By Jonathan Collins in Washington
Microsoft Corp will have to wait until Wednesday to finally turn the tables and go on the offensive at the continuing Washington antitrust trial. The company is hoping to reverse the effects of 10 weeks of government witness testimony. Believing its chance would come today, Tuesday, Microsoft yesterday released the written testimony of its first witness, Richard Schmalansee, who is an MIT economics professor. Professor Franklin Fisher, the government’s final witness will remain on the stand throughout today. Schmalansee’s testimony runs to over 300 pages and in it he predictably dismisses the government’s case, maintaining in what he terms key findings. He says that consumers have benefited from Microsoft’s actions; that Microsoft does not have monopoly power in the operating system market; that Microsoft has not engaged in anti-competitive conduct; and that it did not stop Netscape Communications Inc from distributing its Navigator. Schmalansee also dismisses testimony from fellow economists that have presented their testimonies in favor of the government’s case. The testimony carries an entire section that seeks to dispute the testimonies and conclusions of government witnesses Dr Warren-Boulton and Franklin Fisher. Schmalansee maintains the two expert witnesses relied largely on hearsay and emails selected as evidence by the government, rather than facts. Lead government attorney, David Boies, speaking at the end of the day, replied that the issues raised by Schmalansee, primarily that Navigator sales tripled in size during the time period covered by the complaint – not declined, as Fisher had testified, was misleading. Boies pointed out that although Netscape sales did grow, as a percentage of the market they fell. Yesterday, following the release of the Schmalansee testimony, Boies was careful to use his redirect of final government witness, professor Fisher, to counter many of the claims of Schmalansee’s hastily released testimony. Fisher dismissed Schmalansee’s analysis that the fast pace of the computer market makes Microsoft’s position far from being a traditional monopoly. According to Schmalansee, Microsoft may have a snapshot monopoly market share, but it is maintained only through skill and not illegal monopoly practice. He maintains the company could be toppled at any time due to the unique nature of the computer industry. Fisher also maintained that the planned acquisition of Netscape by AOL did not change whether Microsoft was a monopoly or not. This is not about the destruction of Netscape,” Fisher said, it’s about the destruction of competition. That does not require the complete destruction of Netscape.” Fisher reiterated how there had been little economic sense it the Microsoft strategy of developing and then giving away its own browser unless it was to defend its key operating system monopoly. He also told the court that the pricing of Microsoft’s operating systems is clearly made without regard to serious competition and in defense of its monopoly. Speaking at the end of the day, Boies said that the government economists had used standard economic analysis, whereas the lengthy testimony of Schmalansee relied on a new theory and a great deal of press reports and surveys sponsored by Microsoft. He also dismissed the economists rebuttal of the government’s economic experts. The Microsoft defense had the chance to raise these issues during cross examination. They did not, he said. Microsoft to expected to start it defense on Wednesday. á