE BOTH OF

25 MUTUAL COMMERCIAL ADVANTAGE AND OF BENEFIT TO CONSUMERS

 

 

34

1 USING THE INTERNET WITH THE COMPANIES' RESPECTIVE PRODUCTS.

2 THERE WAS NO PROPOSAL BY MICROSOFT THAT NETSCAPE CEASE

3 DEVELOPMENT OF WEB BROWSING SOFTWARE FOR WINDOWS 95. THAT

4 SOFTWARE WAS FINISHED BY NETSCAPE AND PROVED TO BE ONE OF

5 THE MOST POPULAR SOFTWARE PRODUCTS IN HISTORY.

6 NOR, FAR FROM BEING THREATS OF DIRE CONSEQUENCES,

7 THERE WAS NO CESSATION OF ASSISTANCE TO NETSCAPE IN ITS WORK

8 ON THAT SOFTWARE. TO THE CONTRARY, MICROSOFT PROVIDED

9 EXTENSIVE ASSISTANCE ON THE VERSION OF NAVIGATOR DESIGNED

10 FOR WINDOWS 95 EVEN WHILE IT WAS RUSHING TO COMPLETE WORK ON

11 THE OPERATING SYSTEM ITSELF.

12 LIKEWISE, AS TO THE MARKET DIVISION PROPOSALS AND

13 THREATS ALLEGEDLY MADE BY MICROSOFT TO INTEL AND APPLE,

14 WHICH THE GOVERNMENT CLAIMS ARE RELEVANT UNDER RULE 404(B)

15 TO SHOW MICROSOFT'S INTENT AT THE JUNE 1995 NETSCAPE

16 MEETING AND CLAIMS ARE RELEVANT TO SHOW THE SUPPOSED

17 EXISTENCE OF MICROSOFT'S MONOPOLY POWER, THOSE PROPOSALS AND

18 THREATS CLAIMED BY THE GOVERNMENT WILL LIKEWISE BE SHOWN BY

19 THE EVIDENCE, INCLUDING THE TESTIMONY OF PAUL MARITZ, AND

20 ERIC ENGSTROM OF MICROSOFT, TO HAVE BEEN GARDEN-VARIETY

21 COMMERCIAL DISCUSSIONS BETWEEN COMPANIES DEVELOPING

22 COMPLEMENTARY PRODUCTS, DISCUSSIONS OF NO ANTITRUST

23 CONSEQUENCE.

24 I SAID AT THE OUTSET THAT MICROSOFT DEVELOPS

25 PRODUCTS COMPLEMENTARY WITH THOSE OFFERED BY BOTH INTEL AND

 

 

35

1 APPLE. AS A RESULT, CASTING THOSE COMPANIES AS MICROSOFT'S

2 COMPETITORS IN ALL CIRCUMSTANCES IS BOTH SIMPLISTIC AND

3 MISLEADING. DESPITE THE SUGGESTION MADE YESTERDAY,

4 COMPETITION ON THE MERITS IN THE SOFTWARE INDUSTRY OFTEN

5 INVOLVES EFFORTS TO ATTRACT THE ATTENTION OF COMPANIES THAT

6 DEVELOP PRODUCTS COMPLEMENTARY WITH YOUR OWN. IMPLICIT IN

7 SUCH EFFORTS IS URGING YOUR PROSPECTIVE PARTNER NOT TO ALLY

8 WITH YOUR PRINCIPAL COMPETITORS. YOU WANT HIM TO SUPPORT

9 YOUR TECHNOLOGY, NOT THEIRS.

10 THIS TALK OF MARKET DIVISION AND THREATS

11 PURPORTEDLY EVIDENCING MONOPOLY POWER LEADS ME TO MARKET

12 DEFINITION AND THE INABILITY OF MICROSOFT TO RAISE PRICES OR

13 EXCLUDE COMPETITION FROM ANY PROPERLY-DEFINED MARKET WHICH

14 IS THE DEFINITION OF MONOPOLY POWER UNDER THE LAW.

15 THE COURT: BEFORE YOU GET INTO MARKET DEFINITION,

16 WOULD THIS BE AN APPROPRIATE TIME FOR THE MORNING RECESS?

17 MR. WARDEN: YES, YOUR HONOR. IT SURELY WOULD.

18 THE COURT: TEN MINUTES.

19 (A RECESS WAS TAKEN.)

