MS/DoJ: Maritz acknowledges pressure

A top Microsoft official has acknowledged in court that the software company pressed chip giant Intel to pull an Internet multimedia software product off the market in 1995 and to later back away from embracing Java cross-platform technology.

But the official, Microsoft vice president of the platforms and applications, Paul Maritz, denied that the pressure on Intel was designed specifically to quash potential competition from the chip company.

US Department of Justice lawyers allege that Microsoft's dealings with a variety of competitors -- the most dramatic testimony to date has been about Microsoft's dealings over browser technologies with Netscape Communications -- show a pattern of behaviour in which Microsoft attempts to convince rivals to back out of competition in exchange for promised favours.

Meanwhile, attorneys for Microsoft and the government have agreed that the software company's next witness, James Allchin, senior vice president in charge of personal and business systems, will not be called to testify before Monday.

It is expected that an hour-long video Allchin supervised will be shown sometime tomorrow. The video details problems company engineers have found with a program to hide the Internet Explorer browser in the Windows 98 operating system designed by government witness Edward Felten.

Felten, a computer scientist from Princeton University, wrote the program for the government to show that the browser can be hidden - in effect deleted for the average consumer - despite the company's claims to the contrary. Microsoft maintains that IE is integrated into Win98 and is impossible to remove without irreparably damaging the operating system because the two functions share many sections of code.

Microsoft spokesman Mark Murray said the video will demonstrate how the Felten program only hides IE, how a user can still use the Web even though the program was supposed to disable that function, and how the program otherwise degrades the operating system.

Today government attorney David Boies concluded his cross-examination of Maritz, the highest ranking Microsoft official scheduled to testify at trial. Maritz was then questioned by Microsoft attorney John Warden about possible competition Microsoft faces on the operating system front.

Maritz told the court that the Open Source movement "is one of the key changes that has happened over the last few years" that threatens to change the status quo. US District Court Judge Thomas Penfield Jackson then quizzed Maritz about the movement and the support for the movement by such companies as Intel and IBM, both of which have sent witnesses to testify against Microsoft at trial.

"There are many people in the world who derive pleasure out of writing software," Maritz said. "It's almost like the village blacksmiths around the world can assemble carts together and compete with General Motors."

Warden will continue questioning Maritz Friday morning. First thing on the schedule though, is a hearing on a government motion filed today seeking access to an internal Microsoft e-mail and spreadsheet that allegedly indicate the IE browser can be easily separated from Windows 98, contrary to what Microsoft has claimed.

Earlier today Maritz testified that Microsoft opposed the Intel software, called Native Signal Processing (NSP), because it was developed to work with an out-dated version of Microsoft's Windows operating system software, Windows 3.1. At the time Intel was seeking to market NSP, Microsoft was poised to release its next-generation operating system, Windows 95.

"The issue here is that Intel would have made it difficult for the industry to migrate from Windows 3.1 to Windows 95 for a variety of reasons," Maritz testified, during his third day on the witness stand in Microsoft's antitrust trial, now in its 13th week.

Maritz's testimony was undercut by a series of internal Microsoft memos and e-mail written about the negotiations, in which top executives referred to support Microsoft later gave to Intel products, and which government attorney Boies suggested was in exchange for Microsoft's support of the then-new Intel microprocessor, the MMX.

In an October 18, 1995 e-mail, Microsoft CEO and chairman Bill Gates wrote to Maritz and others, "Intel feels we have all the (original equipment manufacturers) on hold with our NSP chill. For example they feel (Hewlett Packard) is unwilling to do anything relative to MMX exploitation or the new audio software Intel is doing using Windows 95 unless we say it's ok. This is good news because it means OEMs are listening to us."

An Intel witness, Steve McGeady, testified earlier in the trial that Microsoft officials threatened to withdraw support for Intel's MMX chip if Intel continued to give NSP software away to computer manufacturers for free.

Another potential motive for Microsoft's pressure on Intel came in an internal Microsoft memo from May 15, 1995. "Microsoft doesn't want Intel to be in the system software business for the very same reason -- we don't want the operating system to be a commodity."

When asked about the memo, Maritz conceded that Intel was a potential competitor in the software field. "If we didn't do a good job meeting their needs they would go out and develop software that would either compete with us or commoditise our software," Maritz said.

In an interruption of the cross-examination today, the Judge Jackson pressed Maritz on what he meant using the term "commodity" to describe software.

"What do you mean by commoditise?" Jackson asked.

"What we meant here is the operating system would have had the same value," Maritz responded.

"Because there would be reasonable alternatives?" Jackson asked.

"Correct," Maritz responded.

That wasn't the only instance in which Microsoft sought to convince its partner Intel -- the two companies are often known as the "Wintel" duopoly because each holds a dominant position in its field -- to back away from technologies Microsoft saw as competition to its operating system platform. In a 1996 e-mail message displayed in court today, Gates relayed to subordinates a conversation he had with Intel Chairman Andy Grove. "I said it was important to us that they NOT ever publicly say they are standardising on Netscape browsers," he wrote.

In addition, a February 20, 1997, e-mail from Gates to subordinates regarding support sought by an Intel rival, Advanced Micro Devices, for its 3DX technology, indicates company officials pondered using that to coerce Intel into dropping work on Sun Microsystems' Java technology. "I would gladly give up supporting this if they would back off from their work on Java which is terrible for Intel," Gates wrote.

At another point, Maritz was asked about his dealings with Real Networks, an Internet media-streaming company that is now a Microsoft competitor. Boies asked whether Microsoft sought to force Real Networks out of the streaming business, offering preferential treatment for the company if it agreed to build applications that ran on top of Microsoft streaming technologies. After face-to-face meetings, Maritz said, "They told us if we did a good job making our technology ubiquitous, they would build on top."

Outside the courthouse, Boies said Microsoft had engaged in a pattern of actions with potential rivals that Maritz' testimony corroborated. "What the Intel and Real Networks examples show -- and what also happened with Netscape -- is that when a platform competitor arises, Microsoft has meetings in which they say, 'If you get out of this platform we'll do helpful things for you later on,' " Boies said. "And that is something the antitrust laws forbid."

Microsoft spokesman Murray disagreed. "The facts are very clear. Microsoft and Intel are both large, successful companies and neither one can push the other around," he said.

William Neukom, Microsoft's vice president for legal affairs, added that it's important to put the company's talks with Intel in perspective. In the third quarter of 1995, Microsoft was trying to complete its effort to bring a 32-bit operating system to market, in Windows 95, he said. But the Internet software group at Intel, led by McGeady, had developed a product targeted to Windows 3.1, a 16-bit operating system.

"He had targeted it to an obsolete technology, a 16-bit program, while the world was moving to 32-bit computing," Neukom added.

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