Home

June 14, 1999 - Monday -

8:07 AM PDT - Microsoft let stand most of the performance testimony for the OS without IE offered by Professor Felten last week

I guess Microsoft agrees that the OS without IE offers superior performance and could not refute the claim. It is certainly reasonable that a smaller OS would offer superior performance. And, taking IE out of the OS (or at least not starting it up each time the system boots) would decrease the demands upon the system resources. 98Lite reduced the allocated memory by about 20 megabytes but 98Lite does in fact remove IE. Even the parlor trick that Microsoft tried on Professor Felten would certainly fail with 98Lite.

It appears that Microsoft does not want to pursue this topic any further. Toss some mud on it and then leave.

June 13, 1999 - Sunday -- Friday Transcipts, June 11 are yet to be posted (7:06 AM PDT) for whatever reason

7:24 AM PDT - An additional comment on the in-trial demonstration offered by Microsoft on Thursday

Mr. Holley: Your honor, in light of this testimony from Professor Felten, I would ask the court to direct him to appear for a demonstration with any machine that he cares to bring with any software that he cares to put on it, and a copy of his IE remove program, and we will videotape exactly what we did today, and there will be no difference.

Mr. Holtzman: Objection, your honor. This is inappropriate. If Mr. Holley had wished to do something like this, he had the opportunity. Dr. Felten was deposed, and Mr. Holley, for his own reasons, chose not to do that.

The court: Motion is denied.

The court is correct in denying this motion from Microsoft.

It is true that Microsoft can put on any demonstration they wish using any witness they wish and have that witness subject to cross examination. But, for whatever reason, Microsoft has chosen not to do so.

What you have to ask is "what was Microsoft trying to prove during their cross examination of Professor Felten?". Clearly Felten's process of removing IE could easily have bugs in it. That would be expected. What is unclear is just what occurred during the demo. Without a witness who can explain precisely what the demo is supposed to show and be subject to cross examination on that demo, the demo is worthless. Mr. Holley, as attorney for Microsoft is not a witness. So he is incapable of testifying. And, clearly Professor Felten is unaware of what the demo is supposed to show or do. The result is that you have a completely worthless demonstration put on by Microsoft. It even has less probative value than the bogus videos presented earlier in this trial by Microsoft. At least with the videos it was explained what they were supposed to show.

If Microsoft wanted to present evidence to show that Professor Felten's removal program did not prevent the Ncompass browser from working or other other browser using IE components, that would be fine. But, this demo does not do it.

If Microsoft wants to argue that somehow this cross examination proves that IE can not be removed they are incorrect. It does not even attempt to prove that suggestion. There is not even a witness sworn in who can explain what it is supposed to show.

Maybe Microsoft just did not want to put another employee of theirs on the stand attempting to present another bogus demonstration. I am just not sure. If it was only to discredit Professor Felten that is fine but Felten did not testify that IE was completely removed as Microsoft tried to get him to testify. He only testified that IE was disabled and disabling IE did not interfere with the proper operation of the OS. Of course it would not since it is only an application. Maybe Microsoft was afraid that Felten would run the 98Lite program on Windows98? 98Lite does remove IE. Neither Ncompuss nor any other IE based browser would work after 98Lite is used. Maybe Microsoft only wanted to muddy up the issue and hope that the muddy water was better than the truth about IE.

June 12, 1999 - Saturday (Review of Thursday, June 10 Transcripts)

6:26 PM PDT - 98Lite (Windows 98 with IE removed by 98Lite) does appear to work just fine

q. If you could go to page two this time of that article. Near the top of the page, it's really the second paragraph under "this isn't just a parlor trick," and then it reads, "for several weeks, smart reseller has evaluated 98 lite and found it, for all practical purposes, to be a fully functional windows 98 operating system. In particular, such ordinary windows applications as Microsoft office, 95 and 97, netscape 4.0 and 4.5, pegasus mail 2.5 and lotus notes 4.0, all worked perfectly. When it comes to productivity, windows 98 without internet explorer 4.0 works like a champ." now, do you agree with that based on your own work?

a. Based on my own work, i have no reason to contradict that.

I also tested 98Lite. The OS does remain. I had no problem running any application. The only exception I noticed was that Windows Online help did not work because the HTML rendering code was apparently also removed or not accessible. 98Lite does install some files from Windows 95 such as the old Windows Explorer etc. But, the OS runs just as it should.

It is really too bad that 98Lite could not be brought in more directly in the testimony. As I mentioned, that would required yet another witness to be sworn in and witnesses are limited.

.

6:01 PM PDT - The transcript has a whole serious of rather worthless questions from the Microsoft attorney.

Mr. Holley: I think that's all the questions Ii have at this time, your honor.

I will try to summarize very briefly the effort Microsoft has made in trying to challenge the testimony from Professor Felten.

Basically, Microsoft tried to suggest that IE and the OS were a single product by attempting to run the Felten IE removal program on a system that was basically unknown to the Felten staff. The Ncompass browswer was also installed on the system in addition to IE. Well as you know, the Ncompass browser simply uses the IE browser components to do web browsing.

As you would expect when the Felten removal program was run in the live demo strange things happened. What happened was not disclosed. Thereafter the system was logged onto the internet and the Microsoft Update site was invoked. Again, what the update site did is not known. It appeared that Ncompass would still function as a browser as it should. The IE components were not removed by the Felten program.

However, the whole demonstration was worthless for a court of law. For one, no witness could tell anyone present what was occuring. Keep in mind that the attorneys for both sides are not witnesses. That simply means that they can not tell anyone anything about the demonstration. Clearly Professor Felten could not tell anyone what was going to occur. It was his program but the environment in which it was running was unknown to him. And, the judge was simply not in any position to add information.

So. As a result, you have Microsoft putting on a completely worthless in court demonstration. It has no value at all. The whole time was wasted trying to elicit comments from the witness suggesting somehow that IE must be part of the OS because it is still there or something like that. I have no idea what was supposed to result from that dialog.

Yes. IE is composed of many components. And, because of that an accurate removal requires a redesign of the products. The point Professor Felten was making was that IE could easily be removed. And, it can. Felten did it one way. 98Lite does it another. And, clearly Microsoft could do so as well. Nothing that Microsoft tried to present in their live demo even addressed those issues.

5:13 PM PDT - Again, the Microsoft lawyer pushes a non-relevant issue

q You have had the sourcecode for windows 98 since august of 1998; correct?

a. Yes. Parts of it, at least.

q. And during that time, you have made no effort to rearrange any of the six files listed in paragraph 100 of Mr. Allchin's written direct testimony to, in your words, identify the things that are solely related to web browsing, have you?

a. No, it just didn't seem--it just didn't seem like an important thing to consider, when considering whether the IE web browser can be removed from windows efficiently. it can. And that's true regardless of how i might try to rearrange code among these dll's. We know it's possible to rearrange functions between dll's because Microsoft has done it, but it's just not relevant to the question of whether the web-browser application is removable.

Apparently some lawyers at Microsoft actually thought they could manipulate antitrust law by blending the procedures in DLLs. Mixing up the code does not make one product out of two. This is particularly the case when Microsoft distributes IE 5 separately as an application even after the bring Mr. Allchin up on the stand and swear that the Os and IE are really one product. They clearly are not.

5:01 PM PDT - Microsoft is stuck on this bogus argument about deleting whole files being the only way to redesign an application

q. Well, luckily neither you or i have to reach that ultimate question, so just bear with me. now, if you look at the files in paragraph 100 of Mr. Allchin's written direct testimony, these are the shdocvw.dll, mshtml.dll, urlmon.dll, wininet.dll, shlwapi.dll, and comctl.dll, these files all differ from the components in government's exhibit 1700 in that if any one of the files in paragraph 100 of Mr. Allchin's written direct testimony is deleted from windows 98, the operating system will not boot; correct?

a. If you take out any of these files in its entirety, then windows 98 will not boot. But, these files are containers. They contain a variety of things. And it's not the case that the only choice technically is to either take a file away entirely or to leave it in place. Things can be removed from these files. These files can be rearranged into different form as Microsoft has done in going from IE 4 to IE 5. And other methods may be available as well. The question of whether simply doing those limited steps which you mentioned can remove ie or--is really not the same as asking whether IE can be removed.

Does Microsoft really think the only way to alter the design of a product is to use the file manager? This question is based upon that old question Microsoft keeps raising that IE and the OS must be one product because simple file deletes will not remove it. So what? Nobody designs products that way. And, as far as antitrust law is concerned it is not even an issue.

Professor Felten has testified that which procedures are contained in which DLLs or files is simply not material. But, somehow, Microsoft wants to fool the court into thinking that only whole file deletes address the issue of the system integration or whether IE and the OS are a single product. With manufactured hard goods that logic might make sense. But, with computer software that logic is a bit ridiculous and completely devoid of any relevant logic.

4:54 PM PDT - Professor Felten is correct in rewording the questions put to him by the Microsoft attorney

q. And I take it, then, that you rejected his fundamental agreement with each and every one of Mr. Allchin's points; is that right?

a. If he agreed with all of Mr. Allchin's points, then yes, I disagree with him about that. That is-I should not imply that I disagree with everything that Mr. Allchin said. What I mean is that I disagreed with all of the rationales he gave for why IE supposedly had to be included in windows.

When Microsoft forces the purchase of IE, ISVs who depend upon that technology may very well benefit. Actually they may benefit in many ways. But, that never justifies forcing the consumer to buy IE. To do so is to harm the consumer and subsidize the ISV. Benefits to ISV do not justify forced sales.

