Gateway, RealNetworks say Microsoft caused harm |  Government

After fiery opening statements and some strong words from a federal judge, the Microsoft Corp. remedy hearing got down to basics on Thursday as attorneys for the company and the litigating states worked to build support for their respective antitrust remedies.

An executive from RealNetworks Inc. questioned by a states' attorney testified that his company has been harmed by Microsoft's anticompetitive practices. Microsoft's software-licensing terms are "severe and onerous," said Dave Richards, RealNetworks' vice president of consumer systems.

He was put on the stand by the nine states and District of Columbia that did not settle with Redmond, Washington-based Microsoft to offer the point of view of a software vendor that competes with Microsoft.

Unlike Microsoft, Seattle-based RealNetworks allows software developers to customize certain licensing agreements to suit their needs, he said.

The executive also said RealNetworks has been harmed by Microsoft's strict Windows licensing contracts with PC makers. For years, RealNetworks has struck deals with PC vendors to preinstall its media software as a default on the computers they deliver to end users, but since the summer of 2000 the company has been met with resistance, he said.

Hardware makers told RealNetworks they could no longer set its software as a default because of new terms in Microsoft's licensing contracts for Windows, Richards said. Windows ships with media player middleware that competes with software from RealNetworks.

This line of questioning prompted Microsoft attorney Richard Pepperman to object, claiming that the material was hearsay because Richards never actually saw the contracts between Microsoft and hardware vendors. On Wednesday, Judge Colleen Kollar-Kotelly struck from the record over a dozen paragraphs from Richards' written direct testimony that described Microsoft's contracts with PC makers, labeling it as hearsay.

On Thursday morning, however, the judge said she would allow the record to stand because the states' attorney John Schmidtlein and the witness managed to skirt the hearsay issue. Later she told attorneys for both parties that there are ways of restating or reframing testimony to avoid hearsay. "(Schmidtlein) was able to get what he wanted without ... any hearsay," she said, and recommended that lawyers for both parties strive to do so.

Turning his focus to the states' proposed remedies to Microsoft's anticompetitive behavior, Schmidtlein asked Richards if the RealNetworks software that leverages Microsoft's Internet Explorer Web browsing abilities would be harmed if the browser was removed from Windows. One of the states' proposed remedies is to force Microsoft to sell a version of Windows stripped of all middleware, including the browser. Richards answered that he is supportive of the remedy and that RealNetworks' software wouldn't suffer at all.

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