20 (AFTER RECESS.)

21 MR. WARDEN: AS I SAID, YOUR HONOR, I WILL NOW

22 TALK ABOUT MARKET DEFINITION AND ALLEGATIONS OF MONOPOLY

23 POWER. AS TO MARKETS, THE EVIDENCE FROM BOTH BUSINESS

24 PEOPLE AND EXPERTS WILL SHOW THAT THE DRAWING OF HARD AND

25 FAST LINES BETWEEN SEPARATELY IDENTIFIABLE PRODUCT MARKETS

 

 

36

1 IN THE SOFTWARE BUSINESS IS NOT JUST DIFFICULT, BUT IS

2 IMPOSSIBLE.

3 AS THE COURT IS WELL AWARE, SOFTWARE IS COMPRISED

4 OF LINES OF CODE THAT TELL A COMPUTER WHAT TO DO. THERE IS

5 AN INFINITE VARIETY OF WAYS IN WHICH SUCH INSTRUCTIONS CAN

6 BE ARRANGED.

7 NOW, IT MAY BE EASY TO SAY AND PERHAPS GENERALLY

8 CORRECT IN SOME SENSE THAT SOME PIECES OF SOFTWARE

9 CONSTITUTE PLATFORMS, SUCH AS OPERATING SYSTEMS, AND SOME

10 PIECES OF SOFTWARE CONSTITUTE APPLICATIONS THAT RUN ON TOP

11 OF SUCH PLATFORMS. AND THERE EXAMPLES WOULD BE WORD

12 PROCESSORS OR SPREADSHEETS. NO SUCH CATEGORIZATION CAN BE

13 EXPECTED TO BE ENTIRELY TRUE, EVEN IN THE SHORT RUN. AND AS

14 AN EXAMPLE OF THAT, MICROSOFT OFFICE, WHICH IS WIDELY

15 REGARDED AS A COLLECTION OF BUSINESS PRODUCTIVITY

16 APPLICATIONS, IS ALSO A PLATFORM IN THE SENSE THAT

17 VALUE-ADDED RESELLERS AND SO-CALLED SYSTEM INTEGRATERS,

18 BUILD SPECIALIZED LINE-OF-EVIDENCE SOLUTIONS ON TOP OF SOME

19 OF THE APPLICATIONS IN OFFICE LIKE EXCEL AND WORD.

20 THE EVIDENCE WILL SHOW, HOWEVER, THAT ONE THING IS

21 CERTAINLY TRUE. THE GOVERNMENT CANNOT DRAW A LINE AROUND,

22 QUOTE, OPERATING SYSTEMS FOR INTEL-BASED PC'S, CLOSE QUOTE,

23 AND CALL THAT A MARKET FOR ANTITRUST LAW PURPOSES. PERSONAL

24 COMPUTERS ARE LINKED TOGETHER BY LAN SERVERS (LOCAL AREA

25 NETWORK SERVERS), WAN SERVERS (WIDE AREA NETWORK SERVERS),

 

 