4:31 PM PDT - Does anyone at Microsoft know the difference between an operating system and the applications loaded on a particular system? It appears the lawyer from Microsoft does not.

q. You testified in response to questions from Mr. Holtzman, professor felten, that users, individual users, should decide whether they want support for particular networking protocols and data formats in the operating system. Did i understand that correctly? Your example was the pdf format from adobe.

a. Well, i think what i said is that users can get support for things like that separately from operating system products, and many users do. It's not necessary in order to support pdf in order for users to use pdf for any pdf viewer to be bundled with the operating system in such a way that the user or oem can't take it out.

q. My question to you is, sir, whether you said on direct, as i thought i heard you say, that users should be able to decide whether they want support for particular networking protocols or data formats in windows 98.

a. I have two things to say about that. Number one, again, if you would like me to comment on something that occurred earlier, i would like to see the transcript so i could see exactly what i said and in exactly which context. second--

(simultaneous conversation.)

q. --there isn't a transcript yet, but you could tell me the second point.

a. Okay. The second point is that Microsoft does give users many choices about which networking protocols, for example, are present in the system. For example, tcp/ip is optional. The user can remove it. They could add it later. The user has the choice of whether they want tcp/ip on their system or not, among other protocols.

Microsoft tries to confuse the difference between what is loaded on a particular system and what features the OS itself provides. The reason is simple, only Microsoft can provide technology from the OS. So if Microsoft can confuse the court and the public as to where technology comes from, only Microsoft can provide it as the monopoly provider. The OS does not do everything the user wants. The OS supports applications which in turn serve the user. PDF format support is not provided by the OS.

4:23 PM PDT - Cross examination of Professor Felten begins - here is that security issue again

q. Now, the court asked you a question, professor felten, about whether there were security issues involved in the choice of browser or whether to have a browser installed at all. do you recall that question?

a. Yes, and i said that there were.

q. And you said that there were. now, there obviously is no security issue from having the six files described by Mr. Allchin in paragraph 100 of his written direct testimony present in windows 98 if the computer is not connected to the internet in any way. Do you agree with that?

a. No, not necessarily. There are security threats that can arise, even on computers not connected to the internet.

Actually, I am surprise to hear any Microsoft person admit that not all computers are connected to the internet/intranet. Clearly all of those computers are being harmed directly by Microsoft and receive no benefits at all from IE. But, of course the Microsoft lawyers would not speak of those customers except in this one instance.

4:09 PM PDT - Consumers should want to hear Professor Feltens opinions

q. Okay. Now, as we've referred to, there has been testimony in this trial about whether the prototype removal program, itself, removes different code that Microsoft has included in the windows package. let me just ask you: in your judgment, what, if anything, is the difference to consumers between removing code on the one hand and removing a browser on the other?

Mr. Holley: your honor, i object to lack of foundation. I wasn't aware that professor Feltenis an expert in the perception of consumers.

the court: speaking as one consumer, i think we will let him express his opinion.

(Actually the question did not call for the witness to report on the perception of consumers at all. The question asked the witness for the difference to consumers. That is clearly within his expertise. Besides, the judge wanted to hear the answer.)

the witness: could i hear the question again, please?

by Mr. Holtzman: q. Certainly. in your judgment, what, if anything, is the difference to consumers--to you, for that matter--between removing code and removing the browser?

a. To me, removing code is not--is not such a big issue. from my standpoint, what i care about is whether i have a choice of which browser i'm going to use, and whether i have to pay the costs in performance and in memory of taking a browser that i don't necessarily want to have.

This is actually kind of a silly question. But, Microsoft has tried to make a big point about IE not being removed or removable. Microsoft has also made a big point about consumers being free to use Navigator if they want. But, this evidence points out they are not. All consumers pay a price for Microsoft forcing that product upon them. How much do they pay? We do not know. But, the cost is not only related to the purchase. The real costs are also related to the use of the OS itself when unwanted applications are bundled with it. Again, nothing here is news to Microsoft. They know this cold. They only lie about it to the consumer and to the court.

4:03 PM PDT - Professor Felten summarizes his testimony

q. Okay. So, to go back to where we started today, with your proof of concept, can you summarize for the court the potential effects of removing internet explorer from windows 98, using the prototype removal program as an example.

a. Sure. The prototype removal program is a proof of concept that demonstrates four things: First of all, Microsoft can deliver the internet explorer web browser separately from windows 98 and give the user a choice of which browser they want to use or to use no browser at all. Second, Microsoft can do that in such a way that it does not change any of the non-web-browsing functions of windows 98. Third, doing that would make windows 98 run faster. And fourth, doing that would save a significant amount of memory on the computers of users who don't want to use internet explorer.

Noting new here for Microsoft. They know it all. They just do not care about harming consumers if it means strengthening their monopoly. Presenting false evidence in court is no problem either.

3:53 PM PDT - All consumers are hurt by Microsoft forcing the use of IE

q. Okay. Now, let me show you in connection with this a portion of Mr. Maritz's testimony in January. Mr. Holtzman: if the witness could be handed a transcript from the afternoon session of january 27^th.

by Mr. Holtzman: q. If you could turn, please, to page four, we could start at line seven, (reading): "question: i just have a few more subjects to cover. First, and hopefully briefly, is it the case that netscape's browser runs slower and less efficiently on windows 98 than it did on windows 95? answer: i can't recall the specifics of it. i do believe that in certain circumstances, applications in general, not just netscape's browser, can run slower on windows 98 versus windows 95 in memory-constrained situations; in other words, running a machine with smaller amounts of memory." now, how, if at all, does Mr. Maritz's testimony relate to your testimony about memory and performance?

a. Well, what he's describing here is the situation that i described before. If you have a memory-constrained situation--that is where memory is a bit scarce--and the user starts to use applications, the performance of those applications will suffer when you're running on top of a larger operating system product, larger in terms of the amount of memory used. So, he's describing here a case where windows 98 performs worse than windows 95 because windows 98 uses so much more memory than windows 95.

q. Now, what's the impact of that on whether forcing users to take internet explorer with windows 98 is harmful or beneficial as to performance?

a. Well, what we saw is that for users who do want to use the internet explorer browser, they don't suffer in memory use if it is made optional. on the other hand, what we have here is a description of a case where users who don't want to use the IE web browser do suffer a slowdown as a result of the web browser being bundled in with windows.

Microsoft knows full well when the OS is bloated with unwanted applications all consumers are harmed and all competing products are disadvantaged as well. And, that applies to ALL APPLICATIONS not just browsers. All of the computers resources are limited. They cost real money even if the absolute cost is becoming less over time. Microsoft knowingly hogged limited resources in their effort to try to advantage their software (i.e. IE) and disadvantage competing software at the same time.
 

3:38 PM PDT - Professor Felten finds that Windows 98 uses less RAM after IE is disable or removed?

q. Okay. Now, i want to turn to the other performance-related issue that you mentioned: memory. first of all, as background, can you describe how the consumption of memory on a pc can make a difference in the performance of the operating system and applications that run on the operating system in the pc?

a. Sure. And let me start by being clear about what i mean by memory. I'm not referring to space on the disk. i'm referring to what's usually called ram. That is the sort of working storage that the programs use while they're running. And memory is a limited resource. A pc has only a certain amount of it, and buying more costs money. as more memory gets used up, the system--as more memory gets used up, the system starts having to do complicated things to keep all the programs running, and so use of more memory generally translates into reduced performance. so, in other words, conserving memory generally has the effect of improving performance, especially in cases where the user is using a number of applications at the same time.

q. Now, when you say "performance" in that answer, what do you mean?

a. So, what i meant by "performance" in that answer is speed. That is, saving memory translates into an improvement of speed, and speed indicates where the user is using a number of applications at the same time, or when the user is using an older pc that has less memory.

q. Okay. Now, can you describe for the court what testing, if any, you have done on the issue of the extent to which windows 98 consumes memory with and without internet explorer.

a. Sure. Once again, we ran a side by side test where we had two identical pc's, one of which had windows 98 with the IE web browser, and the other of which had windows 98 without the IE web browser. Of course, we removed the IE web browser in this case by running the prototype removal program. and what we did is we booted both of those systems. And without starting any application programs, other than the one required to actually do the measurement, we measured how much memory was allocated on the two systems in the two cases, one with IE and one without. And that let us see what was the effect on memory use of removing the IE web browser.

q. I want to be clear about one thing. On the unmodified windows 98 machine, was internet explorer running when you performed the tests?

a. No, the web browser was not running. And so, what we re seeing here is not the cost of using the IE web browser. We are just seeing the cost of having it on the system, even if the user doesn't want to use it.

q. Now, what, if any, conclusion did your testing reach about the impact of including internet explorer on the amount of memory consumed by windows 98?

a. What we found is that including internet explorer led to a significant increase in the amount of memory in use, even in the scenario where the user was not using the browser.

q. Can you give the court, perhaps, an order of magnitude of the difference we are talking about.

a. Sure. Let me give two numbers. In the scenario with internet explorer with the browser, the amount of memory allocated after boot was 35.6 megabytes. And in the other scenario, with the IE web browser removed, the amount of allocated memory was 29.8 megabytes. That's a difference of about six megabytes, or about 20 percent, in the memory use of windows.

