Microsoft: iTV firm demands protection

A states' witness at the Microsoft remedy hearing has defended his written testimony calling for protection from Microsoft...

A states' witness at the Microsoft remedy hearing has defended his written testimony calling for protection from Microsoft anti-competitive behaviour in the interactive television software market, despite the fact that the market is nascent.

Yesterday, a Microsoft attorney Steve Webb continued his cross-examination of Mitchell Kertzman, the chief executive officer (CEO) of Liberate Technologies.

Webb's questioning aimed to show that Liberate's iTV software does not pose a threat to Microsoft's dominance of the PC operating system market and, therefore, should not be covered in remedies designed to modify Microsoft's business practices.

Kertzman argued that Liberate's software poses a credible threat to Windows, much like Netscape's Navigator browser did years ago, and should be extended protection under the remedies imposed on Microsoft by the court.

Webb asked Kertzman how Liberate's software could be considered a threat to Microsoft's Windows when the interactive TV program is not even sold for PCs. At present, Liberate's program runs on servers housed by cable and satellite network operators, as well as on embedded operating systems that power set-top boxes in consumers' homes, to provide enhanced TV services. Microsoft's competing interactive TV software runs on both PCs and on server/set-top box combinations.

"We view the PC as a future platform on which we'll have to compete," Kertzman answered because, he added, Microsoft has decided to make its iTV software available on the PC.

"On the PC, I think we look just like a browser," he said, implying that Liberate's software can make the operating system it runs on less significant because it exposes programming interfaces to developers.

Kertzman testified in support of a number of remedies proposed by the nine states and the District of Columbia, which did not agree to a settlement with Microsoft. This group is seeking tougher restrictions to Microsoft's anticompetitive behaviour than those proposed in a settlement the software maker reached with the US Department of Justice and nine other states last November.

The states' proposed remedy that would require Microsoft to disclose acquisitions and investments in other companies or technologies in an attempt to keep the company from secret dealings - would help encourage fair competition, Kertzman said.

He claimed that through investments in cable network operators, Microsoft has attempted to cut exclusive deals that keep those operators from using Liberate's interactive TV software.

"Investments are how Microsoft controls distribution channels in this case," Kertzman said.

Webb countered that regardless of Microsoft's attempts at exclusive deals with cable operators, Liberate has managed to secure some of the companies that Microsoft invested in as customers.

"Isn't Liberate doing very well in the marketplace without any remedies in place?" he asked.

"We're doing well in the nascent state of the market, due to Microsoft's ... inability to ship a product," Kertzman answered, referring to Microsoft's problems with its own iTV software. He added that Microsoft "is not successful in delivering, it's more successful as an investor than a supplier".

An attorney for the states, Howard Gutman, followed Microsoft's cross-examination by questioning Kertzman about how long his company referred to its product as "middleware," to which Kertzman answered, "since day one".

In its decision last June, the Court of Appeals defined middleware as software products that expose their own programming interfaces to developers, and found that Microsoft's anticompetitive behaviour was directed toward middleware competitors.

While Microsoft lawyers say that any remedies imposed on it must stick to the company's behaviour toward browsers and Java - the two instances highlighted in the Court of Appeals' decision - lawyers with the states argue that the definition of middleware also includes server software, Web services and software for cell phones and set-top boxes.

The next witness scheduled to appear at the hearing is John Borthwick, vice-president of AOL advanced services with AOL Time Warner.

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