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Gates tape delayed
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October 27, 1998: 7:44 p.m. ET
Gov't will show deposition Thursday; Barksdale wraps up testimony
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WASHINGTON (CNNfn) - Government lawyers continued to hammer away at Microsoft Corp. Tuesday, using internal documents to counter the software giant's claim that it was set up by rival browser firm Netscape Communications Corp.
Armed with an electronic mail message from Microsoft executive Dan Rosen to Chairman Bill Gates, the government asserted Microsoft wanted to elbow Netscape out of the way in the Windows-based browser market.
The government claims Microsoft officials suggested the two browser makers divvy up the market during a meeting on June 21, 1995 - a claim which Microsoft repeatedly has denied.
Government lawyers had hoped to show parts of Gates' video deposition Tuesday to bolster their case. But Microsoft objected, arguing the videotaped testimony violates the spirit of a limitation allowing each side to call only 12 witnesses.
Jackson rules Gates tape can be shown
However, Judge Thomas Penfield Jackson struck down Microsoft's motion to exclude Gates' deposition from the trial, stating federal rules clearly allow the government to use any and all portions of the videotape.
He added, however, that he would allow Microsoft to present an additional witness without charging it against its original 12.
"The 12-witness rule is not an inflexible rule and can be relaxed when appropriate," Jackson said.
The government now plans to show approximately six to seven hours of Gates' deposition beginning Thursday.
That's because both Justice Department and Microsoft lawyers spent the day wrapping up the testimony of Netscape Chief Executive James Barksdale.
At the close of four tense and often tedious days of cross-examination of Barksdale on Monday, Microsoft claimed Netscape officials fabricated details of the controversial June, meeting.
In his redirect questioning of Barksdale, David Boies, the Justice Department's lead attorney, interspersed his questions with memos and videotaped deposition to argue that Microsoft had intended to make the offer to Netscape all along.
In one Microsoft internal memo dated June 1, 1995, three weeks before the controversial meeting, the company outlined its goals:
-- "move Netscape out of the Win32 (Windows 95 and Windows NT) Internet client arena".
-- "avoid cold or hot war with Netscape. Keep them from sabotaging our platform evolution".
The government also used a June 22, 1995, e-mail from Microsoft's Rosen in which he told Gates the most important priority at the meeting, was to "establish Microsoft ownership of the Internet client (browser) platform for Win95.''
Rosen represented Microsoft at the meeting.
Barksdale expressed his surprise at seeing the memo in court.
"It seems to corroborate exactly what we've been saying," Barksdale said.
"You didn't invent or fabricate it, did you?" Boies asked.
"No," Barksdale replied.
Warden gets another shot
Microsoft lead attorney John Warden, however, attempted to take advantage of another opportunity to challenge Barksdale's credibility during a second cross examination. One particularly combative exchange prompted Jackson to interrupt and tell Warden and Barksdale "that's enough."
Netscape says it has lost hundreds of millions of dollars in revenue because Microsoft's actions forced it to give away Navigator for free last January.
Microsoft, however, contends Netscape's business continues to thrive and has in fact benefited from making Navigator free.
In yet another heated exchange, Warden pressed Barksdale to commit to whether Netscape would charge for its Navigator browser again if Microsoft "dis-integrated" Internet Explorer from Windows 98 and began charging customers for it.
"I would be competitive," Barksdale said.
"What does competitive mean?" Warden asked.
"It means I would give good value to the buyer."
"Would you give it away?" Warden asked.
"I might, I might not," Barksdale said. "Give me a shot and we'll find out."
Soon after, however, Barksdale was finally free to leave after enduring five days on the stand. Afterward, he explained his motives for testifying on the government's behalf. [349K WAV] or [349K AIFF]
AOL exec to testify
On Wednesday, Microsoft will begin cross examination of David Colburn, America Online Inc. senior vice president of business affairs.
In his written direct testimony, which the Justice Department released late Tuesday afternoon, Colburn said AOL had agreed to Microsoft's demand to distribute Internet Explorer exclusively in exchange for placement in Windows 95's Online Services folder.
"It was AOL's objective to have both Navigator and Internet Explorer available to its members, allowing them to choose which browser to use," Colburn said. "Microsoft, on the other hand, attempted to secure exclusive distribution and promotion for Internet Explorer, with no or few exceptions for distribution or promotion of a competitive browser."
The government contends that Microsoft routinely abuses its monopoly power through exclusionary contracts with PC makers, Internet service providers and Internet content providers.
Apple notes help to bolster case
The government also introduced notes by one-time Microsoft rival Apple Computer Inc. to bolster the Justice Department's claim that Microsoft often bullied competitors by threatening to withhold information and software upgrades.
Barksdale testified he was shocked when Apple co-founder Steve Jobs announced on Aug. 6, 1997, that the computer maker would accept Microsoft's Internet Explorer Web browser over Netscape Navigator and that Microsoft was investing $150 million in Apple.
According to Barksdale, Apple Chief Financial Officer Fred Anderson said Apple chose Microsoft's browser because it needed access to Microsoft Office, a package of software that includes the Microsoft Word, for its Macintosh computers.
"Apple needed to ensure that Microsoft would continue to provide MS Office for Mac or we were dead," Anderson's handwritten notes said.
Microsoft (MSFT) shares closed at 105-7/16, off 1-5/8. Netscape (NSCP) shares finished 5/16 higher at 23-13/16. 
-- by staff writer John Frederick Moore
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