98Lite reduced memory use by about 20 megabytes. But, as Professor Felten testifies he was not trying to maximize the memory reduction. 98Lite removes a lot more code from the disc and thus from being loaded on boot up as well.

q. Why, if at all, is this, or might this be a significant thing to pc users?

a. As i said before, memory is a scarce resource, and if a user had particularly an older computer and started using a large application or a couple of applications in this scenario, that extra six megabytes of memory might have a significant impact on the speed of operations. And eventually the user might find themselves unable to do the work they want in an effective way on that pc because the IE web browser was there.

q. Now, if you take the modified windows 98--in other words, windows 98 without internet explorer as removed by the prototype removal program, and you reinstall internet explorer 4 on that machine, how, if at all, does the amount of memory allocated on that machine compare to the unmodified windows 98?

a. Well, you see what you would expect to see, is that when you put the IE web browser back, the amount of memory in use is just what it was before it was taken away in the first place. That is, starting with the machine with--without a web browser and adding the IE web browser separately, you end up requiring the same amount of memory as if you had gotten the two in a single install.

q. Now, what, if any, conclusion do you reach from that about whether it's necessary to require users to take internet explorer in order to save memory or to get to where you would have been otherwise?

a. Well, in addition to the benefit i mentioned before of saving memory for users who don't want ie, the IE web browser, what this shows is users who do want it don't suffer any memory penalty if they get it separately instead of getting it as a single unit. In other words, Microsoft, by forcing users to take the IE web browser with windows 98, does not save any memory.

q. Okay. Now, i will go back to the same question i asked you on the speed issue. now, in developing the different versions of the prototype removal program, trying to save memory was not specifically something you were trying to accomplish; is that correct?

a. That's right. We made no particular effort to see how much memory we could save.

q. And again, going back to the code issue, you weren't trying to remove a particular quantum of code; right?

a. Again, no particular effort to remove that. That wasn't the goal.

q. Now, what, if any, impact in your judgment, again, if Microsoft were to remove more code than you found necessary or relevant to do, what impact would that have on the amount of memory consumed?

a. Well, I would expect it that--i would expect that if Microsoft found a way to remove more code, that that could only save more memory. So, as with the performance, speed improvement, the numbers that I referred to are really a minimum on the amount of savings that Microsoft could expect to provide to users by making IE removable.

This is not news to Microsoft. They know this. This is about Microsoft getting caught falsifying evidence in court. And, this is about Microsoft falsely representing the Windows 98 product to the public.

3:20 PM PDT - Professor Felten finds that Windows 98 offers higher performance after IE is disable or removed?

q. Okay. I want to turn to, hopefully, one last subject, and that's the impact of bundling internet explorer with windows on the performance of the system. now, have you considered whether, as a technical matter, it's necessary to require users to take IE with windows 98 in order to provide the performance improvements?

a. Yes, i've considered that.

q. What have you done on that score?

a. I have done two sets of experiments: one to determine whether removing internet explorer--what the effect of removing internet explorer is on the performance--that is, the amount of time it takes to get things done; and the other measuring the effect of removing internet explorer on the amount of memory that windows takes up.

q. Okay. You've got two separate things there. performance or speed and memory. Do i have that right?

a. Yes.

q. Let's look at the first one first. Can you describe the testing you did on the issue of performance or speed.

a. Yes. I ran a set of ten test programs on various versions of windows, which i will talk about in a minute. first, let me describe what the test programs are. as part of the discovery process in this case, Microsoft turned over to us a set of ten performance measurement programs that they use for measuring performance of various Microsoft software, in particular measuring performance related to what Mr. Allchin calls the core IE dll's. And as far as i could tell from looking at the documents that Microsoft turned over, these are the programs that Microsoft used in their evaluation of the first version of the removal program. so, those are the performance tests we used. there are ten separate tests. and now, we ran those tests on pc's in two different configurations. The first configuration is Windows 98, as Microsoft ships it; and the second configuration is windows 98 with the latest version of the prototype removal program run. So, in other words, the two pc's are identical, except that one of them has the internet explorer browser and the other does not.

q. Let me ask you, why did you do this testing in the first place?

a. Well, we wanted to see what was the effect, if any, of removing internet explorer on the performance of windows.

q. Now, what, if any, conclusion has your performance testing reached on that issue?

a. Well, in these performance tests, what we found was on the whole, removing the internet explorer browser from windows makes windows a little faster. now, i should point out here that in developing the prototype removal program, we made no particular effort to make windows faster, so what this gives us is a sort of minimum amount of performance benefit that one would get by taking IE out of windows.

q. You talked about ten different tests. Can you summarize the results on the different tests.

a. Yes, there were ten tests, and on one of the tests there was no statistically significant difference between the two systems. on six of the tests there was a performance improvement due to removing internet explorer--the internet explorer browser. and on three of the tests there was a slight performance slowdown due to removing the IE web browser. and i want to point out the three slowdowns are considerably smaller than the six performance improvements on the other test. So, on the whole, what we see is a slight performance improvement due to removing ie.

the court: describe the two pc's again. One is with windows 98?

the witness: exactly as shipped by Microsoft.

the court: with the browser?

the witness: right, exactly as Microsoft ships it. and the other one is windows 98 as shipped by Microsoft but with the prototype removal program run, so without the IE browser. The presence or absence of the ie browser is the only difference between the two machines.

the court: all right.

by Mr. Holtzman: q. Now, what, if any, conclusion has your testing--these ten tests--reached as to the impact of whether the browser is there or not?

a. Well, this performance gain shows that removing the browser certainly does not make windows slower, as Mr. Allchin would have you believe, but it, in fact, makes windows a little bit faster.

q. Okay. And what, if any conclusion, then, do you reach from your testing about whether the integration of internet explorer improves windows 98 performance?

a. The integration in the sense of forcing the user to take both products does not improve performance. If anything, it makes it worse. That is, forcing users who don't want the IE web browser to install it hurts the performance of those computers.

q. I want to make sure one thing is clear. I have been asking you about windows 98. is it your testimony that windows 98 runs slower than windows 95 without ie?

a. No. Windows 98, taken as a whole, runs faster than windows 95.

q. Okay. What, if any, conclusion do you reach as to the impact of bundling on IE of whether it runs faster or slower?

a. Well, Microsoft has made a number of changes going from windows 95 to windows 98. I'm referring here to changes that are not related to web browsing. And Microsoft has made some changes not related to web browsing which have the effect of speeding up windows in many cases. One exception is cases where memory is scarce. But in other cases, windows 98, in general, runs faster than windows 95 because of these nonbrowsing related improvements. but on the whole, the conclusion we can reach is that windows 98 is faster than windows 95, but it's not because IE is there. It's in spite of it.

q. Now, you referred earlier today to the question of whether you tried in a prototype removal program to remove code or chunks of code, and i believe you said that wasn't the thing that was important to you; is that correct?

a. That's right. We made no particular effort to remove a large amount of code.

q. Now, if you were to try, or if Microsoft were to try to remove code, what, if any, impact would that have in addition to what you already quantified on the performance of windows 98?

a. Well, i assume that if more code were removed, that would have the effect of improving performance in general. that's generally the case. So, what that means is that Microsoft might well be able to find a way of removing internet explorer from windows 98 that gives a bigger performance improvement than the one that we measured.

This is not exactly what Microsoft wants to hear. Remember the bogus video that Allchin presented? That video was supposed to prove that Windows 98 ran slower when IE was removed. Mr. Allchin even claimed to have a video to prove that. But, then the video was bogus, Microsoft attorneys vouched for the video with the judge but then failed the next day to produce a valid video on that point. Okay. So the fraud was caught.

But, now we see evidence presented that Windows 98 is faster without IE. And, this is not even 98Lite. 98Lite removed substantial portions of IE code. 25 megabytes or so. And, 98Lite reduced the allocated memory some 20 megabytes.

Clearly it is logical to expect the OS to run faster without IE. If Microsoft wants to prove otherwise, they can present valid evidence not fraudulent videos.

2:50 PM PDT - More evidence that Microsoft is attempting to monopolist the browser market

q. Okay. Let me ask this: does Microsoft provide consumers a choice of whether to install or uninstall other things, not ie, but other things that are bundled with windows 98?

a. Yes, there are about 80 optional components in windows 98. And by optional components, i mean when the user installs windows 98, they get the choice of which of these components to install. And after having installed windows 98, they can remove or add any of these components at any time.

q. Now, you referred to 80 different components. Can you just give one example of that.

a. Well, i referred to one earlier: webtv for windows.

q. Right. And can you describe for the court how easy or difficult it is, as a general matter, to install or uninstall these 80 or so different components.

a. It's fairly easy. You go to the control panel and double-click the add/remove programs icon, and then you get--then you get a dialogue box that pops up. You click windows setup, and then you see a big list of these components with check boxes next to them. You check the boxes on or off as you like, as you want things, and then you click okay, and then you're done.

There is a reason why Microsoft does not want a single customer to take off IE. This evidence also permits the court to conclude that in time Microsoft will clearly have over 50% of the browser market. 100% if you allow Microsoft to run unchecked and count installations unreduced by usage. The charge that Microsoft is trying to monopolize the browser market is a serious one. And, certainly the effort proven here that IE is treated differently than other options also bundled permits the court to conclude that Microsoft is making a concerted and concerted effort in regard to IE. Microsoft really does not want any other company to be able to enter the browser business and it is going to make certain that is impossible to do.

