WASHINGTON—Microsoft Corp. isnt the only company that tries to use its size and power to advantage, attorneys for the Redmond, Wash., software giant attempted to prove in U.S. District Court here on Thursday.
America Online Vice President John Borthwick took the stand, resuming a second day of testifying Thursday during the antitrust hearing between Microsoft and the states that havent signed onto the agreement with the Department of Justice. Borthwick faced questions about AOLs own competitive advantages vis-à-vis Microsoft in the online services and Web services arenas.
Microsoft lawyer Richard Pepperman focused for a second day on AOLs Magic Carpet Internet authorization facility that competes directly with Microsoft Passport. Pepperman introduced an AOL internal memo from October 2001 detailing discussions between AOL and Vodaphone regarding Magic Carpet. According to that document, there were more than 320 million "screen names," or registered user handles, representing 160 million total subscribers in the AOL Time Warner Inc. empire. Comparatively, Microsoft Passport sports an estimated 165 million users.
Pepperman also introduced a May 2001 internal design document, "Vision of the Magic Carpet," authored by AOL executive Damian Saccocio, which allegedly discussed how AOL could use its assets to advantage against Microsoft. The document detailed strategy options, such as AOL Time Warner making its assets—such as HBO, TimeWarner Cable and TimeWarner magazines, in addition to the AOL online service—available exclusively through Magic Carpet. The document suggested that AOL Time Warner could opt to "withhold" Time Warner assets from any sites that adopted Microsofts .Net.
Saccocio claimed that since Microsoft has nothing in its portfolio to match these kinds of services, AOL should try to take advantage of this situation "in every way it can."
Borthwick tried to distance himself from the memo, claiming that his team didnt take control of Magic Carpet until the summer of 2001, several months after this "junior" person authored the document. However, he did acknowledge that "when you form a business, you bring the assets you have to bear to the table."
Pepperman also questioned Borthwick on AOLs decision to join the Liberty Alliance, a group of 50 companies anchored by Sun Microsystems Inc. that is trying to build a network of trusted sites to counter the one Microsoft and its allies are building around Passport. Pepperman introduced an e-mail dated November 2001 that Borthwick sent to top AOL executives that allegedly claimed that allowing Microsoft to beat it to the punch in joining Liberty—a move Microsoft has said on several occasions that it has contemplated doing—would "mitigate a major reason for AOLs participation in the alliance."
Borthwick also discussed Microsofts alleged attempts to quash specialty PCs, such as the Lego Station prototype. Such a PC would allow consumers to choose from a variety of non-Microsoft middleware, browsers and other software in customizing their own machines, Borthwick said, which would benefit not only AOL, but also OEMs like Hewlett-Packard Co., Gateway Inc., Sony Corp. and Dell Computer Corp.
Michael Mace, chief competitive officer with PalmSource Inc., also retook the stand Thursday. Microsoft attorney Bruce Braun questioned Mace again on Maces claim that Microsoft delayed Palm Inc.s access to software and related program information that Palm needed to develop to Microsofts .Net architecture. Mace testified last week that Microsoft restricted Palms access to the Microsoft VSIP (Visual Studio Integration Program), hindering Palm in the handheld space.
Mace told Judge Colleen Kollar-Kotelly that Palm tried to get around Microsoft by working with Access SoftTek and AppForge, two third-party software developers, to reverse-engineer Visual Studio application programming interfaces. But that wouldve cost Palm up to $1 million, Mace said, and no deals were consummated.