WASHINGTON -- On Friday, Microsoft tried to defend itself against a key allegation in the government's ongoing antitrust case -- that the software giant forced leading computer maker Compaq into using Microsoft's Web browser.
The government has charged that Microsoft (MSFT) sent a threatening letter to Compaq (CPQ), warning that its vital license to use the Windows operating system would be cancelled unless Compaq reduced the prominence of rival-browser icons.
But John Rose, a Compaq official testifying at the trial in Microsoft's defense, said that the problem was really due to a mix-up. He said there was poor communication with Compaq employees who did not understand Compaq policy.
For a window into the Microsoft antitrust trial, visit US v. Microsoft. - - - - - -
Those Compaq employees had dumped Microsoft icons -- the symbols used to start programs -- from Compaq screens -- in favor of competing offerings from Netscape Communications and America Online.
"They were not representing the overall corporate strategy and direction the company was on," said Rose, a senior vice president with responsibility for Compaq's relationship with Microsoft. The move was reversed, in line with Compaq policy, he said.
The Justice Department and 19 states allege that Microsoft's Windows operating system has such dominance that the company has used it to monopolize the browser market. Since the day it filed the case, the Justice Department has cited a Microsoft notice canceling Compaq's license for Windows in 1996 as an outstanding example of a Microsoft threat.
At the center of the action was Celeste Dunn, who was in charge of software for the Compaq consumer division.
Dunn came up with deals to bring revenue to the company, one with America Online and the other with Netscape, that would sell space on the Compaq Presario computer desktop.
Dunn's America Online deal gave the online service a "featured" position on the desktop, so consumers would be tempted to sign up for the service when they purchased a Compaq Presario. Dunn said in a May 1996 memo her deal had produced US$6.4 million in revenue for Compaq that year.
Dunn also set up another deal with Netscape and Sprynet, an Internet service provider, that she estimated would produce $2.6 million for the second half of 1996.
But Dunn's deals violated an agreement with Microsoft, according to testimony at the trial by Rose.
Copyright© 1999 Reuters Limited.
