MS/DOJ: On tape, Gates queried on IBM

By Patrick Thibodeau
IDG News Service, 12/16/98

Washington, D.C. - The Microsoft antitrust trial is closing out the year with a Department of Justice-sponsored deposition film festival-leading off with its marquee star, Bill Gates.

The government yesterday turned to the videotape, once again, to attack the credibility of Microsoft's chairman and CEO, and the business practices of his company.

The excerpts were used, in part, to back up the government's contention that Microsoft was willing to use its power over PC equipment manufacturers to attack competitors, in this case IBM.

The government also showed excerpts from the videotaped depositions of Steve Wadsworth, vice president of Walt Disney subsidiary, the Buena Vista Internet Group, and Ron Rasmussen, a vice president of The Santa Cruz Operation, a firm that develops Unix-based desktop and server operating systems software.

Justice Department attorneys were expected to spend the next several days showing videotaped excerpts from various witnesses who were deposed prior to the trial, including John Kies, a vice president of Packard-Bell NEC, and David Limp, of Network Computer, Inc.

Another videotape segment of Gates is expected to be shown, but Justice Department attorneys are not sure if this will happen today or tomorrow. The trial is expected to break Thursday for the holidays and is not due to resume until Jan. 4.

In the taped excerpts already presented, David Boies, the lead government attorney, asked Gates about a series of memoranda written by him and other top company officials, about IBM's growing relationship with Lotus.

"Why does IBM help Lotus so much?" wrote Gates, in a March 1994, memorandum, in a message to some of his top executives, including Joachim Kempin, Microsoft's senior vice president for OEM sales. "Is there anything we can do about this?" he wrote. Kempin wrote back that Microsoft needs a "WW (world wide) hit team to attack IBM as a large account, whereby the OEM relationship should be used to apply some pressure."

Boies repeatedly asked Gates whether he could recall Kempin or anyone else saying "that the OEM relationship with IBM should be used to apply some pressure" to stop IBM from promoting the sale of Notes. Gates said, "No."

"Do you understand that Mr. Kempin is here proposing to you that Microsoft apply OEM pressure to IBM?" asked Boies.

"It doesn't say OEM pressure," Gates said.

Showing frustration over Gates' evasive answers, Boies repeated the question again until finally Gates said he didn't think Kempin was proposing anything. "It is one of the things he mentions, but it's not a proposal," Gates said.

Outside of court, Boies said the memorandums and his exchange with Gates illustrated a key point in the case concerning Microsoft's power, and whether the company "has the ability to use its power to influence OEM decisions."

But Microsoft spokesman Mark Murray said that the government has "not provided any evidence whatsoever that Microsoft in any way pressured IBM in regard to Lotus." Moreover, IBM ultimately purchased Lotus, he said.

The Disney witness, Wadsworth, described his company's negotiations with Microsoft for an icon on its Active Desktop. The agreement included an almost blanket prohibition keeping Disney from using Netscape in anyway to promote its product.

"We are being roughed up by the 1,000-pound gorilla of the industry," he said.

The government is nearing the end of its case, and the introduction of the depositions is intended to build its record. However, some of the material being introduced by the government seems to have more value as entertainment then as testimony.

In one lengthy, tooth-pulling exchange between Boies and Gates, the two embarked on a dialogue that did more to produce chuckles from the audience than shed light on the government's case.

It began when Gates was asked about a notation in a memorandum he wrote in August 1997, to a number of top company executives, regarding IBM and Netscape.

The memo included the note in a message header that said: "Importance. High." Asked if he typed that, Gates said "no."

"Who typed in "High?" Boies asked.

"A computer," Gates responded.

"Why did the computer type in "High?"

"It's an attribute of the e-mail."

"And who set the attribute of the e-mail?"

"Usually the sender sends that attribute."

"Who is the sender here, Mr. Gates?"

"In this case it appears I'm the sender."

"Yes, and so you're the one who set the high designation of importance, right, sir?"

"It appears that I did that. I don't remember doing that specifically."

"Right, now, did you send this message on or about August 15, 1997?"

"I don't remember doing so."