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Intel details Microsoft pressure

A senior executive at the chip giant doesn't budge from claims that the software giant pressured his company to stay out of the software business.

WASHINGTON--Microsoft today tried to cast doubt on the testimony of a senior Intel executive, but by day's end had failed to get the government witness to budge from claims that the software giant pressured his company to stay out of the software business.

Under today's cross-examination, Intel vice president Steve McGeady reiterated testimony Microsoft's day in court he made yesterday that Microsoft in 1995 threatened to withhold support for forthcoming Intel chips if it developed software that Microsoft viewed as a threat. McGeady's testimony came as Microsoft attorney Steven Holley introduced evidence today that he said contradicted McGeady's claims.

McGeady's testimony came during his second day on the stand in the ongoing trial here. The Justice Department and 20 states, which filed suit against the software giant in May, claim that alleged pressure Microsoft put on Intel is part of a broad pattern that violates antitrust law.

Microsoft's strongest evidence was sworn testimony from McGeady's superior, who claimed that his company's decision to drop development of a product known as NSP, or native signal processing, had nothing to do with Microsoft's objection to it. In videotaped testimony, Ron Whittier, McGeady's superior who managed Intel's Oregon-based research arm, known as Intel Architecture Labs, said executives backed out "for our own best interest."

But McGeady, who managed to maintain his composure throughout the grilling, refused to back away from his claim that Intel dropped NSP after Microsoft threatened not to support Intel's MMX and Merced chips, which at the time were in development and were seen as critical to Intel's continued success.

When Holley asked if Whittier's comments were wrong, McGeady replied: "Microsoft enlightened our business interests by threatening to withhold support. We had some help in determining what our best interests were, and, after getting that help from Microsoft, we made an overall business decision."

Holley pointed out that NSP, created to make audio and video applications run more smoothly on computers, was designed for Windows 3.1. He cited deposition testimony and other evidence that showed Intel's concern about releasing the product just months before Microsoft was slated to release Windows 95.

McGeady responded that those concerns were "not a primary consideration," and were raised only after the decision was made. He added that, while Intel was prepared to support a Windows 3.1 version of NSP, the company had a separate version for Windows 95 in beta testing.

But much of the evidence presented today did little to blunt McGeady's testimony. In an email, for instance, Intel's then-chief executive Andy Grove told his counterpart at Microsoft, Bill Gates, that the two companies "have special responsibilities toward the PC industry." In another, Grove thanked Gates for providing him with a patch in Windows to fix a bug in two Intel chips. "It was an example of excellent--truly excellent--cooperation," Grove wrote.

Holley also brought up charges made in June, when the Federal Trade Commission filed an antitrust lawsuit against Intel. The suit alleges that Intel leveraged its valuable patent portfolio against other companies as a way of getting them to adhere to Intel strategies.

"Is it not a common Intel pattern to deny technology to companies that Intel seeks to punish?" Holley asked, using dealings with Digital Equipment and Intergraph as examples.

"Absolutely not," McGeady replied.

At other points during today's proceedings, McGeady expanded on his allegations, claiming that Microsoft sought to kill technologies Intel was developing with Netscape Communications and Sun Microsystems.

Microsoft allegedly worried See CNET Radio: 
Our Man in Washington that software developers might use code, known as application programming interfaces (APIs), based on HTML and Java, instead of those based on Windows. David Boies, the Justice Department's lead prosecutor, introduced an email in which Gates told his senior executives about a June 1996 meeting he had with Intel's Grove.

"I told Andy that it's inappropriate for their group to take anything resembling a Windows API and wrap it as a Java API," Gates wrote. Gates also referred to work Intel was doing with Netscape's browser. Boies then pointed to a set of notes McGeady took during a November 1995 meeting between the two companies. According to those notes, Microsoft said it planned to "kill HTML by extending it" and to "co-opt Java."

Boies also introduced another set of notes McGeady took at July 1995 meeting, a time when Microsoft and the Justice Department were in the process of getting court approval for a settlement to an earlier lawsuit. Despite the proposed consent decree and a separate investigation being carried out by the DOJ, Gates told Intel, "We haven't changed our business practices at all," according to McGeady's notes.

"This antitrust thing will blow over." Gates allegedly added.

Outside the courthouse during a lunch recess, Microsoft spokesman Mark Murray said Boies's exhibit was another example of the government's "trial-by-excepts" approach to the case.

"This is merely an effort to engage in further personal attacks against Bill Gates," Murray said, adding that Gates was vindicated when the Justice Department dropped its inquiry into the MSN icon.