37

1 INTRANET SERVERS WITHIN AN ENTERPRISE, AND INTERNET SERVERS,

2 ALL OF WHICH HAVE THEIR OWN OPERATING SYSTEMS, AND THUS,

3 TECHNOLOGY COMPETITIVE WITH P.C. OPERATING SYSTEMS.

4 THERE IS ALSO A REMARKABLE FLEXIBILITY IN HARDWARE

5 CHOICE AND SUBSTITUTION THAT MAKES THIS POINT EVEN CLEARER.

6 WHAT ONE COMPANY USES PERSONAL COMPUTERS TO DO, ANOTHER CAN

7 USE HAND-HELD PERSONAL DIGITAL ASSISTANCE TO DO, ANOTHER CAN

8 USE APPLE MACS TO DO, ANOTHER CAN USE WORK STATIONS RUNNING

9 UNIX TO DO, ANOTHER CAN USE NETWORK COMPUTERS ATTACHED TO A

10 SERVER TO DO AND, FINALLY, YOU CAN USE DUMB TERMINALS

11 CONNECTED TO A MAINFRAME COMPUTER TO DO THE SAME THINGS.

12 THESE ARE ALL VIABLE OPTIONS FROM THE PERSPECTIVE

13 OF CUSTOMERS SEEKING COMPUTING SOLUTIONS AND THAT IS, OF

14 COURSE, WHAT CUSTOMERS SEEK. THE SOLUTION SOUGHT MAY VARY

15 FROM CUSTOMER TO CUSTOMER.

16 NOW, WITH RESPECT TO THE ALLEGATION THAT MICROSOFT

17 POSSESSES MONOPOLY POWER IN THIS PURPORTED MARKET -- WHICH

18 WE CONTEND IS CLEARLY NOT A MARKET -- THE EVIDENCE WILL SHOW

19 THAT NO SUCH POWER IN ANY TRADITIONAL ECONOMIC SENSE DOES OR

20 CAN EXIST.

21 FIRST, THERE ARE NO STRUCTURAL BARRIERS TO ENTRY.

22 NO FACTORIES TO BUILD, NO MINERAL DEPOSITS TO LOCATE, AND NO

23 DISTRIBUTION INFRASTRUCTURE TO DEVELOP.

24 SECOND, THERE ARE LITERALLY NO CONSTRAINTS ON

25 OUTPUT ONCE A SOFTWARE PRODUCT, INCLUDING AN OPERATING

 

 

38

1 SYSTEM, HAS BEEN DEVELOPED. YOU DON'T HAVE TO GO BUILD

2 ANOTHER BILLION-DOLLAR FACTORY TO TURN OUT MORE TIRES. IT

3 DOESN'T WORK THAT WAY. AND MARGINAL COSTS OF PRODUCTION ARE

4 CLOSE TO ZERO.

5 ON THE BASIS OF THESE FUNDAMENTAL ECONOMIC

6 CONSIDERATIONS, THE SOFTWARE BUSINESS IS AND ALWAYS WILL BE

7 HIGHLY COMPETITIVE. THE ASSETS REQUIRED TO CREATE OPERATING

8 SYSTEMS, LIKE OTHER SOFTWARE, ARE TWO-FOLD: HUMAN BRAINS

9 AND THE CAPITAL TO SUPPORT THOSE HUMAN BRAINS WHILE THEY

10 WORK. SUPPLY OF BOTH OF THOSE ASSETS IS EXTENSIVE. THEY

11 ARE FREELY AND ABUNDANTLY AVAILABLE. AS LINUS TORVALDS, THE

12 CREATOR OF THE LINUX OPERATING SYSTEM HAS SHOWN, ONE PERSON

13 IN HELSINKI, FINLAND CAN QUICKLY WRITE THE CORE OF A

14 SOPHISTICATED OPERATING SYSTEM THAT IS NOW USED BY MILLIONS

15 OF PEOPLE.

16 AS I ALLUDED EARLIER, COMPETITION IN OPERATING

17 SYSTEMS IS BASED ON TECHNOLOGICAL INNOVATION. IN PRODUCT

18 COMMERCIALIZATION, AS IS TRUE OF ANY HIGH-TECH INDUSTRY, YOU

19 HAVE GOT TO DO THE CREATIVE WORK. YOU HAVE GOT TO TURN IT

20 INTO A USABLE PRODUCT AND FINALLY MARKET IT. AND YOU DO NOT

21 HAVE TO HAVE BILLIONS OF DOLLARS IN ASSETS TO GET INTO THE

22 GAME.

23 ANY COMPETITIVE POSITION CAN BE LOST OVERNIGHT IF

24 SOMEONE ELSE CREATES A TECHNICALLY SUPERIOR OR MORE

25 USER-FRIENDLY PRODUCT. THERE ARE THINGS THAT ENGINEERS MAY

 

