The New York Times
November 5, 1998
Microsoft Defends Tactics in 1997 Talks With Apple
By JOEL BRINKLEY
WASHINGTON -- The Microsoft Corporation argued in court Wednesday that it had every right to tell Apple Computer last year that it would stop producing word processors and other software for Macintosh computers unless Apple adopted Microsoft's Internet browser as the default choice on all its computers.
"Suppose Microsoft simply decides not to offer a product," said Theodore Edelman, a Microsoft lawyer. "Do you have a problem with that?"
"Yes," replied Avadis Tevanian, Jr., the Apple senior vice president who was being cross-examined today in the Government's antitrust suit against Microsoft. "I have a problem with them doing it when they are using it as a threat to get us to do something we didn't want to do."
In his direct, written testimony, made public on Friday, Dr. Tevanian contended that Microsoft had threatened to stop producing a new Macintosh version of Microsoft Office unless Apple reversed its position and favored Microsoft's browser, Internet Explorer, over Navigator, the market-leading browser of the Netscape Communications Corporation.
Several e-mail messages written by Microsoft executives disclose that the company intended to use the threat as "a club," as one message put it, to force Apple into line. Microsoft Office is so dominant -- it has more than 90 percent of the market for business applications suites -- that Apple executives worried that their company would be crippled if their customers could not buy it.
In the end, Apple gave in and made Microsoft's Internet Explorer the default browser and agreed not to promote Navigator, which had been the default browser on Macintosh computers. Dr. Tevanian disclosed in court today that at Microsoft's insistence, the Netscape browser is not even installed on Macintosh computers when an owner first loads a new computer with software from the installation CD-ROM -- unless the new owner chooses a custom installation option. Hardly anyone does that, Dr. Tevanian said.
Apple's agreement to make Internet Explorer its preferred browser was part of the deal in which Microsoft agreed to produce its Office suite for Macintosh customers, invested $150 million in Apple and settled several longstanding patent disputes.
Edelman, a partner in the Sullivan & Cromwell law firm, argued that however Dr. Tevanian chose to describe Microsoft's bargaining tactics, the company had every right to decide which products to develop -- and which to drop.
Among other attempts to impeach Dr. Tevanian's testimony, Edelman also suggested that Apple brought a threat of its own to the negotiations last year, saying that it would file a $1.2 billion lawsuit contending that Microsoft had infringed on Apple patents.
"Didn't you personally tell Microsoft that if no deal was reached, Apple would sue Microsoft for more than $1 billion?" he asked.
No, Dr. Tevanian said, Apple had told Microsoft that it owed Apple $1.2 billion in royalties but had not said anything about filing suit.
As Microsoft did with a previous witness, from America Online, Edleman tried to show that a user could easily install Netscape's browser on a Macintosh computer, even if the computer came with Internet Explorer as the default. On video monitors in the courtroom, Edelman showed seven sequential photographs of the Macintosh screens a user would have to navigate to change the default browser.
As he did that, Dr. Tevanian found himself in the position of having to criticize his own company's product to support his testimony. He told the lawyer that the process was not really as simple as he was making it seem. The menus were counterintuitive, Dr. Tevanian said; it would be easy to get confused.
In fact, when Edleman finished, Thomas Penfield Jackson, the United States District Court judge who is hearing the case, remarked: "It certainly doesn't tell me how to do it."