MS/DoJ MS denies Apple, Netscape bullying

A top-ranking Microsoft executive has denied that he threatened to cut off Netscape Communication's "air supply" or that Microsoft used its Office suite of software applications "as a club" to force Apple Computer to promote the Microsoft Internet Explorer (IE) browser.

Paul Maritz, Microsoft's vice president of the platforms and applications group, is the highest-ranking company executive scheduled to testify at the antitrust trial and answer allegations about the software giant's business practices.

At the trial, which is entering its 13th week in federal court, South Africa-born Maritz appeared confident and steadfast in denying an allegation that he made a threatening statement about rival Netscape during a meeting with Intel officials in 1995. An Intel vice president, Steven McGeady, already has told the court that Maritz made the remark although the comment wasn't reflected in notes McGeady took of the meeting.

Maritz was questioned by David Boies, an attorney for the US Department of Justice, about why he testified during an October 2, 1998 deposition in the case that "I have no recollection of saying that". At the time, Maritz added, "It's possible. But I just don't recall."

Maritz maintained there was no inconsistency between his deposition and his trial testimony. He said that prior to preparing a 160-page written direct testimony delivered to the court last week, he had reviewed the accounts of other Intel officials at the meeting and his own "clear recollection" of that meeting. In the statement, Maritz said, "I never said in the presence of Intel personnel or otherwise that Microsoft would 'cut off Netscape's air supply' or words to that effect."

But while many executives of Microsoft and rival companies have been quoted during the trial as making threats and boasts about what they would do to rivals, Boies' focus on Microsoft's interest in a 1997 agreement with Apple has some of the heaviest legal import.

Under a series of accords announced in August 1997, Apple agreed to make Microsoft's Internet Explorer its default browser on Macintosh computers; Microsoft agreed to continue producing its Office suite for the Macintosh platform and bought $US150 million in Apple stock; and the companies cross-licensed each other's patents.

Maritz said that Microsoft's main concern was getting Apple to drop a patent dispute it had with Microsoft that could have cost the software giant $US1.2 billion. He labelled the dispute as "patent terrorism" coming from a company that was struggling financially at the time. Maritz said he viewed the action as Apple "essentially trying to put us out of business".

Boies, however, tried to show that the browser issue was in fact a major one for Microsoft from the beginning and he presented several pieces of Microsoft correspondence to prove that point. A June 23, 1996 e-mail from Bill Gates, Microsoft chairman and chief executive officer to Maritz read in part, "I have two key goals in the Apple relationship -- 1, maintain our application share of the platform and -- 2, see if we could get them to embrace Internet Explorer in some way."

Maritz pointed out, however, that his job is to oversee application issues, not legal matters. So, Maritz said, it was only natural that Gates -- even though his main concern was the patent dispute -- focus on the application and browser issues in the e-mail, since the e-mail was addressed specifically to him.

Maritz testified that the link between Microsoft's commitment to continue producing MacOffice and Apple's decision to make Internet Explorer its default browser was only coincidental. "We were using the same period to define when Apple would be obliged to ship IE," he said.

But Boies produced an agreement between the two companies that more definitively requires Microsoft to continue to produce MacOffice as long as Apple continues to bundle IE with its computers.

Back in November, Avadis Tevanian, Apple's senior vice president for software engineering, testified that Microsoft threatened to discontinue producing MacOffice unless Apple replaced Netscape's Navigator browser with Internet Explorer as the default browser on Mac systems.

Outside the courthouse, Boies told reporters, "The documentation is pretty clear that from the beginning Microsoft was using MacOffice as a club."

However, William Neukom, Microsoft's vice president for legal affairs, later noted that interim Apple CEO Steve Jobs said when he announced the deal with Microsoft that its origin was in the resolution of the patent controversy.

Maritz is the second Microsoft witness to be called at trial. Microsoft's first witness, Richard Schmalensee, dean of the Sloan School of Management at the Massachusetts Institute of Technology (MIT), finished his testimony earlier today in a closed-door court session in which the two sides examined Windows pricing information.

The US Government examined Windows pricing data with its own economic expert earlier in the trial, and used the information to try to prove its allegation that Microsoft has monopoly control of operating system pricing. At the request of Microsoft and the PC manufacturers, details of the pricing data, and the trial sessions in which they are examined, have been closed to the public -- though the main issues relating to the data have been argued in open court.

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