 

39

1 VIEW AS ELEGANT THAT ORDINARY PEOPLE DON'T LIKE, AND VICE

2 VERSA. BUT IF YOU GET IT RIGHT -- IF YOU GET TO THE

3 CONSUMER THE PERFORMANCE THE CONSUMER WANTS IN A WAY THAT IS

4 EASIER FOR HIM TO USE, YOU HAVE THE BETTER MOUSETRAP.

5 THE SUPPOSED LOCK-IN EFFECTS THAT YOU HAVE SEEN

6 REFERENCE TO THAT THE GOVERNMENT POSITS ARE THUS

7 EPHEMERAL -- IF SUCH LOCK-IN EFFECTS EXISTED, IT WOULD HAVE

8 BEEN IMPOSSIBLE FOR MICROSOFT TO MAKE A DENT IN NETSCAPE'S

9 COMMANDING LEAD IN WEB-BROWSING SOFTWARE, A POINT THE

10 GOVERNMENT'S ECONOMIC EXPERTS IGNORE.

11 AS I SAID EARLIER, MICROSOFT OR ANY OTHER LEADING

12 FIRM IN THE SOFTWARE BUSINESS MUST CONSTANTLY INNOVATE TO

13 REMAIN VIABLE IN EACH SUCCEEDING ROUND OF COMPETITION, AND

14 THE PACE OF THAT COMPETITION IS EXTRAORDINARILY RAPID. THIS

15 IS NO COMFORTABLE AND QUIET MONOPOLY BACKWATER.

16 OEM'S HAVE ALTERNATIVES. THEY HAVE THEM TODAY,

17 AND THERE WILL BE PLENTY OF EVIDENCE AS TO WHAT THEY ARE.

18 THEY INSTALL WINDOWS BECAUSE THAT'S WHAT THEIR CUSTOMERS

19 WANT. AND THEY, THE OEM'S, ARE DEMAND-DRIVEN ENTERPRISES IN

20 A HIGHLY COMPETITIVE BUSINESS.

21 MICROSOFT HASN'T DENIED CONSUMER CHOICE. IT IS

22 CONSUMER CHOICE. ALTHOUGH I DO NOT AND CERTAINLY COULD NOT

23 PURPORT TO BE AMONG EVEN THE MORE TECHNICALLY ADEPT PEOPLE

24 IN THIS ROOM TODAY, I KNOW -- AND I AM SURE MY EXPERIENCE IS

25 THE SAME AS THE COURT'S -- OF NO OTHER AREA OF TECHNOLOGY

 

 