2:39 PM PDT - The single install excuse - yet another bogus reason for forcing all consumers to buy IE

q ... let me ask you to look at Mr. Allchin's in-court testimony during the afternoon session on february 2nd. I don't think that's one you have quite yet, would you please turn to page 31. I will be starting at line six. The question there reads, (reading): "Mr. Allchin, you referred in answer to my last question to a single install. What significance, if any, does that have?" Mr. Allchin replies: "i personally believe a huge one. I think the impression is around Microsoft that assembly is not required. I mean, you could take a system--and let me give you an example. Let's take a cd player or something like that, maybe a boombox, whatever, that has many different components built into it. You plug it in, and it all works right out of the box, versus a situation where you're trying to connect individual components that you purchase separately which may or may not work perfectly together, and you may or may not have the most optimal thing that's there, the most optimal experience. so, when you install windows 98, you just install a single cd, and you have a very seamless experience all the way through. And that wasn't possible even if you took windows 95 and downloaded IE 4. You don't get that. You still have to go through a separate installation, even ignoring all the other benefits that i have been talking about, like windows update and help system being unified or that--i will stop there. those--you don't get those benefits." now, only referring to Mr. Allchin's "single install" argument, you consider that argument a compelling rationale requiring users to take internet explorer along with windows?

a. No, it's not. If a user wants both windows and internet explorer, they--Microsoft can offer them that option with the single install. But a user who only wants windows without internet explorer can get that in a single install. and this is all assuming that we are talking about a user who is installing windows on the pc themselves. Many or most users, when they get new computers, get them from oem's, and that's a different topic.

The real problem with this argument is that it applies equally to the entire line of Microsoft products. Why not just force all consumers to purchase the entire line of Microsoft products and be done with it? Microsoft would love that. But, consumer pay for it. This is a real benefit for those consumers who choose IE or any other Microsoft product but a severe harm to everyone else who does not.

I would also note that Microsoft absolutely rejected a settlement offer to Microsoft before this trial started because it would have pre-installed Navigator on all machines right along with IE. Remember the big speech Bill Gates gave about not wanting to be required to put Pepsi cans in his case of Coca-Cola? Mr. Allchin's argument applies equally well to Navigator being pre-installed or the Office Pro Suite being pre-installed.

2:10 PM PDT - Microsoft is trying pretty hard to establish a monopoly position in IE

q. Now, you said that Plus 98 is an exception to that? [..."that" being the redistribution of IE along with the product in question]

a. Yes.

q. What, if anything, distinguishes plus 98 from the other applications?

a. Plus 98 is a kind of add-on pack you can get to add new functions to windows 98. And since plus 98 only is intended for windows 98 and only runs on windows 98, in that special circumstance, Microsoft has chosen not to redistribute IE 4. now, on the cd in which plus is shipped, there is plenty of space to put internet explorer, if Microsoft wanted to do so, but they have just chosen not to.

the court: why do you think they do that with the other --

the witness: well, the reason, i think, is that Microsoft, like other software developers, recognizes that there is a diversity of systems in use out there. There are many versions of windows 95. There are now two versions of windows 98 and different versions of ie, and different users are going to have different configurations. and if the software vendor wants to be able to sell to all of those people with all of those configurations, they need to be sure to redistribute the things that their software relies on.

by Mr. Holtzman: q. Following up on that point, let me ask you to look back at Mr. Muglia's deposition testimony, specifically at page 322.

a. 322?

q. Yes.

a. Okay.

q. Starting at line 14: "question: is it true that as long as the office group does want to reach those customers -- in other words, users of windows 95 -- it will feel compelled to redistribute internet explorer with office"? and Mr. Muglia responds, "well, the way i would say it is as long as the office group chooses to use services of windows, which are not -- where were produced since earlier versions of windows, that it will distribute it. Yeah, that's the most convenient way." now, how, if at all, professor felten, is Mr. Muglia's testimony relevant to the redistribution issue?

a. Well, i think he is talking about the point that i just made, which is that the convenient way for a software developer to service this diverse set of users' computer configurations is just to redistribute whatever that software product needs. And that's what Microsoft does in the case of office, as Mr. Muglia is saying here.

Microsoft is clearly trying to make IE a prerequisite for any other Microsoft product. For one, they make you buy it anytime you buy an OS. And, as we see they make you buy it anytime you buy a number of other products. But, why do you have to buy IE? Almost all of these browser functions could be provided by another browser such as navigator. Not all of them. Some may not use the browser itself and only call a particular API. But, remember that Microsoft was all excited about the possible threat of some other browser offering access to APIs, remember. So now Microsoft creates a dependancy upon IE and IE APIs in all its products (or almost all).

What happens if Microsoft is required to sell IE competitively? Do you suppose it would sell IE for $35 but if you buy these other products, you still get it included in the box? How is that going to qualify as a competitive sale? Maybe no body would pay $35 and just buy some other item that included it. Do you suppose that Microsoft would have to stop requiring the use of IE by its own products just in order to satisfy a court order? It could be.

The other interesting observation about this Q&A is that the DOJ is charging Microsoft with attempting to achieve a monopoly position in browsers. Now, a colleague of mine (Richard Gray) has pointed out in his own column that normally evidence showing at least as much as 50% of a market is necessary in order to prove the attempted monopolization of a another market. But, we have here evidence that a number of Microsoft products bundle IE not just the OS. And, of course, the reasons for these other products including IE are simply because IE is a pre-requisite according to the way they are currently designed. The result is that the DOJ can argue that Microsoft is creating a number of dependancies on IE besides forcing all to purchase it with the OS. They even got Intuit to require IE or actually bundle it with their software too. (As well as Apple.)
 

1:58 PM PDT - James Allchin sure presented a lot of false testimony

q. Now, going back to internet explorer, there has been testimony in this case about whether various application developers redistribute internet explorer and whether they like to do so. now, when we talk about redistribution, can you explain to the court perhaps what we're referring to?

a. Sure. If you look at -- when a software application gets installed, the installation program -- the installation facility will often check whether particular features that that software needs are present on the user's system, and if not, to install them. And sometimes these features - sometimes these extra things come from a third party. sometimes they come from Microsoft. And Microsoft permits software vendors to redistribute -- that is, put with their products in this way lots of different code that Microsoft offers. so we're talking here about a software developer shipping with their product some code that comes from Microsoft or some third party.

q. Okay. Now, i would like to ask you to look back at Mr. Allchin's written direct testimony, paragraph 134. you can look at the middle of the paragraph, the sentence that starts, "it is much better." Do you see where i am?

a. Yes.

q. Mr. Allchin states: "it is much better for Microsoft to include internet explorer technologies in windows once, however, rather than have each of the hundreds or even thousands of developers that rely upon those technologies distribute them and require them to be installed before their products become functional. That would be true even if internet explorer technologies were not crucial to the operation of windows 98 itself." now, putting aside for a moment what any other software developers do, what i would like to focus on is Microsoft itself. Other than office 97, which you've talked about already, have you examined any Microsoft application products to assess whether they, in fact, rely on internet explorer being included in windows, as Mr. Allchin put it?

a. Yes. In addition to office 97 professional, i have looked at Microsoft money 98, money 99, frontpage 98, visual studio 6.0, msn and plus 98.

q. Now, of these products, which, if any of them, redistribute internet explorer?

the court: Say that again.

by Mr. Holtzman: q. Of the products that you listed, professor felten, which ones, if any, redistribute internet explorer?

a. All of them, except for plus 98, redistribute internet explorer.

the court: The entire explorer?

the witness: The entire explorer browser product, yes.

by Mr. Holtzman: q. And that's the case regardless of whether internet explorer is bundled with any version of windows?

a. That's right. With that one exception, Microsoft does redistribute the full internet explorer browser product with all of these applications.

I guess Microsoft wants to make absolutely certain that all consumers have their IE. If the consumer is choosing IE that is fine.

But, is sounds like the judge is about to discount James Allchin's entire testimony as being false. Point after point, the reasons Allchin offered for forcing all consumers to buy IE appear to be bogus.

1:46 PM PDT - Suggesting that Microsoft might bundle Office Pro with the OS is not far fetched at all

q. -- where it reads: "Microsoft office is not only the best set of productivity applications for all types of users, but also a development platform for building custom business solutions. Today, more than one million developers are creating solutions based on Microsoft office applications." now, how, if at all, does the fact that office provides a platform for millions of developers relate to whether api's have to be part of an operating system product?

a. Well, here we have a set of api's offered by Microsoft, which Microsoft gives their customers -- users and oem's -- the chose whether to install, and it provides a platform without being bundled with any operating system product -- that is, without requiring anyone to install office.

q. What, if any, implications does that have as to whether, as a technical matter, internet explorer should be considered part of windows?

a. Well, as a technical matter, this shows that the fact that some software exports api's or provides a platform does not mean that it has to be part of any operating system product.

I have often suggested that Microsoft would just bundle the Office Pro Suite if it wanted to. The economic factors are similar. The legal issues are the same. Consumers better hope Microsoft loses this case.

