COURT NOTES: The Microsoft antitrust trial, despite being on extended recess, was pushed back into the news last week after 10,000 pages of key testimony were unsealed. Microsoft and several computer manufacturers tried to block the release, but an appeals court ruled in favor of a media group that sued to have them made public. The released evidence includes depositions from people working for IBM, Packard Bell America Online, HP and Sun, among others. While the testimony varied from person to person, they all at one time or another showed various ways Microsoft has hampered or put restrictions on decisions made by their respective companies. Depositions taken from Microsoft witnesses - including the 20-hour Bill Gates video - were also released.
Later in the week Judge Thomas Penfield Jackson pushed the deadline for submitting a rebuttal witness list back until May 3rd, this Monday. The deadline was originally April 23, but Jackson delayed it because of another scheduling problem. While it still hasn't been officially announced, most people expect the judge to also push the trial's resume date back until the end of May to give the two sides more chances to reach a settlement. But don't hold your breath waiting for that; While Microsoft and the Department of Justice are both still publicly claiming negotiations, Microsoft has already gone ahead with its plan to gather testimony about browser competition and the Netscape/AOL merger from Netscape and Sun executives.
The first witness, former Netscape CFO Peter Currie, told a Microsoft lawyer that merger negotiations between the companies began in August 1998, but weren't publicly acknowledged until that November. He also testified that while Netscape was worried Microsoft could force America Online to cancel the merger, the antitrust trial itself was never a major factor in their negotiations. Currie's testimony revealed new information about the merger, but unfortunately for Microsoft it never contradicted anything former Netscape CEO Jim Barksdale said in his own testimony last year.
Microsoft attorneys attempted to question Sun COO Mike Popov on Friday, but his deposition was delayed when Sun attorneys requested that the courtroom be closed to the media because of some confidential product information. Once the media had been removed, the deposition continued for only 40 minutes before everyone remaining was forced to leave the building because of a bomb threat. The deposition continued about 12:30 pacific time, but we don't know what happened inside the courtroom because of the confidentiality rules. But whatever was said, the good parts will come out after the trial resumes sometime later this month.

Meanwhile in another courtroom, hundreds of Microsoft internal documents and a statement of facts added further credibility to Caldera's chilling portrait of Microsoft as a ruthless bully with no qualms about using its market power to crush competition. "If you're going to kill someone there isn't much reason to get all worked up about it and angry - you just pull the trigger," reads a September 1993 message from Microsoft's Jim Allchin. "We need to smile at [former DR-DOS owner] Novell while we pull the trigger."
Caldera claims that Microsoft tried to eliminate DR-DOS as a rival to MS-DOS by illegally tying their product to Windows and misleading users into thinking DR-DOS and Windows were incompatible. It also alleges that Microsoft used vaporware announcements to dampen sales of DR-DOS, made false and misleading statements to create fear, uncertainty and doubt (FUD) about the product, and used per-processor and other exclusionary licensing statements to block out manufacturers.
Microsoft claims many of these documents are quoted out of context, but the chilling portrait of a ruthless killer may prove impossible for the company to shake. In another document, senior Microsoft executive Joachim Kempin is quoted as threatening to more than double the price of Windows to a German PC maker that was considering DR-DOS. In a deposition, even Bill Gates said that Mr. Kempin had "made a mistake."
Microsoft's response to the April 28 filing by Caldera has been, as usual, oriented towards swaying public opinion. Calling Caldera's claims "Pulp Fiction", Microsoft revisited a number of arguments already overruled by a federal judge last year, including claiming that its 1997 consent decree with Justice already established that Windows 95 was an integrated product and not just a combination of MS-DOS and Windows.
Interestingly, one of Microsoft's primary "rebuttals" is to accuse Caldera of merely being a sore loser who misread the market trend towards graphic interfaces (Sounds like another company that misread the market trend towards the Internet).
With five hearings scheduled May 25 through June 16 to deal with Microsoft's motions for partial summary judgment, we can expect to hear a lot more about Microsoft's not-so-harmless "mistakes" soon.

After being delayed five weeks, last Thursday the third beta of Windows 2000 went up for sale on Microsoft's web store and from select partners for $59.95. Microsoft is so eager to get the unfinished operating system deployed that it has, for the first time, allowed several computer manufacturers to build systems with it preinstalled. While they're claiming the third (and expected last) beta is a large milestone, Microsoft has still yet to announce a release date for the completed system. Customers who buy the beta will receive free updates every five to eight weeks and get a free coupon for the final version, whenever it finally shows up.