40

1 THAT HAS MOVED AS FAST IN THE LAST TWENTY YEARS AS

2 COMPUTING.

3 AT SULLIVAN & CROMWELL IN 1978 -- AND I THINK OUR

4 EXPERIENCE IS TYPICAL AND GENERAL IN THIS RESPECT -- WE HAD

5 VIDEX MACHINES FOR WORD PROCESSING. PEOPLE THOUGHT THEY

6 WERE GOING TO BE AROUND FOREVER, THEY WERE SO GREAT. THEY

7 WERE LARGE BOXES WITH A LOT OF BLINKING LIGHTS THAT ONLY A

8 FEW PEOPLE IN THE WORD PROCESSING DEPARTMENT UNDERSTOOD HOW

9 TO USE.

10 THOSE MACHINES WERE REPLACED BY IBM DISPLAY

11 WRITERS, ANOTHER GREAT ADVANCE THAT LOOKED LIKE IT WAS THERE

12 FOREVER. THESE WERE COMPUTERS DEDICATED TO THE SINGLE TASK

13 OF WORD PROCESSING. ALL THE SECRETARIES HAD THEM. IN A FEW

14 SHORT YEARS, THOSE TOO WERE OBSOLETE, AND THEY HAD TO BE

15 REPLACED BY PC'S THAT COULD RUN A NUMBER OF DIFFERENT

16 APPLICATIONS, INCLUDING WORD PROCESSING. THEY WERE USED

17 BOTH BY SECRETARIES AND YOUNGER LAWYERS.

18 RECENTLY WE SWITCHED OUR OFFICE TO WINDOWS 95 AND

19 GRAPHICAL WORD PROCESSING SOFTWARE THAT ALMOST EVERYONE IN

20 THE FIRM USES, ALTHOUGH THERE ARE A FEW OF US, INCLUDING

21 MYSELF, WHO STILL USE FOUNTAIN PENS AND LEGAL PADS.

22 MY POINT IS THIS. CONTRARY TO THE GOVERNMENT'S

23 SUBMISSION, THE EVIDENCE WILL SHOW THAT CONSUMERS ADOPT NEW

24 TECHNOLOGIES THEY REGARD AS SUPERIOR EVEN IF THAT REQUIRES

25 THEM TO SCRAP WHAT THEY ALREADY HAVE AND LEARN SOMETHING

 

 

41

1 NEW.

2 NOW ANOTHER THING THE COURT, I AM SURE, HAS AT

3 LEAST IN THE BACK OF YOUR HONOR'S MIND, BUT YOU HAVE TO

4 BRING TO THE FRONT AND BEAR IN MIND, IS THAT SOFTWARE NEVER

5 WEARS OUT. AS PAUL MARITZ WILL TESTIFY, THAT PUTS MICROSOFT

6 IN COMPETITION WITH ITSELF.

7 CONSUMERS WILL NOT GO OUT AND GET THE LATEST AND

8 GREATEST OPERATING SYSTEM FROM MICROSOFT, UNLESS THEY SEE IT

9 AS A SUBSTANTIAL IMPROVEMENT ON WHAT THEY ALREADY HAVE.

10 UNLIKE A MONOPOLIST, MICROSOFT MUST CONSTANTLY

11 INNOVATE JUST TO SELL NEW PRODUCTS AT ALL BEYOND THE

12 DIMENSIONS OF MARKET GROWTH ITSELF. AND EVEN THAT MARKET

13 GROWTH IS, IN TURN, PARTIALLY DEPENDENT ON INNOVATION TO

14 SPUR DEMAND. DEMAND HAS GREATLY INCREASED AS THE

15 FUNCTIONALITIES PROVIDED HAVE GREATLY INCREASED.

16 IT'S NOT JUST A QUESTION OF PRICE REDUCTION. IT'S

17 NOT JUST A QUESTION OF RISING STANDARDS OF LIVING IN OTHER

18 PARTS OF THE GLOBE. IT'S A QUESTION OF ACTUALLY PROVIDING

19 NEW PRODUCTS THAT MAKE MORE PEOPLE WANT TO HAVE THAT KIND OF

20 A PRODUCT.

21 THAT NEED TO GENERATE ADDITIONAL DEMAND IS ONE OF

22 THE REASONS WHY MICROSOFT ADDED SUPPORT FOR INTERNET

23 STANDARDS IN THE FORM OF INTERNET EXPLORER TECHNOLOGIES TO

24 WINDOWS 95. THEY WANTED TO MAKE PERSONAL COMPUTING

25 APPEALING TO A BROADER RANGE OF PROSPECTIVE PURCHASERS.

 

 

