A mid-level Microsoft Corp. employee made clear to Apple Computer Inc. developers that the company wanted Apple to "knife the baby" - Apple's multimedia playback program QuickTime - in exchange for the Web authoring side of the market, according to testimony at Microsoft's antitrust trial today.
The testimony came from Avie Tevanian, Apple's senior vice president for software development, who attended an August 1997 meeting with other Apple officials and counterparts from Microsoft. He said at that and other meetings Microsoft proposed dividing the multimedia market, although he conceded under cross-examination that Microsoft only had a small percent - some estimate it to be 5 per cent - of the multimedia streaming market.
During his second day on the witness stand, Tevanian said Apple's Peter Hoddie wanted to make sure he understood what Microsoft was proposing during the meeting, as QuickTime was a popular product even though Apple hadn't figured out a workable business model for making money off it at the time. "Are you really asking us to kill playback?" he said. "Do you want us to knife the baby?"
Microsoft's Christopher Phillips, business development manager for Microsoft multimedia APIs and DirectX, replied using Hoddie's words: "Yes, we're talking about knifing the baby."
Microsoft attorney Theodore Edelman confronted Tevanian with an Apple document and accused Apple of trying to use Microsoft's ongoing probe by the US Justice Department as a threat against the software giant.
The slide series from an Aug. 21, 1996 meeting at Apple was entitled "What to do about Microsoft." The presentation included a category called, "Why Microsoft needs us." And under that category were listed the initials DOJ. Edelman asked Tevanian whether Apple intended to use the threat of running to the Department of Justice (DOJ) to obtain concessions from Microsoft. In testimony at the trial, it was revealed that Apple was pressing a $US1.2 billion patent infringement claim against Microsoft and was considering pressuring Microsoft to adopt QuickTime as a multimedia standard.
But Tevanian replied, "No." He did add a caveat. "If someone is going to start bullying us then we need to consider going to the DOJ," he said.
Outside the courthouse, Justice Department attorney David Boies said Tevanian was providing important technological testimony in the case and he defended Apple's right to contact the government with allegations of wrongdoing on the part of Microsoft. "If somebody is robbing your house, you're going to call the cops," he said.
Microsoft's spokesman Mark Murray said that a series of e-mails submitted into evidence, including one from Apple founder Steve Jobs, indicated that Apple wanted Microsoft to adopt its multimedia playback technology. "That's exactly the same allegations the government is bringing against Microsoft," Murray said. "There is nothing wrong with that. There is nothing anti-competitive about that."
In the cross examination this afternoon, Microsoft's Edelman attempted to demonstrate how Apple conducts some of the same practices the government is accusing Microsoft of doing, continuing a tactic that Microsoft has used throughout the trial.
Edelman presented Tevanian with a press release of Mac OS 8.5, touting the software as the world's most Internet savvy operating system. Edelman pointed out that among the new features of the operating system was Sherlock, designed to let users search their disks, the Internet and networks without using a browser.
"Isn't it true that Apple considers this feature to be built into the operating system," Edelman asked.
"No I consider it to be bundled with the operating system," Tevanian replied, then turned to the judge and added, "I really should explain this."
Tevanian went on to say that during his direct testimony, taken before the trial began, he used the terms "built in" and "bundled" interchangeably because "they sound alike".
But he said that he considers "built in" to mean software that the operating system depends on to work, while something that's "bundled" could be removed easily.
The government is accusing Microsoft of bundling Internet Explorer into the Windows operating system and forcing manufacturers to take both products, and is saying that this is, under antitrust law, an illegal "tying" of the browser to a monopoly product.
On the stand today, Tevanian defended Apple's bundling of software into the Mac OS by saying that it's one thing for Apple to do it, but another thing for a company that has a monopoly position in operating systems to do it.
Judge Thomas Penfield Jackson, will rule on whether Windows is a monopoly product.