Microsoft uses rival to counter key charge Netscape co-founder said Gates was open about browser plans


WASHINGTON -- Potentially undercutting a major government argument in its lawsuit against Microsoft, Netscape co-founder Jim Clark said he heard Microsoft Chairman Bill Gates say as early as late September 1994 that he would include Microsoft's Internet browser in its Windows operating system.

Clark, in a deposition in preparation for Microsoft's antitrust trial, told questioners that Gates made the statements at a conference in Washington. The revelation seemingly contradicts contentions by Netscape Communications Corp. and the government that Microsoft Corp. decided to bundle its Internet Explorer browser with the operating system after failing to divide the market with Netscape at a meeting in June 1995.

In what Microsoft intended to be its first bombshell in defense of antitrust allegations, the software giant introduced parts of Clark's deposition as evidence yesterday during the cross-examination of Netscape Chief Executive Officer Jim Barksdale.

"Bill Gates specifically told me he was going to give away the Web browser in the operating system, and this was before we released our first beta [test program], and I felt like we would have to in order to survive against Microsoft," Clark testified at a deposition July 22.

Yesterday, Barksdale testified that he knew nothing about Clark's recollection. But he took lengths to downplay Clark's comments and separate e-mail Clark sent to Microsoft executives at 3 a.m. Dec. 29, 1994, offering Microsoft an equity interest in Net-scape.

Asked by Microsoft attorney John Warden whether Clark had a reputation for veracity, Barksdale said he couldn't say.

Warden: "Do you regard him as a truthful man?"

Barksdale: "I regard him as a salesman."

Warden: "I'm not going to touch that, Mr. Barksdale."

At a break in the trial, Netscape counsel Christine Varney told reporters that Gates also reportedly made the statements to dissuade any software developers from investing in what at the time was a fledgling technology.

Varney said Gates told developers to avoid creating a Web browser, because if the concept became successful Microsoft also would develop one and put it in the Windows operating system.

David Boies, the Justice Department's lead counsel, observed: "This is another attempt by Microsoft to change the subject."

Microsoft also presented as evidence e-mail that Clark sent to Microsoft's Dan Rosen urging the company to invest in Netscape: "We want to make this company a success, but not at Microsoft's expense. We'd like to work with you. Working together could be in your self-interest as well as ours."

However, at the end, Clark added: "No one in my organization knows about this message."

The e-mail also seems to call into question the motivations of Microsoft and Netscape at the June 21, 1995, meeting at which Microsoft allegedly sought to collude in dividing the browser market, with Microsoft taking Windows 95 and Netscape taking other operating systems.

In pretrial interviews with the Seattle Times, Microsoft official Brad Silverberg said Clark had barraged him with phone calls seeking to license Netscape technology to Microsoft.

"Clark personally pleaded with me to make a deal," Silverberg said. "Eventually the Netscape co-founder offered Microsoft a 10 percent investment in his fledgling company and a board seat."

In an interview in May 1997, Clark told the newspaper, "I probably made a pretty impassioned plea for them to consider licensing our stuff and probably in that context I suggested taking an equity position."

The introduction of Clark's deposition comes as Microsoft faces testimony from an executive of Apple Computer Inc. that Microsoft repeatedly attempted to divide the market for software that sends audio and video over the Internet. When Apple refused, Microsoft allegedly engaged in a series of exclusionary and predatory practices, including sabotag- ing Apple's QuickTime audio-video software.

The testimony of Avadis "Avi" Tevanian, a senior vice president at Apple, could be another blow to the Redmond, Wash., software corporation.

Executives from Microsoft business partners Intel Corp., America Online, International Business Machines Corp. and Intuit also are scheduled to testify, and these witnesses potentially could stretch to the breaking point the concept of "co-opetition," the word fabricated by the computer industry to describe how companies forge strategic partnerships while vigorously competing against each other.

Indeed, before the written testimony and cross-examination of Netscape's Barksdale on Tuesday, Microsoft said "co-opetition" was at the heart of its explanation for the allegation that Microsoft attempted to divide the market for Internet browsers with Netscape.

Pub Date: 10/22/98

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