Shortly after introducing a new version of Media Player that supports MS Audio 4.0 and its built in piracy protections [see NewsSource, Mar. 22], Microsoft announced the creation of a Streaming Audio division to develop and market new music compression technology. The new unit will be part of the recently created Consumer Division headed by Jim Allchin.
But in spite of the big names and massive resources Microsoft has poured into its audio technologies, the fight is still uphill. For starters, Apple and compressed audio pioneer RealNetworks recently introduced versions of their own audio players that handle MP3 along with proprietary files. And the music industry hasn't reacted positively to Microsoft's new music format, since it belongs to a single company instead of being open like MP3 and a new standard being pushed by IBM and RealNetworks. But most of all, consumers have turned a cold shoulder to MS Audio because the quality is second to MP3 and it requires them to contact a publisher before playing audio clips. An invasion of privacy and a hassle, just to play music that isn't as clear.

Microsoft and the Electronic Frontier Foundation are proposing new ways to simplify how Web sites - particularly small ones with relatively few technical capabilities - create and post their privacy policies. Their new initiative involves new Privacy Wizard tools, which are free for Web sites that want to set up privacy policies, plus two standards-related initiatives going up before the World Wide Web Consortium (W3C). Early next week Microsoft and Trust-e, a business-oriented privacy organization, will post tools on the MSN LinkExchange Web site for creating privacy policies that are machine-readable.
Machine-readable policies could be read automatically by a Web browser or search engine to determine whether a site's privacy practices are acceptable to a user. No current browsers have that capability, but Microsoft, Trust-e and the EFF are hoping that every internet company will adopt the standards soon. The W3C also has a privacy initiative of its own, the Privacy Preferences Project - or P3P - an industry effort to create a technological framework for communicating privacy policies. But Microsoft warned that the technology could take months or even years to become widespread. This is partly because it would require browser upgrades, but also due to a patent dispute involving a portion of the P3P system.

Internet Explorer 5 users probably aren't aware that their browser notifies a Web site any time a user adds it to their Favorites list. The new browser does that when it looks for an icon on the site to "brand" the entry on a favorites list and allows the server to pick up what IP address requested the file. The webmaster of any server that records the address would potentially know who (or at least what ISP they were using) had bookmarked their site. The 'feature' operates unnoticed by users, who cannot disable it. Microsoft defended IE5, but said that future releases of the browser may have more secure implementations of the 'feature' (as if it would be possible to turn something that only exists as a privacy violation into something safe). According to Internet Explorer product manager Mike Nichols, "This is one of those things where we did not see the privacy issue when we were creating the feature." No kidding. But on a positive note, our logs say that some 40 IE users added our site to their bookmarks in April.

Microsoft chief operating officer Bob Herbold was elected to the board of the Software and Information Industry Association last week. This could be trouble for the influential trade organization, who recently lobbied the DOJ and 19 state attorney generals to consider breaking up Microsoft if they prevail against it in their ongoing antitrust lawsuit. Herbold joins a board already made up of familiar names from the software industry, namely Sun general counsel Mike Morris, Oracle general counsel Dan Cooperman, Apple vice president Clent Richardson and America Online associate general counsel Kent Walker, among others.

Last week Microsoft posted a 40 percent increase in earnings - or about $4.3 billion in revenue - for the first quarter. That revenue is up from $3.77 billion a year earlier. Microsoft, as always, warned investors that the next quarter may not be as profitable, but unlike in the past the warning actually had a slight affect on the company's stock price.
However, the stock hit may have been caused by other factors similar to the ones recently affecting PC manufacturers like Compaq, which was forced to fire its CEO after a series of financial mistakes. Hewlett-Packard has also announced plans to restructure, while Dell stock has faltered over Wall Street concerns about future growth. Microsoft, for its part, says that the PC market is "fundamentally healthy," but they can say that because they get a large chunk of cash for each machine sold no matter how low manufacturer prices get.

Microsoft has announced plans to buy Access Software, the primary developer of golf games for Windows. Access, the developer of Microsoft's own golf game until 1995, controls an estimated 50 percent of the $34 million golf simulator market. While the company still enjoys a large profit, a spokesman said they agreed to the buyout because of the increasing difficulty for an independent developer to get shelf space in retail stores against companies like Microsoft. A Microsoft spokesman said that they will continue selling their own entry-level golf simulator along with Access' golf software, Links. The spokesman also said that they may consider licensing a version of Links for the Playstation game console.

In an interview recently published by Colombia's Semana magazine, Bill Gates said that the Y2K crisis will only be a "minor inconvenience" for most people. While he conceded that the date bug could make an impact on smaller countries, Gates held that the majority of people will barely notice any of Y2K's effects. But most of us have known how Gates feels about Y2K for some time, since fixes for his company's products have, so far, been late or nonexistant. Further into the interview, Gates commented that the best time to start fixing Y2K problems is "now." Take your own advice Bill.. Start selling products that comply and fix the ones that don't.

