A government witness argued in the Microsoft antitrust trial on Tuesday that the software giant held a monopoly and was afraid of Netscape threatening its position.
While Microsoft has attempted to poke holes in Frederick Warren-Boulton?s written testimony for the past five days, the economist refused to give an inch, maintaining his position that Microsoft holds a monopoly of the desktop operating system (OS) market.
He backed his claim with internal Microsoft documents showing that while its OS accounted for just 0.5 per cent of the total cost of a PC in 1991, this had jumped to 2.5 percent by 1996, and could rise to 10 per cent with new sub-$500 dollar Pcs, according to one Microsoft prognosis.
He further attested that Big Green could raise its license charge to OEM?s without fear of a drop in sales. This ability to increase prices without fear of competition, together with the software giant?s market share of more than 90 per cent, was proof of a monopoly, he claimed.
The issue of whether or not Microsoft fits the definition of a monopoly is key issue to the outcome of the trial because many of the infractions it is accused of, including exclusionary contracts, are legal for companies without a monopoly.
As a result, Warren-Boulton, a former Department of Justice (DoJ) official, was called as a witness to argue just this point. But Microsoft has always denied holding a monopolistic position, contending that the OS market was too volatile for any organisation to win long-term control.
Warren-Boulton also claimed, however, that Microsoft saw Netscape?s Navigator as a threat to its hold over the desktop market and so tried to lock it out.
The economist quoted from pre-trial testimony by Jim Allchin, a senior vice president of Microsoft, to back this view up. Allchin had said: ?As far as I?m concerned, they [Netscape] were a complete competitor to the operating system.?
But a Microsoft spokesman said the government was ?lying with statistics? and the cost of an OS was still ?a very, very small percentage? of the total cost of a PC. He also pointed out that OSs had become more powerful over the years, which justified the proportional price hike.
The next witness to take the stand will be James Gosling, Sun vice president and one of the creators of Java.
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