Dancing with the Devil: Another Piece of the Puzzle Drops Into Place -
Tracy Swedlow's -InteractiveTV Today reported today
Liberate CEO, Kertzman, Testifies at Microsoft Antitrust Hearing Liberate CEO, Mitchell Kertzman, claimed Tuesday that Microsoft unfairly uses its financial clout to push its ITV technology, by making large investments in cable companies on condition that the latter deploy Microsoft middleware. Kertzman's claim came in testimony he gave for a court hearing in which nine US states are attempting to impose a more stringent settlement of the antitrust case against Microsoft than the one reached last November by the federal government and nine other states. To back up his claim, Kertzman cited the case of UK cable operator, Telewest, which, following a $3 billion investment from Microsoft, declined to do business with Liberate (a subsequent investigation by the European Union caused Telewest to abandon its "exclusive" deal with Microsoft, according to Kertzman). Among other antitrust remedies against Microsoft, the nine states are proposing that substantial investments by the company be reviewed to ensure that they are not designed to prevent competition.
Microsoft lawyers attempted to undermine Kertzman's testimony by arguing that he had shown himself to be perfectly willing to speak favorably of the software giant, if doing so furthered Liberate's strategic agenda: they pointed to emails Kertzman sent to Microsoft VP of corporate development, Richard Emerson, last year in which he seemed to imply that he would be willing to end his criticisms of the software giant if it sold its ITV division to Liberate, and in which he seemed to be attempting to ingratiate himself with Microsoft by offering to tell reporters that the breakup of Microsoft was not called for: "If your folks have any journalists to whom they want me to offer my changed opinion on the breakup, I'd be happy to offer my opinion," Kertzman had written. Kertzman countered that he had genuinely changed his mind about the breakup of Microsoft, and now believed that other remedies would be preferable to a breakup. Additionally, Microsoft lawyers reminded the court of somewhat intemperate statements Kertzman had made about the company, calling it "the Freddy Krueger of software" among other nasty names. However, perhaps the most effective argument Microsoft's legal team made against Kertzman's claims is that, despite Microsoft's multimillion dollar investments in such MSOs as AT&T Broadband and Comcast, Liberate in fact seems to be have enjoyed considerably more success with those companies than has Microsoft. Though, as Kertzman pointed out, much of that success is due to Microsoft's failure to deliver its ITV middleware on time (see, for example, [itvt] Issue 3.09).
Ultimately, whether Kertzman's testimony has any impact on the case will depend on the court's understanding of the future of convergence. Strictly speaking, the antitrust case against Microsoft concerns PC operating software, not set-top box middleware-which is why Microsoft's lawyers were eager to point out that ITV and personal computers are different markets, that Liberate does not play in the PC market (and, by implication, that even if it can be proven that Microsoft engages in unfair practices in the ITV market, this simply has no bearing on this case). In his testimony, Kertzman claimed that those 2 markets may one day become indistinguishable and that Liberate's ITV middleware could therefore eventually compete with Microsoft's Windows operating system. The judge in the case, Colleen Kollar-Kotelly, does seem inclined to take into account the effect of Microsoft's alleged anti-competitive practices on emerging-and potentially converging-technologies such as ITV and PDAs, having last week said that the court would hear testimony concerning these technologies.
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4:42:28 AM 
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