March 7, 1999

ECONOMIC VIEW

Some Advice for Mr. Gates: Have Your Day in Court

By STEVE LOHR

oth sides in the Microsoft trial have retreated to their corners until mid-April, when the antitrust battle will resume in a Washington courtroom. Then, both the government and Microsoft will have the opportunity to call a couple of rebuttal witnesses.

The company has not ruled out the option of rolling out its ultimate weapon, Bill Gates. Here is an example of an e-mail one of his advisers might send, urging him to take the stand and suggesting what he might say:

DEAR BILL:

It's not Paris, but Washington in April isn't bad. You should show up in court and have your say.

Heck, if an IBM corporate bureaucrat like Frank Cary could be a star witness for his company in its successful defense against the Justice Department, a field general of the future like you ought to be able to wow 'em.

OK, you got some bad advice for that taped deposition, which the Justice Department has played endlessly at the trial. It seemed as if some other guy showed up in your body -- evasive, forgetful and out of the corporate loop. Everybody knows you ARE the loop at Microsoft. The answer-nothing approach was a real mistake. Bad PR and bad legal tactics.

So go to Washington to restore your credibility, and do what you can to revive your legal defense. It needs help.

One thing I've found puzzling is this: When Microsoft executives have been asked whether they wanted to crush the Internet upstart, Netscape Communications, they are almost apologetic. They speak of trampling rivals as if it were a regrettable byproduct of competition.

Talk about undermining your own credibility! No one thinks that anybody at Microsoft believes that for a nanosecond.

So when asked, you should just tell Judge Thomas Penfield Jackson what you believe with your every breath to be the truth:

"Yes, we like nothing better at Microsoft than loosening the bowels of our competitors. We get up early and we go to bed late to create products, market them aggressively and revolutionize the industry.

"We call that capitalism, and, yes, we take our capitalism pretty much straight-up in the New Economy. It's why things move so fast in our industry, why companies succeed and fail quickly. Yes, it can be brutal, but it also goes a long way toward explaining the phenomenal dynamism of the American economy.

"Judge Jackson, you may think it makes sense, after hearing all the tales of woe from our competitors, that something should be done to level the playing field in our industry. And having the government intervene to fashion a more controlled style of capitalism can often seem humane. I know you're thinking about it. And it may be that we got a little over-enthusiastic in the browser wars, crossing the line here and there with a couple of our contracts.

"But I'd urge you to be cautious. The Justice Department has said it is using this case to establish new ground rules of competition in the information age. But the economies where the governments play a stronger role in fine-tuning the rules of engagement are the economies now trying to emulate the United States.

"Japan is finally being forced to dismantle its system of corporate socialism, and the traditional social democratic model of Europe is in retreat.

"And, your honor, I would invite you to visit ground zero of our alleged predation -- Silicon Valley. What do you see? A local economy where there is virtually no unemployment, where seven-figure home prices are the norm in many neighborhoods, and where corporate parking lots are filled with $70,000 sports cars.

"Even the government's economic witness, Frank Fisher of MIT, had to acknowledge he could find no current consumer harm from what our accusers call our monopolistic bullying of the entire computer industry. He says he's worried about the future. Well, so am I -- which is why, if you want to observe the 'quiet life' of the monopolist, you shouldn't come to Redmond."

Well, Bill, the bad news is that this would mainly be a speech, not related directly to the specific charges in the suit.

Yet if the judge cuts you off, telling you to just answer questions with a "yes" or a "no," you would have a solid basis for a "judicial bias" challenge on appeal -- given all the digressive speeches he let the prosecution witnesses make.

But Jackson won't cut you off. He'll be flattered that you showed up in his courtroom.

Besides, you'll give him plenty to think about, especially when he is weighing whatever sanctions might be imposed on Microsoft if you lose the case.

Things haven't been going well for Microsoft in the trial so far. So at least in this first round -- before any appeal to a federal appeals court or to the Supreme Court -- you're fighting to limit the damage.

Just do it.