1:10 PM PDT - Neither is it necessary that all developers have access to Microsoft's APIs

q. Okay. Let's turn now to a different one of Mr. Allchin's arguments. Do you understand Mr. Allchin to have testified that requiring users to take internet explorer with windows is justified by a desire to provide internet-related api's to other software developers?

a. Yes.

q. Now, first of all, just to be clear on terminology, what's an api?

a. Api refers to a set of services that one piece of software might offer to other software. So it's something that another piece of software can call on in order to do something.

q. Now, do you agree that software code that exposes api's to application developers is necessarily part of an operating system product, like windows?

a. No, and there are many contra-examples to that. many or most application programs offer api's these days and, of course, they are not part of any operating system product.

the court: say that again.

the witness: what i said was that many or most application software programs these days offer api's. And it's certainly not the case that they are part of any operating system product.

by Mr. Holtzman: q. Okay. In that connection, Microsoft had a representative of one software developer, Mr. Devlin of rational software, testify here in February. have you reviewed Mr. Devlin's testimony?

a. Yes.

q. Now, do you recall Mr. Devlin testifying that his company, rational software, uses a variety of Microsoft api's in its products -- in rational's products?

a. Yes.

q. Now, let me show you an excerpt from Mr. Devlin's live testimony here in court in february. This is the transcript from the morning of february 4th. If you could please turn to page 41 of that transcript.

a. Okay.

q. If you could please go down to line 16, the question starts: "hopefully brief," and it reads: "question: first, you talked about distributing dll's of Microsoft and the importance of api's. "you distribute dll's that Microsoft develops, but also dll's that third parties develop, correct? Mr. Devlin responds: "yes, we do." "question: and you use api's not only of windows, but also of other Microsoft products, including Microsoft access? "answer: many Microsoft products. Not just access. Yes. "question: that was an example? "answer: yes. "question: i was simply saying that you use api's for a variety of Microsoft products, not just the operating system. "answer: yes, we do." now, how, if at all, does Mr. Devlin's testimony relate to whether api's need to be included in windows in order to benefit developers?

a. Well, Mr. Devlin here is referring to his company's products using api's that come from third parties and also api's that come from Microsoft, but are not part of windows. so what that shows is that independent software vendors, like Mr. Devlin's company, can and do use api's that are not distributed with windows.

Microsoft likes to confuse "benefits" with "requirements". If some developers might benefit from some APIs Microsoft then thinks they have some unwritten right to force all consumers to buy those APIs directly from Microsoft. Almost all consumers would rather have a price discount instead. Suggesting that forcing the sale of IE benefits consumers because all ISVs can then count on them is likewise bogus.

The point being made here is that any APIs that an ISV might want to rely upon can be acquired from Microsoft or some other vendor. It is not necessary and in same cases not even desirable or acceptable to rely upon the customer having the correct APIs already installed. In fact that is a very serious problem. Different customers running different versions of even Windows causes a lot of problems with APIs. ISVs need to distribute the necessary DLLs themselves to be certain their products will run reliably.

But the real issue here is based upon Microsoft's desire to be the only company providing APIs. If they can force the distribution of Microsoft APIs then Microsoft APIs have a real competitive advantage over APIs that might be available from other companies. This factor applies to all kinds of added services or capabilities from networking to browsers to even GUIs and VMs (virtual machines).

The suggestion that APIs must be delivered by Microsoft directly to all customers is just another way for Microsoft to make certain that it has an unfair advantage in other markets such as Networking, GUIs, Browsers or what have you.

In other words, independent developers should have equal capabilities to develop superior APIs or components and compete against Microsoft in those markets too. There is no reason why Microsoft should have an unfair advantage in developing and distributing APIs. The question is whether you are going to decide ahead of time who can develop what kind of technology or whether you are going to allow everyone in the industry to compete fairly and succeed if they develop superior technology. Which do you want? Only the Microsoft one or the superior one? If you think Microsoft is the superior one, then you can have it. But no one should be forced to take it and no competitor should be required to always operate at a disadvantage.

I can write APIs too. But, if you were forced to take some of mine, you might not like them would you? Just because I might like them and feel you would benefit from their use does not justify forcing anyone to buy them. Offering a benefit does not make it a requirement.
 

1:00 PM PDT - Microsoft's "file content" defense is really quite lame

q. And what, if anything, is the impact of that fact, namely, that there are functions that are in the same dll, some of which are browser only and some of which are shared, on whether it makes sense as, a technical matter, to define what internet explorer is, according to the contents -- the whole contents of dll files?

a. Well, you have dll files as packages of sometimes unrelated things -- functions. You have functions moving between dll's. That indicates that using dll's as the definition of what is internet explorer doesn't make a lot of sense.

Microsoft could have really blended the procedures from IE into the OS DLLs if it wanted to. But, it really matters little. The whole argument that an application is defined by the way procedures are packaged into files is bogus anyway. With hard goods packaging might matter. With hard goods integration might matter. Or to put it more accurately, the lack of integration may deny consumers the benefits of combining two products by the manufacturer. But, with computer software, this is simply not the case.

I do trust that the courts (including all appellate courts) will be able to draw this distinction.

12:36 PM PDT - And the judge raises the security issue?

q. Okay. Let's talk about a slightly different subject.

the court: before you do that, let me interject a question that i am just curious about. are there any security issues involved in a choice of a browser or whether to get a browser at all?

the witness: yes, there are. There -

the court: it seems self-evident to me, but maybe it's not, that the presence of a browser increases the risks of penetration by a virus or something like that.

the witness: certainly. If you are in the position of, say, a computer systems administrator in a large organization and you're concerned about what your users might do -- and you're concerned that your less-trained users might accidentally introduce a virus or something like that -- you might well choose to not have browsers on your users' computers in order to prevent that means of spread of viruses.

the court: and is there any difference between browsers insofar as security is concerned? For example, is caldera's browser less secure or more secure than another, or can you demonstrate that?

the witness: it's hard, i think, to make general statements about this. Over time, there are different security vulnerabilities in different products. And different people have different judgments about which product is more secure than which other product.

the court: is there any way of absolutely assuring security?

he witness: there is no way of absolutely assuring security. You're always taking a risk whenever you add something new -- whenever you add a new application.

the court: if you have an anti-virus device, that is not necessarily going to be foolproof, is it?

the witness: no. There is no foolproof security technology.

the court: go ahead. I am sorry.

Mr. Holtzman: thank you, your honor.

The security issue as raised by the court is important. No consumer should have to buy a browser. And, no consumer should have to incur the security risks associated with the browser. Any browser. IE should not be any more risky than Navigator. But, all consumers should clearly be given the option to not purchase a browser at all or remove the one they do decide to purchase if and when the browser is no longer needed.

The browser is an application.

12:30 PM PDT - There are no reasons why all consumers must by IE or any browser

q. Now, which, if any, of these things -- the four hardware support items you just described -- which of those things has Microsoft provided support for without requiring oem's to take internet explorer?

a. None of them. Microsoft has always required oem's to take internet explorer in order to get these features.

q. Now, you just described these different hardware items. why, in your judgment, as a computer scientist, might end users want to get things like dvd or usb support?

a. Well, different users want different things. And a user who's interested in playing computer games might want agp particularly. A person who likes to watch movies might want dvd particularly. and those people might not want a web browser or they might not want a particular web browser. I would expect different groups of people to have different desires for getting these different features.

q. Let me ask you a technical question. What, if any, technical reason is there to require users to take internet explorer in order to get things like dvd, or usb, or agp support?

a. None.

The only reason Microsoft forces the sale of IE is to preclude a competitor. (And, we still do not know how much Microsoft is charging, right?)

12:01 PM PDT - This judge may have to decide what an OS should do and what applications should do

q. Okay. Now, looking at the top of government exhibit 720 -- this is the message from Mr. Maritz to moshe dunie. Does Mr. Maritz's message -- and i should read it. "to close this, i need clear statement as to what we offer (and what the work-arounds are) oem's between now and memphis for: usb support, acpi, dvd and agp. I think i know this roughly, but want to have my facts right. Please send me write-up. Thanks." now, does Mr. Maritz's message provide any guidance as to what hardware support was at issue here in this series of e-mails?

a. Well, all four of these bullet points, usb support, acpi, dvd and agp, are new types of hardware or new hardware-related features which are, in fact, shipped with windows 98. so he is presumably talking about these hardware features as -- they are presumably talking in the context of these hardware features being offered in windows 98.

the court: do you know what they are?

the witness: sure. Usb support i described briefly before. Usb is a way of plugging together computers with peripherals, like digital cameras, printers, and so on. acpi is -- has to do with power management. It's particularly useful on laptops to conserve power when you're not plugged in, or just to use less power when you're not at your desk. dvd is a new kind of compact disk-like format for distributing entertainment. and agp is a way of interfacing p.c.'s to high-performance graphics cards.

the court: thank you.

I have listened to a whole lot of Microsoft supporters that seem to argue that the OS should include everything they might want as a minimum on their system. But, that is the wrong criteria. Some consumers do not use nor want networking, therefore networking should not be included in the OS. The price of the OS should be reduced in price. Some consumers do not use nor want disc compression. The price of the OS should be reduced in price. Some consumers do not a browser. The price of the OS should be reduced in price.

For those consumers who want those features useful to some but worthless to others, they should be able to choose the best product among competing products and not be forced to buy the Microsoft version.

Microsoft Corporation and some of its die hard supporters have tried to redefine the OS as being the bundle of products that only Microsoft should be permitted to develop and distribute to all consumers without choice on their part. Sorry. But, that harms consumers now and in the future. When Microsoft acts to remove a specific competitor from the marketplace that act also violates antitrust law and the Microsoft lawyers know that.

Much of the support for new devices does not even have to be provided by Microsoft. In fact, much of it is not. But, the OS must be written in order to support such devices. That does not mean however that the feature must itself be written and distributed by Microsoft. An excellent example of this is networking. Networking does not need to come from Microsoft. In fact, both Lantastic and Novell as well as others do provide it. But, since Microsoft forces all consumers to buy Microsoft's networking scheme whether they want it or not, the market for networking products is substantially subdued to the direct detriment of consumers. Anyone who has tried to network Windows, OS/2, Linux and Unix knows how difficult that is simply because networking is bundled with operating systems. It should not be. All consumers would benefit if it was not part of the OS. Why? Because those consumers who do not use networking could buy a cheaper OS. And, those that do would be able to choose a product that would easily network all operating systems instead of just those of one OS.