42

1 NOW I AM GOING TO LEAVE OPERATING SYSTEMS AND GO

2 TO THE OTHER ALLEGED MARKET, BROWSERS. THAT, TOO, CANNOT

3 PASS MUSTER UNDER ANY SENSIBLE TEST FOR MARKET DELINEATION.

4 YES, PEOPLE WANT WEB-BROWSING FUNCTIONALITY -- AT LEAST A

5 LOT OF PEOPLE DO -- BUT THAT IS BUT ONE OF A LARGE NUMBER OF

6 FEATURES THEY WANT IN A COMPUTER.

7 THE EVIDENCE WILL SHOW THAT THE INCLUSION OF THIS

8 FUNCTIONALITY, LIKE OTHERS IN OPERATING SYSTEMS, IS A

9 NATURAL EVOLUTION IN THE PROCESS OF PROVIDING ACCESS TO MORE

10 AND MORE SOURCES OF INFORMATION -- NO DIFFERENT IN PRINCIPLE

11 FROM WHEN SUPPORT FOR CD-ROMS OR TAPE BACK-UP DRIVES WAS

12 ADDED TO OPERATING SYSTEMS.

13 THIS IS CONFIRMED BY THE FACT THAT EVERY MAJOR

14 VENDOR OF OPERATING SYSTEM SOFTWARE INCLUDES WEB-BROWSING

15 SOFTWARE WITH ITS PRODUCT OFFERING. THUS, THE POINT I WANT

16 TO MAKE HERE IS THAT THE GOVERNMENT SAYS THERE ARE TWO

17 MARKETS: OPERATING SYSTEMS AND BROWSERS. THE FACT OF THE

18 MATTER IS, ASSUMING THEY WERE A BROWSER MARKET, THE EVIDENCE

19 WILL SHOW THAT DEMAND IN THAT MARKET THAT THE GOVERNMENT

20 CLAIMS IS A MARKET FOR BROWSING CAN BE SATISFIED BY SUPPLY

21 IN WHAT IT CALLS ANOTHER MARKET, OPERATING SYSTEMS, BECAUSE

22 THERE CAN BE STAND-ALONE BROWSERS AND THERE CAN BE OPERATING

23 SYSTEMS THAT SUPPLY BROWSING FUNCTIONALITY, ALONG WITH THE

24 MYRIAD OTHER FUNCTIONALITIES THAT THEY SUPPLY.

25 BEFORE LEAVING THIS SUBJECT, LET ME REPEAT THAT

 

 

43

1 THE EVIDENCE WILL SHOW THAT THE GOVERNMENT'S CHARGES

2 CONCERNING THE ALLEGED BROWSER MARKET REALLY TURN ANTITRUST

3 LAW ON ITS HEAD. BY THE GOVERNMENT'S OWN ACCOUNT, NETSCAPE,

4 THE OBJECT OF PROTECTION IN THIS CASE, HAD, BASED ON ITS

5 SHARE OF USAGE, WHAT THE GOVERNMENT APPARENTLY WOULD REGARD

6 AS A MONOPOLY IN WEB-BROWSING SOFTWARE, UNTIL THE GREAT

7 SATAN, MICROSOFT, CAME ALONG.

8 ACCORDING TO THE ACADEMIC THEORIES OF TIPPING AND

9 NETWORK EFFECTS THAT THE GOVERNMENT ESPOUSES, THAT POSITION

10 WOULD QUICKLY HAVE BECOME -- INDEED, ALREADY SHOULD HAVE

11 BEEN IMPREGNABLE. LUCKILY FOR THE CONSUMING PUBLIC, THOSE

12 THEORIES ARE JUST THAT, THEORIES.

13 ANTITRUST LAW PROTECTS COMPETITION, NOT PARTICULAR

14 COMPETITORS. AND IT IS DIFFICULT TO SEE HOW COMPETITION IN

15 BROWSERS WOULD BE MORE ROBUST IF MICROSOFT HAD NOT DEVELOPED

16 INTERNET EXPLORER TECHNOLOGIES, INTEGRATED THEM INTO WINDOWS

17 95 AND 98, ACTIVELY MARKETED THEM THROUGH PROMOTIONAL

18 AGREEMENTS, MADE THEM AVAILABLE TO THIRD-PARTY SOFTWARE

19 DEVELOPERS, SUPPLIED THEM TO AOL AS THE BASIS FOR ITS CLIENT

20 SOFTWARE, AND IMPROVED THEM AT A FURIOUS PACE.

21 THE GOVERNMENT, APPARENTLY, WOULD HAVE PREFERRED

22 MICROSOFT TO LEAVE NETSCAPE IN AN UNCHALLENGED POSITION AS A

23 POTENTIAL COLLECTOR OF MONOPOLY RENTS. INDEED, YOUR HONOR

24 WILL HEAR IN THE EVIDENCE THAT NETSCAPE ORIGINALLY SUPPLIED

25 ITS WEB-BROWSING SOFTWARE FOR FREE AND CONTINUED TO DO SO

 

