Special report: Trial truth according to Microsoft

We analyse Microsoft's mammoth version of trial events

MS on Trial Microsoft trial judge Thomas Penfield Jackson now has substantial documents from both Microsoft and the DoJ - these "Proposed Findings of Facts" are the rival parties' interpretations of what was really established as fact during the trial proceedings. Microsoft's document, analysed here, puts forward the company's own curious view of events at some considerable length. It is, you could say, Microsoft's Mein Kampf. The 442-page production features "black-is-white" logic and commoditises Microsoft's perceptions about itself. It cannot be read without the refrain: "That's not true; that's a distortion; relevant facts are being omitted". The document should have a health warning, since to read it (not an easy task) could seriously prejudice objectivity. New "evidence" is introduced from time to time as Microsoft adds things that it omitted to introduce into evidence, and which are inadmissible at this stage. Unsupportable generalisations are made without any reference to the evidence. Pages of sales pitch, about Windows 98 for example, are also included - these are unlikely to appeal to Judge Jackson. Either Microsoft seems to have taken the view that if it is going to lose the case, at least it can do it with a sales-oriented document - or it is incapable of putting its best foot forward. There is a great deal of repetition, with arguments being duplicated in several sections - but not infrequently contradicting each other. Sales pitches have been added by marketing and PR people, it would appear. The more technical parts are taken from the direct testimony of Microsoft witnesses, but with only partial understanding. Microsoft has chosen to ignore facts that interfere with its arguments, in the hope that the court will not notice that the omissions. It is unlikely that the judge will do much more than turn the pages. The DoJ has until 10 September to produce comments on Microsoft's PFOF. The usual Microsoft arrogance pervades the document, always seeing Windows as a "standard" platform, and competitive software as being proprietary because of its disdain for de facto standards. The focus is on consumers because of Microsoft's need to show that there was no consumer harm, and that it had not therefore fallen foul of the antitrust laws. Microsoft is selective about the third-party data that it introduces, picking and choosing quite happily to find what best fits its story. Since many of the dire predictions foreseen when the case started have come to pass, it is unsurprising that Microsoft favours older data. This particularly applies to the situation with browser share. Many of the assertions that Microsoft makes are just untrue, and not even white lies. An area where judges are particularly experienced is in assessing when witnesses are lying. Judge Jackson will have made his conclusions during the cross-examination of Microsoft's witnesses, and the result is unlikely to help Microsoft's case. It will probably mean that quite a few of Microsoft's arguments that have some validity will not be accepted, because of the unreliable evidence of its witnesses. The lawyers' efforts at plastering over the cracks will not work, because Microsoft's witnesses impeached themselves, and lacked credibility. The document catalogues Microsoft's paranoia about the future, although this can play no role in the case. It is hard to see how Microsoft's concern with "various technologies of which Microsoft is not yet aware" can help Microsoft's defence. So far as past actions are concerned, Microsoft has resorted to one of its areas of expertise: rewriting history. Corporate paranoia Corporately, Microsoft exhibits paranoia about its competitors The claim that CP/M was overtaken by MS-DOS "because of the failure of CP/M to continue to provide what consumers required" conveniently ignores the fact that CP/M was ripped off by MS-DOS and marginalised as a result of IBM having devoted less than its full attention to the deal. IBM only later offering CP/M-86 as a high-priced alternative to prevent a legal action by Digital Research. Windows 3.0 was not successful, as claimed: it was another two years before Windows 3.1 appeared in April 1992 as the first usable version. Microsoft is not known for its confessions about its deficient or unsuccessful software. But Windows 1, Windows 2 and OS/2 version 1.21 were "costly attempts" to produce a GUI that were unsuccessful. And that's not all: Windows 3.x deficiencies included limited security and portability to other microprocessors. The story that "the role of MS-DOS [in Windows 3.0] was reduced essentially to providing the file system and certain device drivers, and the most basic operating system functionality migrated into Windows" is untrue. Windows was just a GUI application to MS-DOS 5.0, and its role was not "reduced". This falsehood is continued when Microsoft tries to claim that Windows 95 "had the same sort of integrated design as the Mac OS". Microsoft falsely described "Windows" as an "operating system" in its SEC filings at the time. Only NT was and is a Windows operating system. Microsoft continues with the claim that "Windows 95 ... [included] Web browsing functionality". That will be news for those who queued up to buy it in August 1995. It is noteworthy that a January 1994 memo by Dave Pollon that Microsoft trotted out explained that Microsoft wanted "business users to buy Chicago". So much for the nascent NT. Browser integration A common Microsoft trick is to claim that a recommendation from a low-level employee who understood a situation but was ignored was in fact elaborating what was accepted