Microsoft Remedy Hearings: Interactive TV Exec Waffled on Foe

An executive at an interactive TV software company testified that Microsoft should face stricter remedies than those imposed by its proposed settlement because the company had stifled competing software in the past and would do so again. Mitchell Kertzman, the CEO of Liberate Technologies, is the tenth witness to testify in Microsoft's remedy hearings, in which nine states and the District of Columbia are seeking a much broader punishment against Microsoft, which was found guilty of sweeping antitrust violations. The hearings continued Tuesday after a long weekend break.

Liberate makes operating systems software for the emerging market of interactive set-top boxes, which work with cable and satellite TV, offering viewers Internet connectivity and TV-based services. Microsoft has been trying to get into this market for years, though it has met resistance from the established players--mostly cable companies--which aren't too excited about Microsoft honing in on their market. Kertzman says the reason is obvious. "There are far more television owners in the world today than there are owners of personal computers," Kertzman noted, and Microsoft has bought parts of cable companies in the past and then attempted to force them to distribute its interactive TV software. One such deal was scuttled by European Union antitrust regulators in 1999, he said, but "the potential for additional exclusive [deals] still exists."

Microsoft says that its antitrust trial had nothing to do with interactive TV and that, therefore, this topic should be omitted from the hearings as well. But the nine non-settling states argue that Microsoft's behavior in this market indicates that the software giant is uninhibited by its proposed settlement and continues to behave in the same manner that landed it in court. Faced with the judge's acceptance of this argument, the company's lawyers have attempted to show that each of the people testifying against the company are biased in some away. Microsoft attorney Dan Webb revealed an email in which Kertzman offered to soften his stance on Microsoft being broken up if Microsoft would consider buying Liberate. When Microsoft declined, Kertzman continued his public tirade against the company.

"It was after Microsoft declined to do this major business transaction with your company, that you decided to support the conduct remedy in this case, which is even more harsh than the breakup, correct?" Webb asked. Kertzman said that he had changed his mind about the breakup before any decision was made and concluded that strong conduct remedies would be more suitable.

Like others testifying against Microsoft, Kertzman has a long history of combating the software giant, including a stint at database rival Sybase, and he's collected a colorful series of quotes over the years. He's referred to Microsoft as "the Freddy Krueger of software," "the great white shark" and a "corporate murderer," among other cute nicknames. So Microsoft attorney Webb presented these quotes and asked, "Yet you wanted to do business with [Microsoft]?" Kertzmann said he had little choice, and noted that such a deal would have shown that Microsoft was willing to work with other players in the industry.

Microsoft's legal strategy centered around showing bias is somewhat risky. The fact that its competitors might be biased against the company is pretty well established, and the hearings are designed to show that Microsoft's behavior justifies harsher remedies, not that it's liked or disliked by rivals. And of course, Liberate Technologies is such a small company that it's hard to believe that it could exert any pressure on Microsoft, though the reverse isn't so hard to imagine.