April 16, 2002
Witness Grilled in Microsoft Case
By THE ASSOCIATED PRESS
Filed at 2:25 p.m. ET
WASHINGTON (AP) -- The first defense witness in the Microsoft antitrust case said Tuesday that he agreed to testify as a personal favor to Microsoft chairman Bill Gates, without knowing anything about the penalties proposed by nine states.
W.J. ``Jerry'' Sanders, chairman of Advanced Micro Devices Inc., testified that because Microsoft's Windows operating system is so widely used, it allows software and hardware makers to innovate freely. Imposing the penalties recommended by the states would set back the computer industry 20 years, he said.
Sanders said he received a call from Gates on the last day Microsoft could name its witnesses. Gates and an outside Microsoft lawyer said the state proposals were crazy, and would fragment the personal computer industry.
But Sanders admitted that he has never read the state penalties himself, nor the federal settlement agreed to last year.
``You agreed without knowing what you would be testifying to other than the characterization that Mr. Gates gave you?'' asked Howard Gutman, a lawyer for the states.
Sanders said he did. ``If there's no fragmentation in the remedies, my appearance here is irrelevant.''
Gutman tried to prove a quid pro quo between Sanders and Gates. Sanders said he had hoped Gates was calling to tell him about Microsoft support for AMD's new chip, which Sanders called the single most important thing in AMD's future.
According to Sanders, Gates said Microsoft and AMD engineers would talk about the new chip. Sanders also wanted Gates to withhold support for a competing chip from market-leader Intel Corp.
Microsoft has not publicly announced support for either AMD's or Intel's chip, but Sanders said he believes Microsoft will endorse AMD's product.
Nine states want U.S. District Judge Colleen Kollar-Kotelly to force Microsoft to create a ``modular'' version of its flagship Windows software that could incorporate competitors' features. The states also want Microsoft to divulge blueprints for its Internet Explorer browser.
The federal government and nine other states settled their antitrust case against Microsoft last year for lesser penalties.
The original judge in the case, Thomas Penfield Jackson, ordered Microsoft broken into two companies after concluding that it illegally stifled competitors. An appeals court reversed the breakup order and appointed Kollar-Kotelly to determine new punishment.
Sanders was the first of over 30 witnesses that Microsoft said may testify during its defense. The proceedings are expected to last for several more weeks.
A University of Chicago economist also took the stand for Microsoft Tuesday. One of two economists tapped by Microsoft, Kevin Murphy said the states seek ``to bolster competition through the promotion of particular competitors.''
``In contrast,'' Murphy said, ``the proposed settlement focuses on enjoining anticompetitive conduct and allowing market forces to determine the competitive threats to Windows.''
States that rejected the government's settlement with Microsoft and are continuing to pursue the antitrust case are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.