Commentary: Microsoft: Bit By Bit, The Feds Are Making A Case...

Prosecutors love smoking guns--ideally, in the hand of a suspect standing over the corpse. In antitrust cases, the equivalent is a hot internal document that lays out a conspiracy to squash competition. Alas, that rarely happens. So in the first two weeks of the Microsoft Corp. trial, the Justice Dept. did what prosecutors usually do in complex cases--try to build a portrait of illegality from bits of evidence.

So far, the government is off to a credible start, especially in trying to prove that the colossus of Redmond, Wash., tried to use its Windows operating-system monopoly to eliminate a threat from Netscape Communications Corp. The centerpiece: a meeting on June 21, 1995. Justice went a long way to establish--through the testimony of Netscape Chief Executive James L. Barksdale and laptop notes taken during the meeting by Netscape co-founder Marc L. Andreessen--that Microsoft tried to persuade Netscape to divide up the fledgling Internet-browser market. Particularly incriminating are day-after notes from a Microsoft exec stating that a top priority of the meeting was to "establish Microsoft ownership" of Internet technologies for Windows.

To be sure, if Justice thought it had a slam-dunk market-allocation case, it could have brought criminal charges. But Justice lead prosecutor David Boies is not trying to prove collusion. Instead, he's trying to show a pattern of anticompetitive behavior by a monopolist. As Washington antitrust attorney Mark C. Schechter points out, Justice need only use the meeting to establish the idea that Microsoft saw Netscape as a potential threat to its operating-systems dominance. "The meeting is atmospherics," Schechter says. "Now, the government has to prove that Microsoft took actions to unreasonably exclude or impede Netscape."

Here again, Justice already has offered compelling proof that Microsoft used its Windows dominance to try to cut off key avenues of distribution for Netscape's browser. Handwritten notes from a senior official of Apple Computer Corp. document a Microsoft threat to withdraw its Apple version of Office business software if the company carried Netscape's browser instead of Microsoft's.

And on Oct. 28, David M. Colburn, vice-president of America Online Inc., a major browser distributor, testified that AOL chose Microsoft's browsing software over Netscape's product because Microsoft had offered to put AOL's software in Windows. He denied Microsoft's contention that AOL chose Microsoft because its technology was superior. "The value of distribution through and promotion on the Windows desktop was something Netscape could not provide," he said.

Barksdale noted that because of deals like those with AOL and Apple--and Microsoft's decision to integrate its browser in Windows--only 10% of new personal computers are shipped with his browser. That's down from more than 75% before Microsoft took such actions. Though Barksdale conceded that Microsoft is offering a better browser than it used to, the government is beginning to mount a powerful case that monopoly power, not a better product, put Microsoft on the path to victory in the browser wars.