It was a busy day at the Microsoft antitrust remedy hearings yesterday, with a number of important developments, including a hint from Judge Colleen Kollar-Kotelly that she is considering imposing at least some of the nonsettling states' more restrictive remedies on the software giant.
First, Microsoft executive Linda Averett concluded her cross-examination about Windows Media Player (WMP). Averett had already made a couple of damaging admissions on Monday, but states attorney John Schmidtlein presented her more embarrassing evidence Tuesday morning. Discussing a new media player feature in Internet Explorer (IE) 6, part of Windows XP, Schmidtlein noted that this player doesn't work with third party products such as RealONE, and is instead hard-coded solely for WMP. "The reason it is not replaceable is that Microsoft does not allow it to be replaceable, correct?" Schmidtlein asked. "Correct, it is an integrated feature," Averett responded.
The IE/WMP integration feature was apparently brought to the states' attention by RealNetworks, makers of RealONE, a company that has complained that Microsoft's media player often overrides user preferences. And another intriguing RealNetworks' claim brought forth yet another embarrassing statement from Averett Tuesday morning. Responding to a complaint that XP's search functionality specifically ignored RealNetworks' files, Averett didn't deny anything, but rather admitted that it was a mistake. "It was clearly a mistake by the search team," Averett said, noting that Microsoft fixed the bug after hearing about the problem during the opening arguments of the remedy hearings. Yes, seriously.
Microsoft Group Vice President Jim Allchin was cross-examined later in the day. Allchin played the security card, stating that Windows would be made less secure if Microsoft was forced to comply with the interoperability provisions of the states' proposed remedy. "\[The states' plan\] would make it easier for hackers to break into computer networks, for malicious individuals or organizations to spread destructive computer viruses and for unethical people to pirate \[Windows\]," Allchin said. But states attorney Kevin Hodges noted that Microsoft's products were already the target of attacks, and wondered how making Windows more interoperable would harm anything. "I guess it's a matter of how hard you make it," Allchin responded. "We have to work on our reputation for security in the marketplace."
Hodges then told Kollar-Kotelly that the security exemption in its DOJ settlement was a "loophole" under which Microsoft would be able to circumvent any remedies. "That's a mischaracterization," Allchin said. "\[The security exception\] enables Microsoft to safeguard our customers' computer installations without denying competitors information they might want to use."
Allchin also responded to charges that Microsoft was using XP as a way to force Web services on its customers. The company bundles Windows Messenger with XP and forces people to sign up for its .NET Passport service in order to access certain features, Hodges said. "We are not trying to force anyone to use Microsoft products," Allchin testified. "We are instead seeking to make our products more attractive through innovation and by increasing their ability to interoperate with a broad range of existing software code."
The most stunning news of the day, however, came late in the day when the judge announced that she would allow the states to present additional evidence, surprising Microsoft's lawyers and most onlookers. The states had asked Kollar-Kotelly for a chance to show her a version of XP Embedded--the modular Windows version that has come to the forefront in these hearings--in which parts of the OS can be removed. The judge said she would allow a video or live demonstration, next week, to be presented by former Microsoft employee James Bach. Bach will contradict testimony from Microsoft Chairman Bill Gates that removing bundled applications from Windows would "shatter" the product, the states say.
Legal experts point to the unexpected evidence allowance as a sign that the judge is seriously considering imposing at least some of the states' more sever remedies. If Kollar-Kotelly does approve plans for a more modular Windows version, then Microsoft would be forced to reengineer Windows so that customers, PC makers, and IT administrators would have more fine-grained control over what gets installed on their systems. Testimony from Averett and others--showing that much of the so-called "integration" between various Windows components was done to shut out competitors and not to aid consumers--can only have helped the judge make her decision regarding the new evidence. Given its earlier guilty verdict, which involved, in part, unnecessary code commingling, Microsoft's decision to continue artificially commingling the code for WMP, IE 6, and Windows XP may come back to haunt it, especially if Bach can pull off a smooth presentation next week. Stay tuned.