This case is not about bundling the network with the OS. But, as you recall I have mentioned other law suits which may be filed as a consequence of Microsoft being found to have a monopoly and having violated antitrust law. Well. Lantastic is listening. Novell is listening (even if they sold Dr-Dos to Caldera). Even IBM is listening on this issue as well. Bundling the network with the OS has indeed harmed the ability of any OS to compete with Microsoft systems. And just where is Apple in this network game?

If the OS could not provide the networking, networking would be a lot easier for everyone and competition between operating systems would improve significantly. How can the BeOS and Linux be expected to network if there is no real market for cross-platform networking or only a sick one?

Please notice how the issues raised in this case go way beyond Netscape. They go to the very presence of real competition in the computer software industry for all kinds of products and not just browsers. And, not just the internet either.

11:52 AM PDT - Of course there is demand for an OS without IE

q. If you'd go down to the second paragraph of that e-mail, where it reads, "the number one big issue dealt with the memphis plan. Paul," -- Mr. Maritz -- "joachim k does not agree with the plan. He plans to raise it with you and bill. I think that he wants a `memphis-like' product (with all the new hardware support) minus IE 4.0 in june. He says that IE 4.0 can be added next year." now, how, if at all, does that statement relate to your testimony?

a. Well, here we have joachim k -- which i understand to be Mr. Kempin -- suggesting that he would like to have a version of windows 98 with these new non-browsing features, like support for more hardware, but without IE 4.

q. Now, how, if at all, does that point relate to your testimony about consumer choice?

a. Well, what we -- well, Mr. Kempin -- Mr. Kempin's job is to interact with oem's -- p.c. Manufacturers. And so Mr. Kempin, the person at Microsoft who interacts with the oem's, is suggesting here having a version of windows 98 without IE 4. In other words, Mr. Kempin appears to think that there would be demand for such a product.

IE is no more a requirement of the OS than any other application (unless Microsoft wants to force all consumers to buy IE and wants to remove a real or potential competitor).

11:41 AM PDT - Of course Microsoft can distribute IE and an OS separately

q. And, again, as a proof of concept, what, if anything, does your prototype removal program demonstrate as to whether it's possible to provide integrated features without removing consumer choice as to the combination of internet explorer and windows?

a. Well, what it shows is that Microsoft can provide windows 98 and the IE web browser separately in such a way that they work well together when combined by the user, or the oem, or anyone else.

In fact they do, IE 5.0. They only force OS customers to also buy IE. They do not force IE customers to buy a Microsoft OS. One is a monopoly product and the other is not.

11:29 AM PDT - Professor Felten comments on testimony from Mr. Muglia of Microsoft (who pretty well proves this point for the DOJ)

q. All right. now, i want to leave the caldera example and talk about -- some more about integration in the context of another Microsoft product. Specifically, i want to ask you some questions about Microsoft office. first of all, what is Microsoft office?

a. Microsoft office is what's sometimes called an office productivity suite. And what i mean by that is it's a set of programs that include a word processor, called "Microsoft word," a spreadsheet, called "Microsoft excel," and two or three other programs.

q. Now, using the term "integration" here to mean works well together -- in other words, your first definition - does the combination of applications, like word and excel, provide users with any benefits of integration?

a. Yes. Those products do work well together.

q. Can you give an example of that?

a. Sure. Well, there are many examples, but probably the easiest one to use is that if you are using word to develop a document, and you want to put a table into that document, you can build the table as a little spreadsheet, using excel. That is, you can take a little excel spreadsheet and just paste it right into your word document. and when you're operating in that table, you get the features of excel. And you can save that document - that word document with the spreadsheet in it and give it to another user. you can read it back. You can print it as a single unit. So these programs work well together in that sense.

q. Now, how, if at all, does Microsoft distribute the applications, word, excel, and power point, other than as part of the office package?

a. They -- you can buy each of these as a separate product. that is, you can buy word alone. You can buy excel alone. you can buy each of the pieces of office alone, if you want.

q. So you can buy them either together in office or entirely separately from one another at different times?

a. Yes. And if you buy them together, you have the option of which ones you'd like to install.

q. Now, to obtain the integration, an example of which you gave, do users have to buy word and excel, for example, together?

a. No. They can buy them separately and then install them both in sequence. You get the same benefit that i talked about.

q. Okay. Now, on this subject, have you reviewed the testimony of Mr. Muglia?

a. Yes.

q. First of all, what, if any, understanding do you have as to what Mr. Muglia's responsibilities at Microsoft were at the time he testified?

a. He was in charge of office, among other things.

Mr. Holtzman: okay. If i could ask the witness to be handed a copy of Mr. Muglia's deposition in january of this year.

by Mr. Holtzman: q. If you could please turn to page 310 of Mr. Muglia's deposition.

the court: i am sorry. The page?

Mr. Holtzman: 310, your honor. The very top of the page, the first line.

the witness: okay.
 

by Mr. Holtzman: q. "okay. Let me ask you this: does by bundling them together -- and all i mean is including them together, distributing them together in the office suite -- does Microsoft achieve synergies that users don't get if they separately license word and excel?" and there's an objection. "answer: very few, if any. Your term `bundle' is bothering me. But in packaging together -- `integrating' is the term i would use. "it turns out what we've done is we have -- by thinking of these things as office products, we've put in an enormous amount of energy into not just advancing and making word a better word processor -- although we do that -- or excel a better spreadsheet, but, in fact, making those things work very well together. "and if a customer went out and bought word and they bought excel, they would find that those two products work very well together on their desktop. There may be features that come in office that aren't included in those two separate products. I've not sure if i can say what they are off the top of my head, but, fundamentally, they'd still find those two products would work very well together." now, professor felten, what, if anything, is the significance of this testimony to whether it's necessary to distribute two products together in order to have them be "integrated," as Mr. Muglia put it?

a. Well, what this shows by example is that it's not necessary to distribute those products together in order to get the products to be integrated in the sense of working well together. The question of distribution is really separate from whether the products work well together.

q. Now, what, if any, implications does the office example have for the relationship between internet explorer and windows?

a. Well, what it shows, again, is that internet explorer and windows can be integrated in the sense of working well together, without having to be distributed together.

Clearly bundling any two software products has nothing to do with the technology. Microsoft's own acts prove otherwise.

This issue will be hotly debated by the attorneys in final argument and on appeal. But, in the end, it will be decided that the bundling of IE was done solely for marketing purposes rather than any technical reason. And, the marketing purposes were illegal ones.

10:58 AM PDT - Integrated products does not mean all consumers must always buy both- at least not in the software marketplace

q. Now, i want to go back to the use of this term "tight integration" or just "integration" in general. Based on your review of Mr. Allchin's and other Microsoft witnesses' testimony, what, if anything, is your understanding of what they mean by "integration"?

a. Well, i think they mean slightly different things at different times. There are really two definitions or two uses of this word "integration" that i've seen. the first meaning of "integration" refers to products that work well together. They are designed to interact well. They are designed to give the user some consistency across them, but just working well together. the second meaning of "integration" is -- means inseparability. And those two meanings -- those two definitions are really completely separate concepts. And you have to be careful in using this word to be sure you know which meaning you're using because, as i said, "working well together" and "inseparability" are completely separate concepts.

q. All right. Now, for two pieces of software to work well together -- that first definition -- do they need to be bound together in an inseparable way?

a. No.

q. How, if at all, does the caldera openlinux example relate to that point?

a. What we see with caldera is a pair of products, if you will -- the Linux and the KDE browser -- which work well together, and are integrated in that sense, but are not inseparable.

I trust the court will get this concept correct and apply the law appropriately. It is very important in this case.

Microsoft has made a point that integrated products are generally free of product tying or bundling antitrust charges. And, clearly they will argue that all consumers must be forced to buy IE simply because IE and the OS are according to Microsoft "integrated". First you must realize that the extent to which two products are integrated is up to the manufacturer. Clearly Microsoft could have blended the code as much as they may want to. To be honest they could have do it much more than they have so far. But, that can not be the test in the computer software industry.

Microsoft Word and Microsoft Excel are integrated too. Yet Microsoft sells them separately due to identifiable market demand for the separate products. With computer software, the identifiable market demand for the individual products must be the deciding factor as far as antitrust considerations are concerned. This is particularly so when (in this case) Microsoft has demonstrated the need to meet the separate market demand for the browser by distributing IE 4 and IE 5 separately. In fact they have done so for other platforms as well.

If necessary, this case should establish the principal that when a product is highly malleable as computer software is and any benefits of integration can be realized at almost any point along the route to the consumer and by the consumer itself if desired, then forcing all consumers to buy "integrated" products because some of them may benefit is warped logic and highly inappropriate. This issue really goes to the arguments that Microsoft and the DOJ will be making during their final arguments as well as on appeal. And, it is very important that the court get it correct.

Computer software needs to be contrasted with hard goods such as clock-radios. Consumers just can not be expected to buy a clock and a radio and integrate them at home. But, with computer software, all of the benefits of any and all integration can be realized by the consumer themselves simply by installing an application if they want those features. If they do not log their computer onto an intranet or the internet, there is no reason for them to want anything that even looks like a browser.

What the above testimony shows is that all of the benefits of computer software can be realized without any need for one company to develop or even sell all of the code.