Microsoft is being sued yet again, this time from the inventor of the pen. Not the kind with ink, rather the kind used to write on a Windows CE handheld. Mitchell Forcier of Walnut Creek, California, the holder of two 1993 patents for the "electronic ink" data processing system, recently filed suit against not only Microsoft but also Compaq, Casio, Sharp Electronics, and Hewlett-Packard. Mr. Forcier states in his suit that a former employer, Aha! Software, violated confidentiality agreements and sold the technology to Microsoft, which in turn distributed it to Compaq, Casio, Sharp, HP and other computer makers as part of the WinCE specification.

According to several sources, Microsoft has offered to pay some $300 million for a 27 percent stake in WebMD, a health-related Internet company. WebMD, which was founded in October 1998, provides services to physicians and publishes a Web site where people can search for information about doctors and medical procedures. Microsoft is interested in the Atlanta-based company because of the categories it does business in: Healthcare, which counts for a seventh of the US economy, and the ultrahot Internet. If Microsoft is successful in buying almost a third of WebMD, they could make billions during its expected initial public offering. Representatives from both companies declined to comment on the reports.

While most people are aware that Microsoft's "Where do you want to go today?" tagline is trademarked, they probably don't know that Microsoft is claiming variations on the phrase under their trademark as well. Specifically, Microsoft has recently given heat to Linux groups that use the "Where do you want to go tomorrow?" slogan. But Cybernet Systems of Ann Arbor, Michigan actually applied for a trademark on that line last July. Cybernet is still waiting for a decision on its request, but in the meantime Microsoft uses the same slogan in promotional literature for its training programs without ever attempting to file for a trademark on it. A Microsoft spokesman explained that their overall goal is to "prevent any customer confusion." So, instead of improving the documentation and useability of its products, Microsoft has decided to make computing simpler by suing little-known companies that use variations of its ad slogan.

Microsoft and MSNBC have filed lawsuits against several residents of Los Angeles County California for registering Web domains similar to their own. According to the companies, Zvieli Fisher, Ed Fisher, M. Zvieli, 37.com, 800GO.com and several others have registered domains like misrosoft.com and mnsbc.com in order to "confuse anyone searching for Microsoft and MSNBC." The typo domains link to pornographic sites, which pay money per visitor to the domain owners. Microsoft says that they have become more aggressive about this type of thing so customers can find the content they want "without being purposely mislead." But what is Microsoft doing to keep people from being purposely mislead after finding its sites?

During Windows World/Comdex in Chicago last week, Microsoft introduced the newest thing in computing since, well, the mouse. The new product, Microsoft Intellimouse Explorer, uses an optical sensor instead of a ball to track its position. But Microsoft is a bit confused about their castrated mouse: they claim to have invented it, forgetting that Sun and Logitech both had similar products about ten years ago - although theirs never offered an "industrial silver finish" like Microsoft's. The $75 IntelliMouse Explorer also features a red "taillight," which leads us to wonder if the next version will feature headlights, turn signals and an airbag.

It was recently announced that Microsoft plans to release three more Y2K fixes for Windows 98 sometime later this month. These fixes affect the Microsoft Automation library that would break after the year 2029 (like anyone will be using Windows then); the Windows 98 international date format which doesn't accept 00 for the year 2000; and some errors specific to international versions of Windows. Too bad they can't make anything Y2K compliant before releasing it.

Last week Microsoft released a bug patch for Internet Explorer 5, fixing the two security problems mentioned in last weeks' NewsSource. Microsoft says that a patch for the "favorites icon bug" mentioned above is also in development.
In a perfect example of the 'fox guarding the henhouse', Hotmail director Randy Delucchi has been appointed to the board of the Coalition Against Unsolicited Commercial E-Mail, or CAUCE. Yes, the man who runs Hotmail is now a director of an anti-spam group. Delucchi was later quoted saying that he is "looking forward to sharing" his vast knowledge of spam prevention with the rest of CAUCE's board.
In April, Microsoft insiders said that the company plans to invest $30 million in highspeed Internet provider NorthPoint Communications when it goes public this month. As part of the deal, Microsoft will buy some 100,000 digital subscriber lines from NorthPoint over the next few years and will set up a co-branded MSN start page for the service provider and 80 of its ISP partners.
About a week later, Microsoft again showed its need for Internet speed by promising to contribute $1 million in funding and research to the Internet2 project. Microsoft then promised that the investment won't have any influence on how I2 is run.

_{NT beats Linux ... maybe
MS adds MyPoints to Outlook Express
Microsoft touts new E-Commerce Alliance
Microsoft Contracts Create Dependent Generation
Microsoft struggles to find online chief
Sun blames MS as Java ISO plans die
Microsoft funds for lobbying up 68%
How Does Microsoft Deal With Linux?}