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MSFT denies bully tactics
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February 17, 1999: 2:55 p.m. ET
Defense witness refutes alleged market-division meeting with Netscape
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NEW YORK (CNNfn) - A Microsoft Corp. executive testified that an alleged market-division meeting with Netscape Communications Corp. never took place, accusing Netscape executives of "trying to rewrite history."
That denial from Daniel Rosen, Microsoft (MSFT) general manager, new technology, undercuts one of the stronger charges the government has levied against the company in the antitrust trial in Washington.
Last October, Netscape (NSCP) Chief Executive James Barksdale testified for the government that Microsoft officials attempted to coerce Netscape to cede the lucrative Windows Web browser market in exchange for developing products for computer network servers.
Government lawyers pointed to that meeting as a more extreme example of how Microsoft uses its Windows monopoly to crush its competitors.
But in written direct testimony released by Microsoft Wednesday, Rosen portrayed the June 21, 1995 meeting as cordial.
"The facts and the record illustrate that Microsoft desired to structure a business relationship with Netscape that would bring benefit to our mutual customers," Rosen said.
Plan was Barksdale's
In fact, Rosen said, there was no single meeting with Microsoft and Netscape officials but a series of meetings that began long before June 1995.
Rosen said that from his perspective, a June 2, 1995 meeting was the more significant one, and that the "purpose of the meeting was to understand if there was an opportunity for a broad collaboration between Microsoft and Netscape."
In that meeting, Rosen noted that Barksdale named Lotus Notes, Lotus Development Corp.'s collaboration software product, as Netscape's most direct competitor.
With that in mind, Rosen said, any suggestion that Netscape would give away its browser for free in exchange for gaining revenue from server products was Barksdale's idea, not Microsoft's.
"In 1995, Lotus Notes was an alternative to the Internet, used solely within enterprises," Rosen said. "Since the Lotus Notes business model was to give away Notes client software, while charging for the server software, it was reasonable to assume that Mr. Barksdale had adopted this strategy as well."
Rosen also noted that it was Barksdale who detailed Netscape's intention to focus on the Internet as a means for distributing the Navigator browser as opposed to Windows-based PCs.
Rosen called that distinction "noteworthy, given Netscape's [and the plaintiffs'] recent allegations that Netscape has somehow been shut out of the OEM (PC) channel for distributing its Internet-related software."
"My strong recollection, as I wrote that day, is that Jim Barksdale made clear that 'develop[ing the OEM] channel' was not part of Netscape's strategy, precisely because the company wanted to focus on the low-cost -- and by all accounts enormously successful --distribution of its software over the Internet," Rosen said.
"Once again, I believe that Netscape either is attempting to rewrite history or deliberately misled me and my colleagues during our June 1995 discussions."
Rosen, Microsoft's ninth witness, will take the stand when the government concludes its cross examination of John Rose, senior vice president and group manager of Compaq Computer Corp. 's (CPQ) enterprise computing group.
Microsoft shares were down 6-9/32 at 149-31/32 in midday trade. 
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