Sun Executives Grilled by MS

What did Sun Microsystems executives know about the AOL-Netscape deal and when did they know it? Microsoft lawyers say the impending merger undercut their client's defense case. Heidi Kriz reports from San Francisco.

SAN FRANCISCO -- The US Department of Justice and Microsoft on Monday are expected to submit the names of three rebuttal witnesses in the government's antitrust case against the software titan.

At a hearing on Friday, a Sun Microsystems executive was asked about the company's future product plans with America Online. Michael Popov, vice president and chief operating officer of staff operations at Sun, was subpoenaed by Microsoft to detail Sun's strategic agreement with AOL.

Microsoft wants to show that the deal between AOL, Netscape, and Sun represents a significant competitive threat in the market and, therefore, weakens the government's antitrust case.

"This case is about whether Microsoft has monopoly power over a market," said Richard Pepperman, an attorney with Sullivan and Cromwell representing Microsoft. "This isn't about paying damages and what's done in the past."

When AOL announced a deal to buy Netscape Communications in November for US$4.2 billion, it also announced an alliance with Sun that includes plans to build a new Internet browser, systems, and software for electronic commerce and other products.

In a subpoena, Microsoft said it would ask Popov about Sun's communications with AOL, specifically about its plans to jointly develop with Netscape or AOL a next-generation browser that would provide Internet access through a non-PC device.

"Their aim is to make Windows [and] PCs obsolete, and they're joining forces to do this," said Jim Cullinan, a Microsoft spokesman. "We don't have any choice but to be competitive back."

After the deposition, which was mostly closed to the press, lawyers declined to comment on what happened. But a Department of Justice attorney said the details gleaned about the deal made no difference in its strategy.

"There is nothing about the AOL-Netscape deal that changes anything about the case," said Phillip Malone, a lawyer with the Department of Justice. "The issue ... does not have any impact on the trial. It's a sideshow." His comments echoed those made earlier in the week by David Boies, the government's lead attorney in the case.