December 16, 1998

Trial Reviews More Microsoft Tactics


WASHINGTON -- When employees of Microsoft Corp. discuss the company's Windows operating system, their language can be extravagant, even imperial. In documents and depositions presented in federal court Tuesday, one described Windows as "our one unique and valuable asset." Another called it "the crown jewel."

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As the government's antitrust suit against Microsoft entered its third month Tuesday, the Justice Department continued to concentrate on evidence that Microsoft used its monopoly position in operating-system software to have its way in all manner of competitive challenges.

In court Tuesday, the government offered new charges that Microsoft had cajoled or threatened companies that for the most part posed no obvious threat to Microsoft or Windows. The subjects of those efforts, the government contended, ranged from IBM and MCI to Walt Disney Co.

The government presented this evidence in the form of videotaped depositions from Microsoft chairman Bill Gates and executives from companies who felt they had been bullied.

Gates said that "hit team" was a not-uncommon term for Microsoft salesmen.

Last year, the government contended, Microsoft felt that Disney was getting too cozy with Netscape Communications Corp., Microsoft's chief rival in Internet software. Disney vice president Steve Wadsworth said Microsoft threatened to pull Disney's logo -- an easy link to the company's Web site -- from its Windows channel bar.

Disney was "being roughed up by the 1,000-pound guerilla of the industry," Wadsworth testified in a taped deposition. "These guys have all the cards. I felt like we were being, you know, leveraged."

In the end, Disney reduced the level of its involvement with Netscape, afraid to lose its position on the Windows desktop.

Regarding IBM, the government showed that in March 1994, a Microsoft executive, Joachim Kempin, addressed Gates' apparent concern over IBM's growing relationship with Lotus -- a Microsoft competitor in business software -- by stating in an e-mail that the company needed a "hit team to attack IBM as a large account, whereby the OEM relationship should be used to apply some pressure."

By that, Kempin apparently meant that Microsoft should take advantage of IBM's need, as an original-equipment manufacturer, to install Windows on the personal computers it sold. Eventually, IBM bought Lotus.

Asked in a videotaped deposition played in court Tuesday about Kempin's e-mail, Gates said that "hit team" was a not-uncommon term for Microsoft salesmen.

Gates was also asked about an e-mail he received from another Microsoft executive, Russell Siegelman, in 1994. In that message, Siegelman said he opposed a request by MCI to have a link to its Internet server on the Windows desktop, referring to "the Windows box" as "our one unique and valuable asset."

Asked about that, Gates seemed perplexed and said, "The Windows box is a piece of cardboard."

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Microsoft complained about the playing of videotapes Tuesday, particularly further use of the tape of Gates' deposition, several parts of which had already been shown. At one point, the government played a brief clip in which David Boies, the government's lead trial lawyer, entered the deposition room as the camera focused on Gates, who was scowling down at the table.

"Good morning, Mr. Gates," Boies said. Gates did not look up or answer.

"What is the legal significance of whether Bill Gates says 'Good morning' to his inquisitors?" Microsoft asked in a news release, one of two documents the company handed out Tuesday to reporters offering 24 pages of counterarguments.

"The government's reliance on edited videotaped depositions underscores the weaknesses in the government's case by taking out of context assertions from Microsoft's competitors and amplifying" them, the company asserted.

But Boies told the judge that 80 percent of the final tape played Tuesday was shown at Microsoft's request.

That deposition was of Brian Croll, a Sun Microsystems executive asked by a Microsoft lawyer about Sun's inclusion of its Hot Java Web browser with Solaris, Sun's operating system for server computers.

Unlike Microsoft, Croll testified, Sun let users remove its browser from Solaris and install another.

Gates, asked in his deposition to name Microsoft's rivals for PC operating systems, listed IBM, Sun and five smaller companies.

But IBM executives testified earlier that the company could not compete with Microsoft and had stopped marketing its OS/2 operating system to consumers. Croll of Sun testified that the PC operating system business "is closed to us" because of Microsoft's monopoly.

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