 

44

1 UNTIL IT THOUGHT IT HAD AN ABILITY, BASED ON ITS DOMINANT

2 SHARE OF USAGE, TO GOUGE CONSUMERS BY CHARGING THEM $39.00 A

3 COPY. NOW AS A RESULT OF MICROSOFT'S COMPETITION,

4 NETSCAPE'S WEB BROWSER IS AGAIN FREE. THE UNDISPUTED VICTOR

5 IN THE SO-CALLED BROWSING WAR HAS BEEN THE CONSUMING PUBLIC.

6 IN CONCLUSION, LET ME SAY THAT WE FIRMLY BELIEVE

7 THE COURT WILL CONCLUDE, AFTER HEARING ALL THE EVIDENCE,

8 THAT THIS IS NOT REALLY AN ANTITRUST CASE BUT A RETURN OF

9 THE LUDDITES, THE 19TH CENTURY REACTIONARIES, WHO, FEARFUL

10 OF COMPETITION, WENT AROUND SMASHING MACHINES WITH

11 SLEDGEHAMMERS TO ARREST THE MARCH OF PROGRESS DRIVEN BY

12 SCIENCE AND TECHNOLOGY.

13 THE GOVERNMENT'S CASE IS A REPUDIATION OF THE

14 BASIC PRINCIPLE IN OUR SOCIETY THAT CREATIVE COMMERCIAL

15 ACTIVITY SHOULD BE ENCOURAGED AND REWARDED. THAT PRINCIPLE

16 HAS PRODUCED FOR THIS NATION ECONOMIC PROSPERITY AND

17 ASSOCIATED INDIVIDUAL LIBERTY UNPARALLELED IN HUMAN HISTORY.

18 NOW, WHETHER THIS CASE ARISES FROM ELECTORAL

19 POLITICS, FROM THE PRESSURE OF ACADEMICS SEEKING JUDICIAL

20 ACCEPTANCE OF NEW FORMS OF SOCIAL ENGINEERING, OR FROM

21 PRESSURE BY MICROSOFT'S MANY COMPETITORS, WHO WRONGLY THINK

22 CONSUMERS WOULD BENEFIT FROM LESS VIGOROUS COMPETITION, THE

23 GOVERNMENT'S CASE IS A FUNDAMENTALLY MISCONCEIVED ATTACK ON

24 THE CREATION OF INNOVATIVE NEW PRODUCTS BY OPERATION OF THE

25 FREE MARKET. THAT IS AN ATTACK ON THE VERY CREATION OF THE

 

 

45

1 INTERSTATE AND FOREIGN COMMERCE OF THE UNITED STATES SOUGHT

2 TO BE ADVANCED BY THE COMMERCE CLAUSE OF THE CONSTITUTION

3 AND PROTECTED BY THE SHERMAN ACT.

4 THANK YOU, YOUR HONOR.

5 THE COURT: THANK YOU.

6 WE'LL TAKE OUR NOONTIME RECESS AND RECONVENE AT

7 2:00 O'CLOCK.

8 (WHEREUPON, AT 11:57 P.M., THE ABOVE-ENTITLED

9 MATTER WAS RECESSED FOR LUNCH.)

10

11

12 CERTIFICATE OF REPORTER

13 THIS RECORD IS CERTIFIED BY THE UNDERSIGNED REPORTER TO

14 BE THE OFFICIAL TRANSCRIPT OF THE PROCEEDINGS INDICATED.

15 ______________________________

16 PHYLLIS MERANA

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