MS/DoJ: Microsoft witness claims no harm done

Microsoft's defence in its antitrust trial today revisited the argument that it has not hurt consumers by giving away its browser software and integrating it into its Windows operating system.

In U.S. District Court here yesterday, Microsoft's defence team called its last rebuttal witness, economist Richard Schmalensee, dean of the Sloan School of Management at the Massachusetts Institute of Technology. Schmalensee, who testified earlier in the trial, reiterated that Microsoft's actions have led to better and cheaper browsers and computing platforms.

The MIT economist answered a series of questions posed by Microsoft's lawyer that were designed to counter the recent testimony on behalf of the government by Schmalensee's colleague at MIT, Franklin Fisher.

The U.S. government has argued in its case against Microsoft that the company's decision to make its browser part of Windows 98 has limited choice and thus hurt consumers.

"There is no evidence at all that their actions have harmed consumers," Schmalensee said. In fact, he said, Microsoft's actions have fostered many improvements. There are better browsers available today than in 1995 when Microsoft's Internet Explorer began shipping and those browsers now cost nothing, he said. The integration of Internet Explorer in the Windows 98 operating system has made it a better product and had minimal effect on its cost, he added.

"In 1995 there was only one browser [Netscape Navigator] and it had 80 per cent of the market," Schmalensee said. "Microsoft introduced IE and improved it rapidly, putting pressure on Netscape to do the same, and that made consumers better off." Consumers continue to have choice in the browser market between Microsoft, Netscape, Hot Java and a host of browsers built off of IE components, he said, while competition and choice has had a dramatic effect on pricing, another benefit for consumers.

Asked by Microsoft attorney Michael Lacovara whether the browser war was over, Schmalensee said it was absolutely not over. He also maintained that threats to Microsoft's hold on the platform market include the emergence of the Java programming language and operating environment, and also the merger of America Online and Netscape Communications and the merged company's alliance with Sun Microsystems.

Schmalensee is expected to be on the stand for the remainder of the week.

The Department of Justice and 19 state attorneys general last year sued Microsoft in federal court, alleging that the software giant has engaged in illegal business practices, including anticompetitive behaviour in the Internet browser market.

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