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MS/DOJ: Microsoft remedy case resumes

A chief executive officer of an interactive television software company faced accusations in court that he had reversed his position on favouring a break up of Microsoft to help "entice" Microsoft into selling its interactive television division to his company.

Mitchell Kertzman of Liberate Technologies is the ninth witness to testify for the non-settling states in the third week of the remedy phase of the Microsoft antitrust trial. He took the stand to testify on the threat posed by interactive television middleware to the Windows operating system.

Set-top boxes have the potential of turning interactive television into a "major platform" capable of competing with PCs, Kertzman said in his written testimony.

But Kertzman faced aggressive questioning by Microsoft attorney Daniel Webb, who argued that Kertzman wanted tougher remedies "only to improve Liberate's competitive advantage over Microsoft". Kertzman denied the accusation and said he was only seeking a level playing field for interactive television makers.

Webb also charged that Kertzman had been "an outspoken advocate" in press statements of breaking up Microsoft, which Kertzman did not deny.

Webb focused on a meeting involving Kertzman and Microsoft officials in February 2001. At that meeting, Webb said, Kertzman wanted to find out whether Microsoft was interested in selling its own interactive television division to Liberate.

Webb alleged that Kertzman told Microsoft officials that if Microsoft would agree to his proposal, "you could be bought off [from] your advocacy" of a harsher remedy for Microsoft.

The remedy hearing was designed to allow District Court Judge Colleen Kollar-Kotelly to evaluate remedies to Microsoft's anticompetitive behaviour that have been proposed by the non-settling states, the District of Columbia and Microsoft.

Those remedies include a provision requiring Microsoft to give companies access to its source code. The proposed settlement agreed to by Microsoft, the Bush administration, and nine other states last year requires Microsoft to disclose application programming interfaces, the doorways between programs, but it does not give competitors direct source code access.

The non-settling states have also asked the court to make the software code for Microsoft's Internet Explorer Web browser open source - something seen as a way of denying the company the benefits of its illegal conduct.

In response to Webb's questioning, Kertzman said the meeting was only intended to explore a possible deal. "I was only there to see if there was some interest in the possibility," he said.

Kertzman denied any hint that there was a quid pro quo arrangement and said he had changed his view well before. Kertzman, in his written testimony, said he could offer "no testimony as to whether Microsoft has attempted to illegally monopolise the interactive television market".

Instead, his testimony focused on how set-top technology is "a major platform" attracting applications developers and how the proposed remedy will do little to "reverse independent interactive television/set-top technology as a competitive threat to Microsoft's business in the PC operating system market".

Among the state remedies that Kertzman said are critical is one that required Microsoft to adhere to industry standards to or continue to support industry-compatible standards, even if it chooses to create its own implementation of a standard by adding its own extension. Without open standards, "one large company could tilt the market toward its own, proprietary implementation of a standard by simply using deception," he said.

Interactive TV can deliver a range of services now delivered by PCs, such as e-mail, Internet access, instant messaging and streaming media.

Liberate considers Microsoft as its direct competitor in the interactive television arena, although Webb pointed out that the company has 300,000 deployments of technology to its cable customers, while Microsoft has none.

Liberate is the market leader and produces a better technology than Microsoft's, said Webb, "but want a remedy to improve [Liberate's] competitive position".

Kertzman said that his only interest is to shed some light on the proposed remedies sought by the nine states that have refused to sign the Bush administration settlement. Those states believe tougher remedies are needed to keep Microsoft from squashing technologies not covered in the settlement, such as handheld devices and interactive TV.

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