States Rip New Microsoft Witnesses

The states seeking stiffer anti-trust penalties against Microsoft Tuesday painted the software giant's first witnesses desperate and unreliable.

WASHINGTON, D.C. -- The non-settling states in the remedies phase of the Microsoft Corp.s anti-trust trial were on the attack Tuesday, berating the companys first witness, Advanced Micro Devices Inc. Chairman and CEO Jerry Sanders, in the morning, and then portraying Microsofts key economic witness as a inconsistent and unreliable in the afternoon.

Although Microsoft portrayed AMDs Sanders as a computer industry veteran who could speak about the so-called "PC ecosystem," Howard Gutman, an attorney representing the non-settling states tried to paint Sanders as little more than a desperate also-ran in a battle with a powerful monopolist, doing whatever he could to curry favor with a huge benefactor. Microsoft, in turn, called the relationship common in the competitive, cooperative world of high tech.

Gutman questioned Sanders about how he came to be a witness in the case; a trial over what remedy Microsoft should face for violating anti-trust statutes. Sanders acknowledged that Microsoft Chairman and Chief Software Architect Bill Gates had called him to ask a "personal favor" that he testify in the case.

Gutman tried to show that, in return for that favor, Sanders was looking for Microsofts public support for Hammer, AMDs upcoming x86 64-bit microprocessor.

Sanders acknowledged he had asked Gates to support the microprocessor, particularly in relation to "Yamhill," a competing technology from Intel Corp. Sanders said Gates told him to, "Have your guys talk to my guys."

Upon his introduction by Microsoft attorney John Warden, Sanders said he had been in the computing industry since 1959 and spent 33 years at the helm of AMD. Gutman probed the chipmakers relationship with Gates and hinted that the software moguls call was strictly one of convenience for Microsoft and not based on long-term relationships.

In fact, Gutman derided Sanders several times about his "thirty-three years" in the industry. "How many times has Bill Gates called you," he asked at one point, to which Sanders replied, three or four. "How many times did he call you for a personal favor," Gutman asked. Sanders said two. Gutman said Gates had called Sanders on Feb. 8, "The last date Microsoft could designate witnesses."

The attorney for the dissenting states then began to press Sanders on whether hed read the non-settling states remedy proposals or any other documents related to this trial or the district court trial for which Microsoft was found to have violated the law. Sanders said he hadnt. But Gutman would not relent, continuing to ask Sanders why he would agree to testify in a case when he didnt know all the particulars and based his knowledge only on Gates and Microsoft attorneys descriptions of the issues.

"I agreed to be a witness for Microsoft. I agreed to testify to nothing but the truth," Sanders said. He also said he was testifying in his own interests – to protect the Windows standard which has enriched his company and the PC ecosystem overall – as well as the interests of consumers.

Sanders said Gates told him the states had come up with a "crazy proposal" that would not allow Microsoft to innovate.

Gutmans focus on the states remedy proposal drew several objections from Warden and the ire of Judge Colleen Kollar-Kotelly. Several times during questioning, the judge admonished Gutman to move on. "His testimony doesnt relate," she told Gutman. "He obviously hasnt read it." Later she admonished, "He doesnt know this, lets move on!"

But Gutman continued to lay the foundation for his portrayal of Sanders as an opportunist. He produced documents in which Sanders was quoted saying he told Gates AMD had 20 percent of the microprocessor market and was shooting for 50 percent. In one, Sanders said Intel was "over."

Yet, Sanders said he emphasized that AMD "could be important to Microsoft with their Trustworthy Computing" initiative. "We were hopeful Microsoft could support AMD as a viable alternative to an Intel monopoly."

Gutman, meanwhile, produced several documents, including speeches Sanders made at AMDs annual meeting that stated how important Microsofts support was to AMD.

"We need to have support from the largest software company in the world," Sanders said, but said the same is true for Intel because they share the same chipset.

Gutman also attempted to portray Sanders as contradictory for having made speeches about open standards and open competition, and about bad monopolists.

To the question of whether he differentiated between good and bad monopolists, Sanders said: "…Microsoft good, Intel bad," to laughter from the court.

On redirect examination by Warden, Sanders said he viewed Windows as an open standard that has generated a 150 million unit-per-year market for PCs and could do much the same for servers.

Also, following a bench conference with attorneys from the states, Microsoft and AMD, Judge Kollar-Kotelly closed the courtroom for about a half hour to tackle some sensitive testimony that AMD deemed "highly confidential."

High Noon for Murphy

In the afternoon, Steven Kuney, another attorney representing the states, cited instance after instance where Microsofts witness, Kevin Murphy, a University of Chicago economist, seemed at odds with both the U.S. District Court opinion as well as with that of the U.S. Court of Appeals that heard Microsofts appeal.

On the issues of Java and Netscape Navigator being harmed by Microsofts actions, Murphy said he saw no real harm, though the appeals courts opinion stated otherwise. Yet, Murphy said he did not see his views as inconsistent with the courts. Same for Microsofts exclusive deals with Internet Access Providers, the companys deal with Apple, and harm to distribution of Sun Microsystems Inc.s Java Virtual Machine (through Navigator).

Murphy said he could see no harm to competition and no detriment to consumer welfare from any of these activities.

Yet, Kuney methodically went through each issue, first showing Murphys contradicting opinions in his written testimony and then showing a relevant passage in court opinion on the issue that also seemed contradictory.

However, Murphy argued that in a remedies hearing the responsibility of the court – and his role – is to look forward at what can remedy the past behavior "going forward."

Some described the scene Tuesday afternoon as a tedious back and forth, with Murphy battling Kuney on every point.

However, in one lively exchange, Murphy told Kuney he believed for middleware or some technology to supplant an existing technology, "It has to provide functionality thats better than whats already there."

He added: "What is it thats going to attract developers away from other APIs to your APIs? Its like the first Windows, which had superior technology over MS-DOS. Its not to just do the same things, but do them better… Its not really a technical question, its also an economic question."

Kuney then asked Murphy of there was any middleware that meets his test. Murphys first response was Windows itself. "Lets not go back quite that far," Kuney said. "What about today?"

"I would say Javas getting closer; its getting that functionality," Murphy said.

"Is it more of a platform threat today," Kuney asked.

"I would say Java has progressed at its ability to do a number of things," Murphy said. "Its progressed in terms of developers. The desktop is a little tough…Java is progressing and has progressed pretty rapidly over time."

But Java is still a future platform threat of any real substance, he said. Indeed, Murphy said the strongest threat could come from some totally different area. "Like AOL or somebody could potentially pose a threat," Murphy said. "…I dont know; there are none that rise to the level Id point to and say, Thats [pushing aside Windows and] going to happen."