at the time as mainstream policy. The great example of this was with browser development, since only a handful of people were concerned with it. At the end of 1993, Microsoft was still considering having an Exchange client in Chicago (later Windows 95), but made no progress on this. The lateness of Microsoft's decision about browsing resulted from Microsoft having failed to buy a 20 per cent stake in Netscape (and procure a seat on its board) in the autumn of 1994. In January 1995 Microsoft licensed Mosaic from Spyglass, the licensee of the National Center for Supercomputing at the University of Illinois, which gave the great innovator something to copy. Even so, Gates did not appreciate how Microsoft was missing the boat until his "Internet tidal wave" paper in May 1995. Even in June 1995, Microsoft was still discussing its Internet strategy and goals, and it was not until 7 December 1995 that Microsoft's Internet strategy was outlined publicly, an additional and tougher Spyglass contract agreed, and Java licensed. We are told that "a brief delay in Microsoft's public articulation [come off it] of its Internet strategy impelled industry participants and analysts alike to predict the company's demise". Errors and omissions There are interesting omissions. It is quite extraordinary that Microsoft should ignore the great contributions of its chairman and CEO. Gates gave 20 hours of videotaped deposition, but this is never referenced. In years to come, law students will be taught that his stonewalling appearance was the greatest PR error ever made by a defendant in an antitrust case, and that it is unacceptable for the CEO to be hyper-aggressive and unresponsive. Gates doesn't even rate a mention until page 175, when his Comdex speech in 1990 on "Information at you fingertips" (which in fact offered nothing new) was credited with inspiring the development of networking and subsequently Internet access. Microsoft likes it to be known that it is spending so much on what it calls R&D (17 per cent of its revenues, it says) but does not make it clear that this includes large amounts spent on propaganda and brain washing for developers (which it choses to call "evangelising"), and that would be better characterised as a marketing expense. Microsoft makes the point as an argument to support its claim that a monopolist would not spend so much. Microsoft's lawyers have also done a sloppy job: they could not even get right the date of entry of the Final Judgement in the consent decree case: it was 21 August 1995, and not 21 April. They also claim that the direct testimony was through written witness statements, but this was not the case for Steven McGeady of Intel. Their editorial inability to remove inconsistencies has not helped their case. If ever there were a sign that Microsoft lives in a make-believe world, one has only to glance at comments such as "relentless innovation occurs at Microsoft". It is surely a joke that Microsoft lists itself as its main competitor: ("long-run competition [is] from [Microsoft's] installed base"), followed by competition from pirated software. Persuading users to upgrade is another problem, the monopolist moans, and admits that "it must constantly innovate" to give an incentive for users to upgrade. So there we have it: "innovation" is to persuade users to upgrade, and is not for the benefit of users "since software does not wear out". But that does not square with "The prices charged by the category leader are constrained by the risk of being displaced, which also forces the leading firm to innovate." Really? Mars Bars have been around since before the war, essentially unchanged, despite strong competition. To Microsoft's claim that its success is "largely attributable to its vigilance in identifying, and its success in innovating in the face of, new trends in the software industry" one only has to say "What about missing the Internet than?" "Innovation" has always consisted of buying-in products like QDOS and Mosaic, or buying-in development teams, such as Dave Cutler & Co from Digital to create NT. It's good to know that to Microsoft its blackmail, bullying and aggressiveness is really just "tough bargaining" and "spirited dialogue". Those "strings of Microsoft emails from all hours of the day and night" demonstrate Microsoft's insecurity about its continued OS "leadership", although "monopoly" would be a more appropriate word. Microsoft claims that if it had a choice it would not go to the lengths that it does to promote Windows to ISVs: employing 2,000 people at a cost of $630 million. Curiously Microsoft probably does spend more than necessary to protect its monopoly, but that is a result of its zero-tolerance attitude to competitors, and its need to "win" on every occasion, whatever the cost. The reward system at Microsoft (share option allocations) is linked to "winning". The losers are the users: they are less likely to find non-Microsoft software if developers are persuaded to write for Windows only. And we are told: "Microsoft's reputation would suffer if Windows did not perform as represented by Microsoft." So what's the point of the document? Let Microsoft have the last word: "No conduct challenged in this case has been detrimental to consumer welfare. Indeed, the benefit to consumers and to the Nation's economy of the widespread adoption of Windows as an industry standard has been enormous." So there you are. Run the credits. ® Next part: Microsoft's antitrust defence Other sections Microsoft's antitrust defence The three threats to Microsoft MS on the Netscape AOL deal The threat from Open Source and Linux Back to intro Complete Register Trial coverage

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