The Microsoft Trial

Kate Galbraith is an assistant editor at Slate.

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Day 39 of the Microsoft Trial

Yesterday was about three futures. Future No.1 was that Microsoft finally began its defense--a piddling four weeks after the entire trial was supposed to have ended. Future No. 2 was that Judge Thomas Penfield Jackson at last faced up to Future No. 1: He wisely rescheduled his pending criminal cases. At about 9:30 a.m., half an hour before the Microsoft grind commenced (and before all but the most dedicated of reporters, yours truly, had arrived), two prisoners materialized out of the courtroom side door. One wore a zebra-striped jumpsuit, the other a bright orange one with "D.C. Jail" stamped in bold black letters across his back. They hovered before the jowly judge while their lawyers negotiated for new court dates. (Jackson perked up briefly at the notion of recessing the Microsoft trial for a narcotics quickie.)

Future No. 3 involved stunningly counterintuitive witness testimony. Two eminent MIT economics professors, testifying yesterday for opposing sides, furnished their expert speculation on Microsoft's competitive future--and implied that their expert forecasts rendered analysis of current market realities virtually moot. The only problem: Being on opposing sides, they came up with dramatically clashing predictions.

Professor Franklin Fisher, the government witness in his sixth day of testimony, was pessimistic He ventured a projection about prices (high prices often being symptomatic of monopolies). Microsoft's evenhanded Windows pricing, Fisher darkly alleged, could be an innocent façade for future price hikes. Any time the Microsoft beast wants to gouge consumers, it can. Inexplicably this hasn't yet come to pass, but watch out; buy Windows before Bill Gates decides to eat your dollars!

Richard Schmalensee--Microsoft's first witness, who in the late '60s wrote his dissertation under Fisher at MIT--squinted into his own crystal ball and produced precisely the opposite scenario. Microsoft is powerful now, acknowledged Schmalensee circumspectly, but just wait--the predominance of Windows could easily decay in a few months (or maybe years). Anyone or anything can become the Next Windows; it's a cyberfree-for-all. Schmalensee even peddled a few candidates himself as future Windows challengers. Linux--which currently boasts an underwhelming 7 million to 8 million users. BeOS--hey, has anyone ever heard of this before? And the one that nearly made his government interrogator collapse from incredulity--Palm Computing. The manufacturer of those cute, benign little organizers could soon be running circles around Microsoft. Sure. (Note to investors: Buy Palm.)

Neither Fisher nor Schmalensee was terribly convincing under cross-examination, but for anyone keeping score in the teacher-student head-to-head, Fisher probably lost the day for the government. Fisher was working from a distinct disadvantage. Not only was everyone, including him, utterly sick of his six day testimony and eager to get on to Microsoft's case, but he was scrambling to recoup from Tuesday's gaffe of admitting that Microsoft's competitive practices, on balance, didn't hurt consumers. (Wednesday's amended version: Microsoft's monopoly does sideswipe consumers by making competition more difficult, increasing rivals' prices, etc., etc.)

But Fisher's recovery was aborted by new evidence, gleefully produced midmorning by Microsoft's dapper young lawyer Michael Lacovara: a handful of Compaq's product Web pages showing that all the newest Compaq PC models have Netscape Communicator in their operating systems. (Lacovara just "happened" to be surfing Compaq's Web site yesterday when he "discovered" this.) Clearly cornered--but paranoid lest he repeat yesterday's mistake--Fisher responded that he did not think this change would affect the market significantly, even though Compaq is the leading Windows-based PC maker.

Incensed government lawyers leaped to the attack. At the midday break, David Boies, the government's lead attorney, darkly and ineloquently told reporters, "Things that happen in the middle of the trial carry with it a certain dubious dubiety in terms of the rationale for why they were made, particularly when they are made by the only [computer maker] that is coming in and supporting Microsoft." To this was added the allegation that Internet Explorer would nonetheless "interfere" with Compaq's Netscape Communicator because IE was "hot-wired" into the Compaq operating system. (This sounds sinister, but I am at a technological loss to explain what it means.)

Schmalensee, as Microsoft's first witness, took the stand after lunch (and after Microsoft's pro forma motion to dismiss the case was denied) for cross-examination by Boies. Unlike the aging and tired Fisher, the twinkle-eyed Schmalensee proved himself a deft semantic fencer. He spent the 45 minutes of his testimony wrangling absurdly with Boies over the definition of Microsoft's monopoly. The traditional definition of monopoly, maintained Schmalensee, necessitates identifying the market that the monopoly dominates. But for Microsoft's alleged monopoly, he maintained placidly, there is no identifiable market! "There is no market?" repeated the flabbergasted Boies. ("No market?" gaped the weary journalists.) No, no, explained Schmalensee devilishly, the markets are too interlocking, and comparing Windows with Netscape is like comparing apples with oranges. How could there possibly be a market? (Did you ever wonder why this trial is taking so long?)

Schmalensee was cognizant of one thing: He was Microsoft's witness. When asked repeatedly whether he would agree that Windows dominated the operating systems market, Schmalensee would deftly twist the question around and answer that the market was open to everybody--Linux, BeOS, and Palm included. Listening to Schmalensee evade Boies' questions, one wonders if Fisher ever wished he had torpedoed the artful dodger's dissertation.

Click here for MSNBC's full coverage of trial developments.

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