On December 14, Microsoft announced that it has taken a 1.33 percent stake in Qwest, a startup telecommunications company. The $200 million investment will give Microsoft access to the world's largest packet-switched fiberoptic data network. That would fill the company's huge need for bandwidth, give it a new distribution method for Windows and possibly provide a new backbone for internet services like MSN, WebTV or something as-of-yet uncreated. In return, Qwest will have access to Microsoft products (not that a telecommunications company would have much use for any of them). In the future the two may team up to offer interactive television or some other type of big-bandwidth service.

COURT NOTES: Also On December 14, technical expert Edward Felten told Judge Jackson how Microsoft deliberately blended different functions into some of the same Windows files, making them more dependant on Internet Explorer than they would be otherwise. But the Princeton professor - who was given access to Microsoft's closely-guarded source code and Windows blueprints - testified that he found "no reason Microsoft was technologically compelled to design things that way. .. Some of the stuff relates to Web browsing and some of it doesn't."
Felten then showed a 30 minute video on a piece of software that removes IE-dependancies from Windows 98. Microsoft complained that Felten’s methods slowed down some Windows functions, but Felten said he hadn’t noticed any performance problems. He said the procedure worked until he handed over a copy of his removal program to the company. The judge immediately jumped in: "Are you telling me that as part of discovery you provided this code in September, whereupon there appears to have been product changes by Microsoft?" To which Felten replied "Yes."
Following that, Felten compared using a web browser to using a screwdriver: "They [Microsoft] take the next step and glue the screwdriver to my hand. It's hard to use other screwdrivers or use other tools. ... There’s no benefit to having a screwdriver glued into my hand." Testimony was cut short on Monday because Microsoft backed down after Judge Jackson said company attorney Dave Heiner was "playing word games" to trip the witness up.
The DOJ finished up the year Tuesday and Wednesday by showing more clips from Bill Gates' videotaped testimony. One clip showed lead government attorney David Boies asking Gates about a series of notes he wrote about IBM's relationship with Lotus back in 1994. "Why does IBM help Lotus so much," Gates wrote in a message to senior vice president Joachim Kempin. "Is there anything we can do about this?" Kempin wrote back that Microsoft needs a "WW [world wide] hit team to attack IBM as a large account, whereby the OEM relationship should be used to apply some pressure." In the video, Boies then asked Gates if Kemplin had been proposing "that the OEM relationship with IBM should be used to apply some pressure" to stop IBM from promoting Lotus products. After some prodding, Gates finally answered "It is one of the things he mentions, but it's not a proposal."
On Wednesday, Judge Jackson surprised the court by allowing Microsoft to examine papers filed by America Online concerning its buyout of Netscape. That ruling sent Microsoft stuck up $4.50 to a record high of $135.13, before it closed at $133.75. No word yet on whether or not AOL will fight to keep the documents secret. The year ended on Wednesday with several hours of video testimony from various industry executives, during which most people in the court went to sleep or left. Trial will resume on January 4th.

Even as it scrambles to comply with the ruling, Microsoft has filed a notice to appeal the preliminary injunction prohibiting it from distributing products that contain Java. The Behemoth now has 28 days to file its appeal with the 9th U.S. Circuit Court of Appeals in San Francisco. The ruling, which was handed down on November 17th by U.S. District Judge Ronald Whyte, ordered Microsoft to bring Internet Explorer 4, Windows 98 and several other products to full Java compliance in 90 days or stop shipping them all together [see NewsSource, Nov. 23]. Microsoft says that it will comply with that ruling during the appeal and has already made some Java-compliance upgrades available, although it is asking Judge Whyte to extend the 90 day period by 30 days. Sun says it will save any comment until the full appeal has been filed.

Microsoft is being sued yet again, this time by an ergonomic hardware manufacturer named Goldtouch claiming that its patent-pending mouse design was ripped off by the software giant. In a meeting in September 1997 Goldtouch displayed its design to MS hoping for a license agreement, which was refused. Not long after that Microsoft introduced the IntelliMouse Pro, which had features specific to Goldtouch's design like rubber sides and a similar ergonomic shape, among others. Goldtouch is taking Microsoft on for theft of trade secrets, patent infringement and fraud charges that total $1 Billion plus compensatory damages. "Punitive implies punishment. With the size of Microsoft, it has to be a substantial amount for the punishment to have any effect," stated Goldtouch president Mark Goldstein. Microsoft is still reviewing the claim and has declined to comment.

MSN Hotmail customers suffered through yet another round of outages last week, apparently because of a routine server upgrade. A represenative would not elaborate or discuss the problems, but said they only affected a "small percentage" of the free e-mail service's 30 million-plus customers. Hotmail users are becoming accustomed to problems like this, as the service has continually experienced some problem or another since being purchased by Microsoft during the last week of 1997.
Microsoft is preparing the Macintosh version of IE 4.5 for release during the MacWorld convention next month. Among other improvements, the company claims IE 4.5 for the Mac will be self repairing, load pages faster, be more stable and have improved print layout functions. It is also promised to eliminate some inconsistancies in the HTML layout engine for Windows and Macintosh versions of IE.

_{Most approve of Microsoft, poll shows
Windows CE names to be simplified
Windows developers favor open-source code}