New York Times

October 31, 1998

An Apple Executive Testifies
Of Microsoft Bullying Tactics

By JOEL BRINKLEY

WASHINGTON -- Shortly after Avadis Tevanian Jr. joined Apple Computer Inc. as a senior executive last year, he recalls, a software developer warned him that if Apple did not stop selling its highly successful Quicktime multimedia software product, "Microsoft would take any necessary action to drive Apple out of businesss."

Eighteen months later, "I appreciate the prophetic import of his words," Dr. Tevanian stated in written testimony as a Government witness in the antitrust trial against the Microsoft Corporation.

Dr. Tevanian, a close lieutenant of Apple's co-founder and acting chief executive, Steve Jobs, was vice president of engineering at Jobs's Next software until Apple acquired Next in 1997. Now an Apple senior vice president, he is scheduled to take the stand in United States District Court on Monday morning to face cross-examination by Microsoft lawyers, who will try to impeach his direct written testimony.

In the direct testimony, made public this evening, Dr. Tevanian accuses Microsoft of threatening and bullying Apple to drop support for the Netscape Communications Corporation's browser for navigating the World Wide Web and instead to favor Microsoft's Internet Explorer browser. If Apple refused, he said, Microsoft executives, in several discussions with Apple, threatened to stop developing and supporting crucial Microsoft business software for Apple's Macintosh operating system.

Dr. Tevanian testified that Microsoft had also repeatedly pressured Apple to drop out of the multimedia software market, in which Apple's Quicktime program for playing audio, video and animated graphics files is a de facto industry standard. When Apple refused, he said, Microsoft rigged the Windows operating system so that, in many circumstances, QuickTime would not work on Windows computers.

Apple's Macintosh line of personal computers and its operating system, Mac OS, stand as the only real competition to Microsoft, though Apple now has less than 5 percent of the market. Almost every other personal computer in the world runs Microsoft's Windows operating system.

Responding to Dr. Tevanian's testimony, Microsoft released a statement today asserting: "Microsoft and Apple continue to be great partners after more than 17 years of both competing and cooperating in the software industry.

Microsoft today reiterates its strong support for the Macintosh and our Macintosh customers."

In many ways, Dr. Tevanian's testimony echoes that of the man who preceded him on the witness stand, David M. Colburn, a senior vice president at America Online. In his testimony, Colburn described how Microsoft had used its Windows monopoly to thwart a planned deal in which America Online was to distribute Netscape's Navigator as its default browser, that is, the browser distributed with America Online's software.

By offering America Online an icon on the Windows desktop, the most valuable real estate in cyberspace, Microsoft was able to persuade the online service to abandon Netscape and to make Internet Explorer its default browser.

Similarly, Dr. Tevanian said that while Apple offered both the Microsoft and Netscape browsers, it had originally chosen Netscape as its default browser.

But Dr. Tevanian testified that when William H. Gates, Microsoft's chairman, learned of that choice, "he became very upset," and that over the following months Microsoft used a variety of threats and entreaties to persuade Apple to make Internet Explorer the default browser.

Finally, in mid-May 1997, Dr. Tevanian testified, Microsoft told Apple that it would pull the plug on application programs for the Macintosh operating system if Apple refused to adopt Microsoft's browser and declined to settle several other disputes "on terms acceptable to Microsoft."

Among the programs Microsoft threatened to quit supporting were its Macintosh versions of Word and Excel, industry-dominating word processing and spread sheet programs. Both are also part of Microsoft Office, which has more than 90 percent of the market for business applications suites.

As a result of that domination, Dr. Tevanian said, Apple "desperately needed to maintain support for Microsoft Office for Macintosh."

Government witness recalls `extremely disturbing' remarks.

At the time of the threat, which Dr. Tevanian called "extremely disturbing," Microsoft, he said, "had made a substantial investment getting Office 98 for Macintosh ready for market,"

yet was "willing to risk an outright loss of that entire investment to force Apple to terms."

Apple gave in and made Internet Explorer the default browser and agreed not to promote Netscape's browser. As Dr. Tevanian describes it, Microsoft sweetened the deal by making a $150 million investment in Apple and agreeing to settle some patent disputes. By the time the deal was announced in August 1997, Apple had lost $1.7 billion over the previous seven quarters.

In its statement today, Microsoft said: "The allegation that Microsoft threatened to withhold Macintosh Office 98 in order to force Apple to make Internet Explorer its default browser is another example of how the Government deliberately twists facts to support its distorted allegations."

Dr. Tevanian testified that Microsoft also used threats to persuade Apple not to market Quicktime for Windows computers. At one point, he testified, Microsoft offered to let Apple continue writing software tools for creating multimedia files -- a tiny market consisting mostly of professional developers -- if Apple would cede the far larger market for software that plays such files on all computers.

The business tactics he describes echo the central testimony last week of James Barksdale, the chairman of Netscape, who said that Microsoft offered to let Netscape sell browsers to the far smaller pool of non-Windows computers if the company would cede the Windows browser market to Microsoft.

Dr. Tevanian quotes one senior Microsoft executive at a meeting as saying: "We're going to compete fiercely on multimedia playback, and we won't let anybody play back in Windows."

Soon after that, he said, Apple's multimedia program stopped working well on Windows computers.

Microsoft's statement says: "While Dr. Tevanian alleges that Microsoft has somehow intentionally disabled his company's product, the facts show that Apple's engineers did not properly author the Quicktime set-up program for Windows.

"Despite Dr. Tevanian's accusations, the only known interoperability issues affecting Quicktime were caused by Apple, not Microsoft."

The statement echoes Microsoft's response when the chief executive of Real Networks, Rob Glaser, told the Senate Judiciary Committee last summer that Microsoft had engineered the Windows Media Player to "break" his company's industry-leading multimedia software for the World Wide Web.

Starting Monday morning, John Warden, Microsoft's lead lawyer in the antitrust suit, will begin a cross-examination of Dr. Tevanian that is likely to last for several days.