Microsoft bundling strategy attacked

Gates's email came to light in the latest installment of videotaped testimony from the chief. Both the email and the new deposition portions came as the government unsealed testimony in which an IBM executive said Microsoft used numerous anticompetitive means to preserve its software dominance, including restricting software developers' ability to write applications for competing applications.

The Justice Department (DOJ) and 20 states, which filed suit against Microsoft in May, claim that Microsoft has engaged in a broad pattern of conduct that violates antitrust laws.

Today's videotaped appearance by Gates--the fifth time government prosecutors have shown parts of the deposition of the world's richest man--focused on Microsoft's attempts to get IBM to back away from its support of Java, the Sun Microsystems programming language designed to run across numerous computer platforms. In an October 1997 email, Gates recounted a meeting with an associate who was considering taking a job at IBM but was "worried" about IBM's relationship with the software giant.

"I told him the Java religion coming out of the software group is a big problem," Gates wrote in his email message, which was sent to some of his top executives. He added that he wouldn't have such a problem with IBM "if they weren't such rabid Java backers."

He went on to complain about support IBM was giving Netscape Communications and Sun. "To make a relationship with the PC guys [at IBM] work, some of this rhetoric would have to be toned down." In what is becoming a pattern in the deposition transcripts, Gates and Justice lead prosecutor David Boies sparred over the meaning of the email, with Gates claiming he in fact did not seek to convince IBM to drop its support of Java, and Boies seeking to pin Gates using his own email.

Removing the clutter
Before the IBM executive, John Soyring, took the stand, Microsoft attorney Richard Pepperman continued his cross-examination of government expert Glenn Weadock, who has challenged the software giant's assertions that its Internet Explorer browser and Windows operating system are a single, integrated product.

In cross-examination, Microsoft launched a broad assault on Weadock's 49 pages of written testimony, challenging everything from the computer consultant's expertise in operating system software to his assertion that consumers prefer the flexibility of using a nonintegrated version of Windows. Yesterday, Pepperman pointed out that Microsoft has a long history of improving its flagship operating system products by folding new features into them. Adding Internet browsing to Windows was no different, the lawyer suggested.

But in redirect examination this morning, Justice Department attorney Steve Holtzman sought to reinforce Weadock's testimony by introducing evidence from a number of companies that objected to the requirement that they take Internet Explorer along with Windows.

Earlier this year, for example, Gateway told Microsoft it objected to bundling requirements imposed in its license for Windows 98, according to a document from the computer seller dated May 7, 1998.

"We want IE to have uninstall (for as much of the code as can be removed without disabling the system)," an executive's notes of the meeting state.

"Need to be able to remove icons if the customer does not choose those options," the notes read elsewhere. "We want to remove as much clutter from the screen as possible."

Gateway's sentiments were shared by aircraft maker Boeing and Packard Bell, according to other evidence the government introduced.

The exhibits helped strengthen Weadock's testimony that the bundling arrangement Microsoft requires on all computer sellers licensing Windows provides "few real-world benefits and several significant real-world costs and risks."

OS/2 "not well-received"
In preparation for their next witness, government prosecutors released new testimony from IBM director of network computing services John Soyring that claimed Microsoft uses a number of anticompetitive methods to hold on to its dominance in the operating system market.

Specifically, Soyring testified, Microsoft makes it costly for independent software developers (ISVs) to translate or "port" their Windows applications to other platforms. Agreements for the tools ISVs need to write programs for Windows prohibit the tools from being used to port the application to a non-Microsoft platform, Soyring testified.

In addition, so-called redistributable code that Microsoft makes available for ISVs may not appear in programs running on non-Microsoft platforms, either. Both restrictions require ISVs writing for non-Microsoft platforms to start from scratch, significantly increasing costs.

Soyring, who oversaw the development of IBM's OS/2 operating system, said the product was "caught in a vicious cycle. Because it is so hard to entice ISVs to write for the platform, it is hard to create demand among users for the operating system. And without demand from consumers, computer sellers are not interested in carrying OS/2 on their machines."

In a statement, Microsoft provided a detailed response to Soyring's testimony. "IBM made decisions with its OS/2 operating system that were not well-received by consumers and did not make it easy for developers to make great applications for their platform," the statement said. It went on to take issue with Soyring's contention that Microsoft makes it hard for developers to write for alternative platforms.

"The reality is that Microsoft tools are designed to assist developers in optimizing the great functionality of Windows, not any other platform," Microsoft said, adding that licenses for OS/2 development tools contain the same restrictions.

Soyring's testimony spans a series of other topics, including Microsoft's control of the first-boot screen and its integration of Web browsing into the operating system. Although IBM independently developed both a browser and an operating system, he testified, "IBM has not found it necessary technically to integrate the browser with the operating system."

Responding to Soyring's testimony concerning the so-called first boot, Microsoft said computer manufacturers remain free to use 85 percent of the desktop "in any way they see fit."

Microsoft's cross-examination of Soyring today concerned mostly arcane technical details such as the programming interfaces that software developers use to create applications. Microsoft attorney Steven Holley also attempted to point out technical flaws in OS/2, such as the fact that it needed a minimum of eight megabytes of random access memory in order to run at a time when Windows 3.0 needed only four. At the time, memory chips were much more costly than they are today.