Carl Shapiro, a professor of business strategy at the University of California at Berkeley's Haas School of Business, testified in favour of a number of states' remedies that he believes may work to restore competition in the PC operating system market.
Last year, a US court of appeals upheld a lower court's ruling that found Microsoft guilty of anticompetitive behaviour to maintain its monopoly in the PC operating systems market. This hearing is for US district judge Colleen Kollar-Kotelly to decide remedies for Microsoft's anticompetitive actions.
Although the appeals court last year upheld a ruling that found Microsoft guilty of using its OS monopoly to stifle competition, it overturned the remedies.
Nine states and the District of Columbia refused to join the US Department of Justice and nine other states in a remedies settlement with Microsoft last November. The holdout states are seeking tougher restrictions against the software company.
However, yesterday Shapiro did not endorse the states' suggested remedy that would require Microsoft to sell an "unbound" version of Windows - one free from additional software such as a browser or media player - because he felt he did not have the technical understanding required to comprehend the provision.
Noting that Shapiro is the only economist testifying for the states, and in the position to explain to the court the benefits to end users of the states' proposed remedies, Microsoft's lawyer spent much of his cross-examination yesterday morning questioning why Shapiro would not weigh in on the unbound Windows remedy, when the professor had given his opinion on other states' remedies that were also technical.
"Who is coming here on behalf of the states, if an economist is not, to explain to my Uncle Harry the benefits of [the states'] provision one?" asked Microsoft's attorney Michael Lacovara. The question was objected to by states' counsel and sustained by Kollar-Kotelly.
Shapiro told the court that he "tried to stay on ground where I felt comfortable" in writing his direct testimony to support other states' remedies.
Lacovara questioned Shapiro's support of the provision that would require Microsoft to disclose application programming interfaces (APIs) so that competitors can be assured their software works with Windows.
While the states' remedies say the provision is included to guarantee interoperability with Windows, it would also give Microsoft competitors access to interfaces for the Office suite of applications.
Lacovara displayed a document describing the remedy, which read that Microsoft must make APIs, communications protocols, and technical information available "for the purpose of enabling non-Microsoft platform software and non-Microsoft applications to interoperate with Microsoft platform software and/or applications for Microsoft platform software".
He then asked Shapiro if that meant Sun Microsystems could insist Microsoft provide it with the Office APIs so that it could write a version of Office for its Solaris operating system. Yes, Shapiro answered, but added that he did not focus on the application portion of that provision.
"That's outside of the principles I explain in my direct testimony," which focused on interoperability with the Windows platform, Shapiro said.
Shapiro insisted that the states' remedies should work to right the effects of Microsoft's anticompetitive behaviour, but should not favour other vendors' technologies in doing so. The remedies should not "be in the business of picking winners or losers, (but should) let the market decide", he said.
Lacovara then questioned how Shapiro could support the states' definition of middleware - software that exposes its APIs which, according to the court of appeals, included Netscape's Navigator browser and Sun's Java programming language - to also include software such as network operating systems and synchronisation software for handheld devices, when Microsoft's attorneys had shown evidence earlier in the hearing that competitors Novell and Palm were involved in crafting the states' definition.
Shapiro countered that the discussion was focusing on semantics, not his field of economics. Lacovara asked if such a distinction was not important, since the definition of middleware would dictate which companies and technologies "could take advantage of a host of (the states') provisions". Shapiro agreed.
However, the economist added that he was not surprised that companies such as Novell and Palm would give input to the states. "That's inevitable," Shapiro said, "The mere involvement of a competitor is not a problem to me."