DISNEY "ROUGHED-UP BY THOUSAND POUND GORILLA".

By William Fellows Government prosecutors used video testimony from Walt Disney Co executive Steve Wadsworth, to further back its claims that Microsoft uses market power to coerce partners. Disney wanted a channel on Microsoft's Active Desktop. However, to get the channel it had no choice but to cut an agreement with Microsoft in which it would promote the downloading of IE and "placed restrictions on Disney's ability to promote Netscape Navigator," according to government lead attorney David Boies. The deal itself was fairly drawn out. "We didn't want it to be exclusive. They did," Wadsworth said. In the end Disney agreed "to limit our marketing and promotion with other browsers." The agreement prohibited Disney from displaying the Netscape logo on its pages, from providing links from Disney pages to a web page that would allow users to download a Netscsape browser, and limited Netscape's ability to promote the Disney channel on Netscape Net Caster. Following a disagreement over the use of the Disney graphic on the Net Caster Disney channel Microsoft even threatened to pull the Disney icon off Active Desktop. "We were being roughed up by the 1,000 pound gorilla," complained Wadsworth, and ultimately Disney changed the logo. Microsoft's John Wharton said the Disney agreement was just an example of a hard-nosed, cross-promotional business agreement and nothing more than that. However, in Gate's earlier testimony it became evident that Microsoft had specifically relaxed some of its bundling conditions because at the time Senator Hatch was engaged in a series of hearings about Microsoft's business. For example Microsoft decided not to make its embryonic Start portal a requirement for being in the IE referral gateway, because the "the PR group thought it would be controversial and we didn't see the benefit as being worth that controversy." Government lead attorney David Boies said the ability to "turn off and turn on these things at will demonstrates the power Microsoft has." Microsoft said this and a subsequent decision not to force ISPs to make the Microsoft page their home page were taken simply because it didn't make business sense. However to "resolve any possible misunderstanding about the cross-promotional agreements with Internet Content Providers [such as Disney] and Internet Service Providers [including MCI], Microsoft voluntarily modified its agreements with ISPs in February 1998 and with ICPs in April 1998."