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Final testimony begins in Microsoft trial

WASHINGTON -- As final testimony begins in the Microsoft Corp. antitrust trial, the software company is trying to convince a judge that federal intervention isn't necessary to keep the high-tech industry robust, while minimizing the ill effects of its past actions on competitors.

The company wants the judge to peer into the computer industry's future, where Microsoft officials believe their flagship Windows software will face unprecedented competition from a raft of fledgling technologies.Government attorneys, however, are arguing that the judge should focus on Microsoft's aggressive behavior toward its rivals earlier this decade and on its dominance now.

The trial was resuming Tuesday after a 13-week recess, despite ongoing secret efforts to settle the landmark case. The verdict, expected as early as this fall, could dramatically change the way consumers buy software during a period when the industry is making huge technology strides and helping drive the nation's economy.

Lawyers from each side met unsuccessfully last spring to negotiate a truce and have met privately at least twice more since the trial began last fall, once in late February and again on March 24.

But the lawyers remain far apart on some core issues after months of an acrimonious courtroom battle, such as how Microsoft can continue adding new technology to its Windows operating system without undercutting competitors that offer similar software products.

The government and Microsoft each have identified three witnesses who will testify during this phase of the trial, when the sides rebut earlier allegations. Franklin Fisher, an economist who testified previously for the government, was to take the stand again Tuesday.

The government's most important witness will be Garry Norris, an IBM Corp. manager who will describe pressure Microsoft allegedly exerted on IBM to sacrifice its rival OS/2 operating system software during the early 1990s. That software competed directly with Windows until its popularity waned in late 1994.

In a deposition last week, Norris claimed Microsoft told IBM it was charged a higher price for Windows in 1995 than other computer makers "because you compete with us," and because IBM included what Microsoft called "objectionable software" from other rivals on its machines.

Norris also testified that major computer makers, such as Compaq Computer Corp., agreed not to sell OS/2 on their machines in 1993 because Microsoft threatened "to make it difficult for Compaq."

In what was considered a shortcoming in its legal case, the Justice Department was previously unable to persuade any of the nation's computer makers to testify at trial against Microsoft.

Microsoft will focus its testimony in the coming weeks on encouraging U.S. District Judge Thomas Penfield Jackson to consider future competition to Windows.

Since the last courtroom testimony, America Online Inc. finalized its $10 billion purchase of Netscape Communications Corp., the Internet pioneer whose Web browser software competes with Microsoft's own Internet Explorer.

Justice lawyer David Boies has derided Microsoft's emphasis on the merger as a sideshow, but the judge remarked previously that the deal "might be a very significant change in the playing field."

Microsoft contends that AOL, as the world's largest Internet provider, could resuscitate Netscape's popularity as the most popular browser, and that other alliances would fuel the development of hand-held, wireless devices that don't use Windows and could displace Microsoft's importance.