Microsoft has tried very hard to convince the court and the public that only it should be permitted to sell computer software. But, all of its arguments are bogus in this regard. Integration does not require it. Microsoft's own witnesses have proven that in this case.

10:45 AM PDT - Again, Professor Felten is required to straighten out misconceptions offered by Microsoft

q. Now, you've referred a couple of times today to windows update. Can you describe, first of all, generally what windows update is?

a. Sure. Windows update is a feature that allows the user to determine whether there are updated versions of various system files, like device drivers, available, and, if they are available, the user has the option of getting them and installing them on their computer. so it's -- i would characterize it as a system maintenance type of feature.

q. Now, do you recall when Mr. Allchin testified that the windows update feature wouldn't work if internet explorer was removed from windows 98?

a. Yes. I recall he said that.

q. As a technical matter, does providing the windows update feature require, in fact, that IE be nonremovable?

a. No. Both versions of the prototype removal program have demonstrated this.

q. Can you describe in a little bit more detail how the prototype removal programs demonstrate that?

a. Sure. And i'll focus on the latest version of the prototype removal program, because in that version, windows update is a separate stand-alone application -- that is, it's a separate program that you run. You run it in the same way that you run windows update on windows 98, as delivered by Microsoft, and it does the same things, but it is a separate stand-alone program, which clearly is unconnected to ie. so what that shows, of course, is that Microsoft is capable of doing that as well -- delivering windows update as a separate program -- if they wanted to.

Many companies (who do not even distribute browsers) offer similar features. I find it amazing that Microsoft continues to present false evidence in this case and try to say that technology is making them do it. Technology does not require them to do anything. It is pure deceit.

10:29 AM PDT - Professor Felten's view on those other features (HTMLhelp, Windows Update and WebTV for Windows)

q. Now, you mentioned the different features: html help, windows update and webtv for windows. Let's take those one at a time. now, when delivered separately from windows 98, does internet explorer 5 deliver html help?

a. Yes.

q. And when delivered separately from windows 98, does internet explorer 5 provide the user with a windows-update feature?

a. Again, yes.

q. Now, i'm going to ask you the same question about webtv for windows. Does a user get that feature when they install IE 5 separately from windows 98?

a. No.

q. Do you draw any conclusion, one way or the other, from the fact that IE 5 does not deliver webtv for windows?

a. No. IE 5 does not deliver webtv for windows, but that does not mean that it could not. In fact, if you look at windows 98, you'll see that webtv for windows is an optional feature, which means the user has the option to install it or not. and if the user has installed it, the user can take it away at any time. So what that shows is that Microsoft can deliver webtv for windows separately from windows 98.

q. Can you describe, again very generally, just how it appears in windows 98 that webtv for windows is removable?

a. Sure. There's a portion of the windows 98 control panel, which is called the "add/remove programs" control panel. And inside that, there's an area called "windows setup." And if you go there, what you see is a long list of optional components of windows 98. And next to each one is a check box. so if you go there and you add or remove checks from those check boxes, just by clicking on the check box, you can add or removal any of those optional components. you click the check boxes on or off, then you click "okay," and it's done.

q. Okay. now, if we put aside webtv for windows, what, if any, of the features that Mr. Allchin talked about in his testimony and his demonstration as being provided by the integration of internet explorer and windows -- which of those features are not available by installing internet explorer separately?

a. All of them are available with separate installation. So none of them are available only in windows 98.

[By the way, not that it is relevant in any meaningful way, I do not read the entire transcript each day before writing my comments. As you see here, Mr. Holtzman did come back to this material and get Professor Felten's testimony on these other features. I rarely go back and edit comments once they have been posted to the web page. What you read in this column is almost entirely the only draft written immediately after the quoted transcript portion has been read. I do it this way to limit my time. So please excuse any grammatical or spelling errors I am sure you find from time to time.]

10:15 AM PDT - Microsoft does in fact distribute IE 5 as a separate product

q. now, has Microsoft released a new version of internet explorer since the time that windows 98 was released?

a. Yes. They've released IE 5.

q. What's your understanding of how IE 5 is being distributed by Microsoft?

a. IE 5 is being distributed by Microsoft as a separate stand-alone product, on cd or by download, for users who have windows 95 or windows 98. And it's also being bundled with -- into the windows 98 second edition, which is the latest version of windows 98 for Microsoft.

Interesting to find out that Allchin is not being recalled to the stand to tell us what is up with IE 5. (Or, if he is, I missed it.)

Why is Microsoft releasing IE 5 separately? Do they not know how embarrassing all of this is? Does it not raise the call for perjury charges against Allchin?

The reason is simple. Microsoft does not want IE to be limited to the same product cycle as the OS is. Once consumers buy a machine, many of them will never upgrade their OS until they buy another machine. It is just too much trouble. If IE was truly part of the OS, Microsoft would have a problem. They could never advance the browser technology fast enough to keep up with the industry. They know that in order to keep up the pace with internet technologies, they have to come out with a new browser every 6 months or so. And, somehow, they have to get that new application into use.

This is the primary reason why operating systems do not include applications. When they are separate, the consumer can upgrade applications as they see fit taking advantages of new enhancements, etc., without the requirement to also upgrade the OS which is a much more complicated process. Upgrading the OS often times requires the re-installation of all applications and possibly a bunch of other tasks as well. Microsoft know this. And, that is why they went ahead and released IE 5 as a separate product just like all of the other versions of IE.

Professor Felten has it correct. IE is simply bundled with the OS [in order to force the sale].

10:05 AM PDT - Other non-browser functions do come with Windows 98

q. Now, do you recall that Mr. Allchin also pointed out that there are a few other web or internet-related features of windows 98 that a user doesn't get by installing IE 4 on top of the retail version of Windows 95?

a. Yes. I believe he mentioned three features: HTMLHelp, Update Windows and Webtv for Windows.

The help system does not need to use HTML anymore than Microsoft Word should drop all proprietary formats and use HTML exclusively. Update Windows could easily be provided to work with any browser. And, WebTV is a separate product.

9:55 AM PDT - Yes. Microsoft has already delivered IE and the OS separately with no technical problems at all

q. Now, what, if anything, first of all, is the significance of the fact that installing IE 4, instead of navigator, on top of the retail version of windows 95, provides each and every windows 98 feature that was demonstrated in the videotape by Mr. Allchin?

a. Well, it shows that Microsoft can provide those features in a browser that's delivered separately from the operating system product. Not only can Microsoft do that, but they have.

Not only has Microsoft delivered IE 4 separately but since Mr. Allchin's testimony, Microsoft also delivered IE 5 that way. I have previously pointed out in this column that when Mr. Allchin testified that IE and the OS were inseparable he knew for a fact that IE 5 was going to be delivered to the market as a separate product. We did not know that. The court did not know that. The DOJ did not know that. But, Mr. Allchin did. Because Mr. Allchin knew for a fact that the OS and IE were separate products and that Microsoft fully intended to distribute them separately (which they did after his testimony), Mr. Allchin's testimony was perjurious. In other words, he testified in court as to a material fact in this case that he knew to be false at the time he testified. We did not know it was false. He did.

Mr. Allchin did not say consumers had to buy both IE and the OS or IE alone. He said they were one product. They are not one product and he knew that for a fact.

9:30 AM PDT - Microsoft has falsely implied that picking and choosing disc files was in any way relevant to the legal issues in this case

q. Now, in paragraph 173 Mr. Allchin states, "it is easy to show that the core internet explorer files remain after dr. Felten's prototype removal program is run, and that they remain functional for many purposes, even for browsing certain web sites." now, first of all, was it important to you whether the so-called core internet explorer files remain?

a. No. That was not -- that was not the issue that the removal program was intended to address. i should also point out that the characterization of these files as "core internet explorer files" is, i think, questionable. in any case, the removal program was just meant to show that the IE web browser could be removed. It was not meant to say anything about which files might or might not be on the system after it was removed.

q. And can you explain why, if at all, that wasn't important to you?

a. Well, the point, as i said before, was to show that Microsoft could remove the IE 4 web browser, not to show that Microsoft could remove this file or that file. The point was the browser, not the files.

This is important. Microsoft can put any combination of routines into one disc file that they might want. If Microsoft wanted to put a key routine for the OS into a Microsoft Word DLL, it could do so very easily. Then, all consumers would be technically required to purchase Microsoft Word in order for the OS to even boot up. (And, if would have to be pre-loaded too so all OEMs would have to sell it along with the OS.)

Microsoft's attorneys have argued in court upon more than one occasion that since the DOJ can not identify the specific files which if deleted would remove IE that somehow that has legal significance. It has absolutely no legal significance at all. Which routines are contained in which files is a decision totally at the discretion of Microsoft and therefore is without any meaning at all. Totally illogical combinations of routines can be decided upon by Microsoft for whatever reasons they might want. Usually the routines are placed in files along product lines but there is no reason why that has to be the case.

