Economist Carl Shapiro, the 15th witness called by a group of states and the District of Columbia to defend proposed remedies against Microsoft Corp. in the landmark antitrust case, took the stand Thursday. In a surprise to many courtroom observers, Shapiro did not endorse every provision in the states proposal.
“I dont presume to know exactly how this should come out,” Shapiro said when asked whether the states proposal was “a kind of rough justice. Im not going to say Ive got it exactly right. But I dont think the Microsoft proposed remedy gets us anywhere near there.”
Grilled by Microsoft attorney Michael Lacovara about the proposals technology disclosure provisions, Shapiro, a former economist at the Department of Justice, said he supports the provisions for the purpose of allowing non-Microsoft products to interoperate with the Microsoft software platform. When Lacovara asked him whether the proposal would allow Sun Microsystems Inc. to demand all interfaces necessary to make its Solaris operating system interoperate with Microsoft Office on PCs and other desktops, Shapiro said that was not one of the purposes he incorporated in his support of the states proposal.
“It is outside of the principles that I endorsed … so I am not endorsing that,” Shapiro said, adding that he did not consider it inconsistent with his principles, however. Shapiro currently is a professor at the University of California, Berkeley.
Equally surprising, Shapiro did not offer an endorsement of the proposals requirement that Microsoft sell a modular version of Windows with computer code for some features removed. Microsoft held up an opinion Shapiro wrote two years ago in an earlier phase of the antitrust case, in which he supported removing end-user access to some Windows components rather than removing the code itself.
Lacovara tried to demonstrate the difficulty Microsoft would have trying to interpret and implement the states proposal. Following a tactic used in the cross-examination of previous states witnesses, he quizzed Shapiro on the definition of “middleware” and specifically why the states proposal includes products like handheld computing synchronization software and calendaring products. He asked whether digital imaging software should be included in the definition of middleware simply because it is an “exciting new technology.”
“I think its important to include it to prevent Microsoft from disadvantaging rivals in this area,” Shapiro replied.
The witness and the cross-examiner spent much of the day clashing over their own semantics, including a long discussion about whether Shapiro meant “barrier” to entry when he actually said “barriers” to entry, among other things. As frustration mounted, Lacovara turned to a white board and colored markers to graphically illustrate a question he was trying to convey, but Shapiro took issue with the illustration and asked the attorney to draw it differently.
Neither the states proposed remedy nor the federal settlement proposal that Microsoft and the Department of Justice agreed to in November contemplates a structural remedy along the lines of the Microsoft breakup ordered by an earlier court and rejected on appeal. However, two provisions crafted by the states would require Microsoft to divest the intellectual property behind its browser and auction the source code for Windows Office to three bidders. Shapiro said that a distinction should be made between the structural remedy rejected by the court of appeals and the intellectual property sharing provisions of the states proposal.
Shapiro said that some of the provisions in the states proposal would have to be worked out to work in the “real world.” There would have to be a dialogue regarding the amount of technical information necessary for interoperability with Windows, and a special master or the court would be involved in making decisions.
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