The New York Times

November 17, 1998

On Tape, Gates Seems Puzzled by Words Like `Market Share'

By STEVE LOHR and JOEL BRINKLEY

WASHINGTON -- Bill Gates, the chairman of Microsoft Corp., stubbornly debated the meaning of words like "we" and "concern" during an hour of his videotaped deposition shown in court Monday. Even "market share" seemed a curiously alien term to a man whose company owns just about all of the market in major product categories of the personal-computer software business.

Most significant for the antitrust case against his company, Gates said that he did not recall what he was thinking or what he meant when he wrote in a January 1996 e-mail to top aides, "Winning Internet browser market share is a very, very important goal for us."

The government used the Gates tape -- the third excerpt from his deposition shown in the Microsoft trial -- to attack Microsoft's defense that it decided to fold Internet browsing software into its Windows operating system to improve its centerpiece product, Windows. Its main rival in the browser market, Netscape Communications Corp., may have been harmed, Microsoft argues, but its actions were guided mainly by its desire to improve its product and to benefit consumers.

The Justice Department and 20 states suing Microsoft contend instead that the decision was an illegal scheme to use Microsoft's monopoly in operating systems to increase its share of the browser market, and to stifle competition.

Microsoft said Monday that the government's tactic of repeatedly showing portions of the taped deposition is turning the trial into a "sideshow" -- a personal attack on Gates, the nation's richest person.

But the government argues that the Gates tapes provide important context for its case by showing what Gates, the central actor at Microsoft, did and what he said about it. The deposition excerpts, culled from more than 20 hours of tape, have been selected by the government, though some questions and answers Microsoft wanted to show have been included.

The government insists that Microsoft's defense is an exercise in revisionist history. When presented with internal company e-mail and documents from a couple of years ago, the prosecutors say, Gates' evasive performance at his deposition shows the weakness of Microsoft's defenses.

"What we saw today shows that Microsoft was quite concerned about Netscape in early 1996, and that Microsoft was not merely trying to improve its product," said David Boies, the Justice Department's lead trial lawyer.

Gates has a reputation as a brilliant, hands-on executive whose fingerprints are on every major decision made at Microsoft. Yet his deposition performance is so at odds with that reputation, professing to be forgetful and only vaguely aware of key decisions in the browser market, that it does seem to cast doubt on his credibility.

But Microsoft's legal advisers say that in his deposition, Gates was merely taking a characteristically competitive and combative approach to what deposition witnesses are supposed to do -- to try to narrow the questions asked, fence with interrogators and avoid broad or responsive answers.

"A lot of time-consuming jousting goes on in depositions," said Joseph diGenova, a former U.S. attorney who is a Microsoft legal consultant. "A deposition is fundamentally an ugly thing."

Still, Gates' determined resistance to the questions asked by Boies at his deposition apparently struck even legal veterans as unusual. Judge Thomas Penfield Jackson chortled and shook his head at some of Gates' replies. Microsoft's lawyers laughed a few times. Even Gates flashed a tight smile, once or twice, as he seemed to be enjoying the give-and-take when he felt confident he was giving nothing.

Gates paused before answering questions for even longer periods, up to 30 seconds or so, than he had in the earlier excerpts shown. At times, he played a waiting game with his interrogator.

At one point, Boies asked, "Do you understand the question, Mr. Gates?"

"I'm pausing to see if I can understand it," Gates replied.

At another point, Boies said he would ask another question, since Gates did not have an answer to his previous question. "I have an answer," Gates replied quickly. "The answer is I don't remember."

Later, Gates was asked about his e-mail on Jan. 5, 1996, in which he wrote that increasing browser market share was a "very, very important goal for us." Boies asked, "So you don't remember what you were thinking when you wrote it and you don't remember what you meant when you wrote it; is that fair?"

Leaning forward and grinning, Gates replied, "As well as not remember writing it."

The verbal fencing over terms like "market share" relates to the antitrust case because the government is trying to demonstrate that regardless of Microsoft's courtroom arguments, the company regarded its Internet Explorer browser as a separate product, marketed separately and measured separately.

Microsoft says that Internet Explorer is a "feature" of its Windows operating system, and not a separate product. Indeed, a U.S. appeals court ruling in a related case agreed that Microsoft should be free to determine what software is included in its operating system as long as there is some consumer benefit from the integration.

After the Gates deposition, the government's fifth witness, Glenn Weadock, a computer consultant, took the stand to be cross-examined by a Microsoft lawyer, Richard Pepperman.

Weadock's testimony, submitted in written form last Friday, is that many companies, like Boeing, find Microsoft's practice of tightly folding its browser into Windows to be a costly inconvenience. This is especially true, he testified, if corporate customers want to use the Netscape browser with Windows, since Microsoft's browser software is deeply embedded into recent versions of Windows.

Under questioning, though, he did say that there is plenty of debate within the industry about what should and should not be in an operating system.

Weadock also said some companies undoubtedly find having the browser integrated into the operating system to be an advantage. The issue, he said, was whether consumers had a choice.

"Nowhere in my testimony," Weadock said, "did I say there are no companies that find the integration of Internet Explorer appealing. But there are those who don't, and they can't get rid of it."

In court on Monday, the government also introduced many new documents into evidence. For example, one internal e-mail from Gateway Inc., a large personal-computer maker, described a conversation with a Microsoft executive in February 1997, suggesting that Microsoft used its market muscle to force PC makers to adopt Internet Explorer.

The Microsoft representative, according to the Gateway executive, mentioned Microsoft marketing and sales campaigns to promote Gateway machines, but "they won't do it if they see Gateway is anything but pro-Microsoft" on the browser.