MS witness called to define market

An economics expert was first to take the witness stand at the Washington district court as Microsoft launched its opening salvo in an attempt to discredit the US government's anti-trust case against it.

But Richard Schmalensee, dean of the Sloan School of Management at the Massachusetts Institute of Technology, had barely taken the oath before Judge Thomas Jackson intervened to iron out an apparent inconsistency in Schmalensee's definition of the market in which Microsoft operates.

Central to the software giant's defence is its refusal to accept it holds a monopoly because of the potential competition that threatens it from platforms other than operating systems. Schmalensee concluded the market was not based on operating systems, a definition that lies at the heart of the government's case, but on a platform on which any other software could run.

The declaration prompted Judge Jackson to ask Schmalensee whether his definition of the market differed from one he had used during his testimony for Microsoft against two other software companies earlier in 1998. His earlier definition tended towards that of the government.

Schmalensee was prompted by cross-examination to concede that Microsoft had no serious competitors selling operating systems to large PC makers, although he maintained: 'This is not an area where a traditional approach to the definition of a market is appropriate.'

The government wrapped up its prosecution on 13 January, but not before it had twisted the knife a little further by entering more than 1,000 pages of transcripted emails and video tapes into evidence. The government believes the evidence offers conclusive proof that Microsoft engaged in a pattern of exclusionary and collusive behaviour to protect its monopoly.

JUDGE PROPOSES THREE-WAY SLICE-UP
A former judge has put forward the notion that Microsoft should be carved up into three separate operations if the government claims an historic victory in its anti-trust case against Microsoft.

According to Robert Bork, such a move would restore competition to the operating systems market, provided all three companies had complete copies of Microsoft's software products and competed as equals.

Speaking at a meeting of ProComp, a group that backs the government's charges, Bork said his proposed solution would be 'perfectly adequate' to resolve the Justice Department's problem with the software giant's alleged monopoly.

Asked if the company that had Bill Gates as chief would have an unfair advantage, Bork joked that the solution was human cloning.

There has been no shortage of solutions being offered by the hoardes of industry experts, journalists and glory-seekers that have hung around the Washington district court since day one of the trial. Another popular suggestion was a 'transparent pricing' remedy, which proponents say would prevent Microsoft from indulging in its alleged practice of price discrimination.

However, most observers agree the most likely outcome in the event of a DoJ victory would be that nothing so drastic will happen to the software giant.