AOL exec: Remedies must protect from .Net threat

Microsoft Corp.’s .Net platform for Web services takes advantage of the company’s Windows operating system in a way that will make it difficult for other vendors’ software to compete, said an AOL Time Warner Inc. (AOLTW) official at the Microsoft remedy hearing Thursday morning.

A Microsoft attorney continued from Wednesday his cross examination of John Borthwick, vice president of AOL advanced services at AOLTW, who testified in favour of remedies proposed by the litigating states in this antitrust case.

During this remedy hearing, which began on March 18, Microsoft and nine states plus the District of Columbia are presenting arguments in favour of their proposed remedies to U.S. District Judge Colleen Kollar-Kotelly.

The judge must decide remedies following the U.S. Court of Appeals for the District of Columbia Circuit’s decision last year that the company violated antitrust law by attempting to maintain its monopoly in the desktop operating system market through anticompetitive behaviour. Microsoft has offered the proposed settlement it reached with the Department of Justice and nine other states last November as a suitable remedy, but the nonsettling states are seeking harsher restrictions.

In his written direct testimony, Borthwick stated that because Microsoft’s Passport authentication software – a part of its .Net platform — is included in Windows XP and is aggressively promoted to end users from within the operating system, other authentication programs can’t compete on a level playing field with Passport. The program stores information about users, ranging from e-mail addresses to credit card information, that is entered once and travels with users to authenticate their identity with Web sites that also use the service.

“If Passport is able to tilt end users towards Microsoft’s services, software developers will begin to develop their Web services to conform exclusively to the .Net platform, for the very reason that it would then provide the best commercial outlet for such services,” Borthwick wrote in his direct testimony.

Through questioning, Microsoft attorney Rick Pepperman pointed out that Windows XP does not require users to sign on to the Passport service in order to access the Internet. Nonetheless, Borthwick said, the average PC user who purchases a Windows XP machine may be convinced otherwise, since an alert pops up after the initial boot sequence that asks the user to add .Net Passport to Windows XP. “If my mom were reading that, she would say ‘Gee, I need a passport to use the Internet,’ ” Borthwick said.

Since Microsoft owns Windows XP, it alone can promote Passport in this way, giving the company an unfair advantage, he said. “Passport is a threat to any other authentication service out there, because no one else can do what Microsoft can do,” Borthwick said.

Also in his written direct testimony, Borthwick told of an October 2001 meeting between Microsoft and AOL to determine if the two companies’ authentication and authorization services could work together. AOL is developing its own suite of authentication and authorization products, called Magic Carpet, which includes its Screen Name Service authentication software. In particular, AOL proposed to Microsoft that the two companies allow interoperability between their products so that both Passport and Screen Name Service users could be authenticated by both .Net and Magic Carpet services.

AOL had three conditions for such an agreement: it wanted to promote Magic Carpet during the Windows’ initial boot sequence, assurance that Microsoft would not modify the Kerberos security protocol used in .Net to favour Microsoft’s own products, and assurance that Microsoft would not capture customer information of AOL users. Microsoft could not agree to the conditions, Borthwick said, and the discussions were halted.

In December, AOL joined the Liberty Alliance, a group of companies that are developing open standards for authentication, he said. Microsoft to date has not joined this group.

The witness used these arguments to support the litigating states’ remedy that forces Microsoft to allow PC makers and third-party licensees of Windows to include registration sequences for non-Microsoft services during the initial boot of the PC, and to allow rival software to be automatically launched.

Microsoft’s attorney asked if .Net implements open protocols, to which Borthwick answered yes. However, Borthwick added, under Microsoft’s proposed remedies there is no guarantee that it will in the future. “.Net is a relatively open platform today,” he said, adding that the services are still under development. “My concern is (that) over time the platform will become more closed … (that) over time protocols can be closed down or extended to (become) proprietary protocols. That’s why the states’ remedies are so important.”

Under the states’ remedies, Microsoft would be prevented from adding proprietary extensions to protocols without continuing to support industry standard versions of protocol, Borthwick said. Microsoft’s remedies, on the other hand, do not cover Web services such as .Net, Borthwick said.

Microsoft lawyers have claimed that the remedies decided upon cannot go beyond the liabilities that the Court of Appeals found, which define Microsoft’s anticompetitive behaviour as targeted toward Netscape Communications Corp.’s Netscape browser and Sun Microsystems Inc.’s Java programming language. The states maintain that restrictions must address Microsoft’s behaviour in additional markets, including Web services, because they present nascent threats to Windows as the Netscape browser and the Java language once did.

Microsoft Corp. is at

AOL is at

The U.S. Department of Justice is at

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