New York Times
October 14, 1998
Microsoft Retort Reinterprets Gates E-Mail
Memos Portrayed as Part of Defense Against a Powerful Netscape
By STEVE LOHR
In its latest pretrial salvo, the Microsoft Corporation yesterday issued a 40-page document that attempts to refute the Government's antitrust case -- a case that Microsoft asserts is based on "a handful of snippets" quoted "misleadingly" from among the 3.3 million pages of e-mail and memos the company handed over to the Justice Department.
In the paper, titled "Setting the Record Straight," Microsoft replies partly with some snippets of its own in the form of previously unreleased e-mail concerning the company's dealings with Intuit Inc. and America Online Inc. In both cases, Microsoft portrays itself as an upstart underdog in the market for software used to browse the Internet's World Wide Web rather than as a predator intent on defending and extending its monopoly, as the Government has painted it. The company notes that until recently, its rival Netscape Communications Corporation was the dominant maker of browser software for navigating the World Wide Web.
A pretrial statement launches a new salvo in an antitrust battle.
In relation to Intuit, the leader in personal-finance software, the Government suit quotes an internal Microsoft e-mail message written in July 1996 by William H. Gates, the company's chairman. It describes a meeting between Gates and Scott Cook, the chief executive of Intuit, which had recently started shipping the Netscape browser with its Quicken financial software. In the Government suit, the quote from the Gates e-mail reads, "I was quite frank with him that if he had a favor we could do for him that would cost us something like $1 million to do that in return for switching browsers in the next few months, I would be open to doing that."
The Microsoft document characterizes this e-mail extract as an effort by the Government to "imply falsely that Microsoft attempted to 'bribe' Intuit." Most of the Gates e-mail, the company says, concerned Gates's efforts to persuade Cook that Microsoft's Internet Explorer browser was technologically superior to Netscape's Navigator browser.
"When read in its entirety, the e-mail makes clear that Cook -- not Gates -- was doing the hard bargaining," the Microsoft rebuttal contends. "This is mainly because of the context in which the Microsoft-Intuit discussions took place," at a time when Netscape was by far the leader in the browser market.
Microsoft, the document adds, was "seeking ways to increase the distribution and promotion of its Internet Explorer technologies, in order to increase competition in the marketplace."
The notion that Gates, the nation's wealthiest person and the head of the company that dominates the personal computer software industry, would be the supplicant in any business meeting leaves Microsoft's critics unconvinced.
"You would expect Microsoft to take positions that at least pass the laugh test," said Kevin Arquit, a partner at Rogers and Wells, who is a consultant to Sun Microsystems Inc. a Microsoft rival. "This paper suggests that Microsoft is worried about the evidence that is going to come out in the trial."
The trial is scheduled to begin on Oct. 19 in United States Federal District Court in Washington. William Harris, the president of Intuit, has been named as a witness for the Justice Department and 20 states suing Microsoft.