Microsoft prepares for long hot summer as antitrust case resumes

US Government forces resumed their battle against Microsoft this week in the latest chapter of a fight which opponents of the world's largest computer company see increasingly as a struggle by the people's republic against the evil empire.

The US justice department and 19 states launched their case against Microsoft more than a year ago, but a conclusion still seems light years away. This week's resumption of the action on Washington's Constitution Avenue comes after a 13-week hiatus during which all suggestions of a settlement have subsided and both sides have bunkered down behind their rival arguments.

With six rebuttal witnesses due to appear in the federal courthouse over the coming months a judgment is not expected until much later in the year. The rebuttal stage, which kicked off on Tuesday, is likely to be followed by a 30-day break and then further arguments and written submissions.

Massachusetts Institute of Technology economics professor, Mr Franklin Fisher, appearing as the first government rebuttal witness, set the tone for the proceedings when he claimed that Microsoft "basically bribed" consumers to take its Internet Explorer browser in order to preserve its monopoly in operating systems software.

He told the court that Microsoft maintained a monopoly position in the market for computer operating systems because of its "substantial ability" to alter the price of Windows, as consumers have practically no other choice. And he predicted that Microsoft's dominance of the market would last for "a number of years".

The epic scale of the proceedings and the complex nature of the legal battle has not lessened the importance of the case or the intensity with which it is watched by those in Silicon Valley and others in the business world. "The crux of the issue is not just who is going to win or lose but the entire nature of competitiveness and innovation in an important industry," said one west coast executive who refused to be named.

The government forces have set out to prove that the company headed by Bill Gates used its monopoly in supplying computer-operating systems to gain advantages in other areas. One central area of concern was the group's behaviour in the browser market, where it is accused of trying to crush Netscape, a smaller rival, by selling its popular Windows operating software with Internet Explorer, its own browser. Rival companies argue that Microsoft is bullying new start-ups by saying that its version of any new software will outsell it. They argue that such tactics will kill the sense of innovation in the industry.

Evidence of bullying behaviour towards small and large rivals has provided the foundation of the government's case. Its star witness during the next stage of the trial is expected to be Mr Garry Norris, programme director of IBM, the hardware giant.

Mr Norris, who negotiated key license agreements with Microsoft between 1995 and 1997, is expected to allege that Microsoft threatened to make it difficult for IBM to buy an operating licence for Windows if it continued to support rival software products. The allegations point to the power of the Windows system. Several hardware manufacturers have highlighted the difficulty of selling computers without the Windows operating system attached.

Microsoft is expected to defend itself vigorously. It is likely to argue that its negotiations with IBM were tough, but hardly illegal.

The most surprising of Microsoft's witnesses is Mr David Colburn, senior vice-president of business affairs at America Online (AOL), who gave evidence for the government in the last round. The company has decided to call this hostile witness because it claims that AOL's $10 billion (€9.6 billion) takeover of Netscape last November, after the antitrust action was launched, proved just how valuable the company was.

One rival said, however: "Microsoft is focusing on the argument that the AOL/Netscape deal helps them, but in a way it could prove the opposite. Netscape was damaged so badly by the thugs at Microsoft it was forced to do a deal to survive."

The argument over the takeover is expected to be among the most passionate.

The landmark case is not the only one facing Microsoft over what is set to be a long, hot summer. Other pending lawsuits include one brought by Sun Microsystems.

Meanwhile, since the trial went into recess at the end of February, Microsoft has announced a new direction and reorganisation of its management team. It has also dented its enormous cash pile with a welter of acquisitions designed eventually to put "Windows everywhere".

This vision sees the operating system being used in mobile phones and cable TVs as well as computers. Such visions do little to calm the fears of its competitors about the size and scope of the evil empire.