The argument Microsoft makes on this point is pure deceit. From a technical standpoint is has absolutely no relevance. It is only offered by Microsoft to deceive the court. Software developers are not deceived by it. Most consumers do not know what the hell Microsoft is talking about. But, Microsoft offers it hoping to fool the court. That is the only reason for making that suggestion.

q. Okay. Now, if we could continue with paragraph 174 of Mr. Allchin's direct testimony. He states, "for example, the doj version of windows 98 can still be used to access information in web formats stored on internal corporate networks, which is one of the central functions of web browsing software (and a heavily promoted feature of netscape navigator). This is shown in the videotape demonstration entitled `deficiencies in dr. Felten's removal program' in defendant's exhibit 2161. "if a customer opens a windows 98 browser window through the `run' box on the `start' menu with an address for html information on a corporate network or their local machine, e.g., By typing" -- and then he gives an address - "the customer will have access to full web-browsing functionality, such as `back,' `forward' and `history' buttons. "alternatively, the customer could drag and drop an icon for any html information source into the browser window. Either way, the customer can then browse in the usual way, clicking on links to navigate from one file to another and so forth." now, is Mr. Allchin correct here in asserting that, using the methods he describes, a user can still invoke full web-browsing functionality?

a. No, the user cannot browse the web in this circumstance. now, there's a reference here to the "back," "forward" and "history" buttons, and it is true that those buttons are still present, but they are present -- they are not there for web browsing. These are buttons which are available when navigating local files on the local hard disk. You can go back and forward, in this scenario, between information on the local hard disk. but what you cannot do is browse the web. And so the statement that there is full web-browsing functionality is wrong.

q. Now, as to that comment that a user can still use the "back" and the "forward" and the "history" buttons, is that a result that you intended?

a. Absolutely. The removal program is meant to show that Microsoft can remove the web browser without changing any of the non-web browsing functions of windows 98. And using the back," "forward" and "history" buttons to look at information on the local hard disk is a non-web browsing function, and so the removal program intended to leave it in place.

I guess Mr. Allchin just does not know as much as he thought he knew? Remember the bogus video that was supposed to show this or that. The video they could not produce to the court after the Microsoft attorneys vouched for the evidence and promised the judge a good video would follow? Remember that? The "good video" never did appear. And, I can assure you the judge is thinking Microsoft tried to defraud the court. The Microsoft attorney even promised the judge BEFORE he knew whether it could be produced. Horrible lawyering.

9:00 AM PDT - 98Lite finally hits the big time

q. Now, in that regard, let me ask you. Have you seen any other approaches, other than yours, to removing internet explorer from windows 98?

a. Yes. I've seen one other approach, which is known as 98lite. This was developed by graduate student at the university of maryland called shane brooks. Mr. Holtzman: okay. Now, let me ask you to be handed, and i will offer what's been marked as government exhibit 2215. This is an article from the computer reseller news, dated january 28th, 1999.

Mr. Holley: your honor, may i inquire of Mr. Holtzman as to what purpose he seeks to offer this? If he's offering it for the truth of the matters asserted, i object.

Mr. Holtzman: it's okay, i think, your honor, to limit this offer to show that this document was written.

the court: all right.

Mr. Holley: i guess that's hard to deny, your honor.

the court: indeed, it is. all right. Government's 2215 is admitted.

(whereupon, plaintiffs' exhibit number 2215 was received in evidence.)

by Mr. Holtzman: q. Now, professor felten, have you seen this article before?

a. Yes.

q. Now, how, if at all, does this article relate to your testimony?

a. Well, this describes 98lite, the program that i referred to a minute ago. And it indicates that 98lite is another way or another approach that could be followed in showing that Microsoft can remove IE from windows 98. So, as I said before, the approach that I and my assistants followed in developing the prototype removal program is not the only approach. There is a variety of approaches, and this is another one.

Microsoft objects to the submission of this article simply because they want the court to think that IE can not be removed from the OS and this article points out how to do that. The objection is valid however on hearsay grounds. Articles such as this can not be used to prove the truth of what the article says. The article (and 98Lite) say they remove IE from the OS. Since the article can not be cross examined and Shane Brooks is not here as a witness, it would be unfair to submit the article for prove of what it does when Microsoft could not cross examine it. Therefore, the article is only submitted as evidence that the article was written and as another example of an approach taken by someone else to accomplish what Professor Felten has done.

98Lite is actually a better example of removing IE than Professor Felten's project. 98Lite removes some 25 megabytes or more of program from the hard disc and reduces the allocated memory of Windows 98 upon initial boot by some 20 megabytes. Professor Felten's program does not do as well. His program primarily disables IE but leaves it on the machine and I assume permits Windows 98 to load it as well during every boot up. 98Lite actually improves Windows 98. 98Lite also illustrates that ALL CONSUMERS are harmed by the bundling of IE the way Microsoft did it. ALL CONSUMERS have much more code allocated into memory each time they boot up demanding more memory, taking more time and limiting what other applications can be run by the system.

From a system design standpoint Windows 98 is horrible and technically inferior to 98Lite. It also illustrates that Microsoft makes design decisions that harm consumers but benefit Microsoft. Only if you run IE and always want to pre-load it at boot up are you not harmed by Microsoft because of their design. IE pre-loading in this way clogs virtual memory so even if you what to use IE, you can not reduce the load on your system resources. There is no reason why the consumer would want what Windows 98 does. If the user wants to preload IE each time they boot up, they can do that themselves.

However, when Microsoft forces all consumers to preload IE, Microsoft disadvantages all other browsers in the eyes of the consumer. All other browsers have to load up while the consumer watches. IE is forced by Microsoft to always be ready for use. All non-Microsoft browsers can not get this favored treatment. And, of course, Microsoft falsely informs the consumer about the trade off Microsoft has forced the consumer to make. Microsoft carries their deceit all the way to the above objection made by the Microsoft attorney above. "Never tell the consumer the truth" is Microsoft's plan. And, in this court case, Microsoft does not intend to tell the court the truth either.

8:51 AM PDT - Professor Felten proves has simple "Microsoft's impossible task" really is.

q. Now, having done a couple of versions of the program, is it your testimony that this is the actual technical implementation that Microsoft ought to offer consumers?

a. No. There are many ways in which Microsoft could go about delivering a version of windows 98 without ie. And i would expect that Microsoft could probably find one which is better and more efficient than this one. The point of this is just to show that it is possible for Microsoft to do this.

q. Okay. And is it your testimony that this is the actual technical implementation that Microsoft ought to offer oem's?

a. No. Again, this is just a demonstration that Microsoft is capable of offering oem's such a version. And, again, i would expect Microsoft could find a better or more efficient way to do it.

You do not suppose the huge technical staff at Microsoft helped Professor Felten on this assignment do you? It would not be right if a "professor" got help now, would it? He did get the source code. But, what the Professor is demonstrating is what every programmer already knows. I do find it strange how many knowledgeable people in the industry just repeat what Microsoft says like some kind of broken record.

8:47 AM PDT - Of course Microsoft can deliver an OS without a browser application.

q. Now, professor felten, you have mentioned throughout your testimony that the prototype removal and the reinstallation program that goes along with it are a proof of concept. can you summarize for the court what the concept or concepts that the programs demonstrate are.

a. Yes. The programs demonstrate that Microsoft can deliver a version of windows 98 from which the IE web browser has been removed, and they can deliver that in a way which does not affect the non web-browsing functionality of windows 98. and then, as the paragraph of my testimony that you showed me earlier describes, Microsoft can then produce an IE installation program which puts the system back, in effect, to what it is in today's windows 98.

I am sure with Microsoft's expertise they can figure this out. If not, they can hire Professor Felten, right?
 

8:40 AM PDT - Professor Felten updates his IE removal program

q. Okay. Now, referring to the new version of the prototype removal program, can you again, just generally, describe for the court what changes you've made in the new version of the program?

a. Yes. There are three types of changes. First, there are changes that i would categorize as user-interface changes -- cases in which a witness like Mr. Allchin might have complained about the existence of a particular menu item, regardless of what the menu item actually did, or the wording in a particular error message. Things like that were changed just to show that Microsoft could make those things the way Mr. Allchin and others would like them. second, there were a few changes to fix bugs in the removal program. and, third, in order to demonstrate that it's possible for Microsoft to deliver the windows update feature as a separate application, we did that. We developed a separate prototype windows update application.

Why is it necessary for Professor Felten to point this out to Microsoft, anyway? The clearly know they can do this too, right? Absolutely. Why they insist upon presenting false information in this regard to the court and to the public is beyond me.

8:27 AM PDT - Professor Felten reaffirms the ease by which Microsoft can sell the OS and applications separately

q. Have you had a chance to review -- I'm sorry -- attend any of the proceedings since December?

a. Yes. I attended court for four or five days at the end of january and the beginning of february -- in particular, for most of Mr. Allchin's testimony.

q. Now, i'm going to spend most of our time today asking you a variety of questions about Mr. Allchin's and some other Microsoft witnesses' testimony. but first for context, i'd like to ask you to look at paragraph 66 of your own written direct testimony. now, professor felten, paragraph 66 reads, "my analysis demonstrates that it is possible for Microsoft to divide windows 98 into two programs, one that replicates the function of the current version of windows 98 except that web browsing is removed, and another that adds IE 4 web browsing to the first program, such that an oem or user who installed the two programs in sequence would end up with software functionally identical to today's version of windows 98. Microsoft, with its intimate knowledge of its own products, would have little difficulty performing this task." now, you provided this testimony in october, and you reaffirmed it when you were here in december, correct?

a. Yes.

q. Is there anything in Mr. Allchin's or any of the other Microsoft witnesses' testimony that causes you to want to change any of your prior testimony?

a. No, this is still correct.

Of course it is still a correct observation. Computer software by its very nature permits this. The same could and should be said for networking, disc compression and all other utilities or add-on applications such as games, etc. (Is Bicycle and others harmed when Microsoft bundles the silly Solitaire game? Of course they are.)

Microsoft's claim that somehow only the bundle is going to allow them to develop software is simply incorrect and deceitful.

8:23 AM PDT - Professor Edward Felten returns to the stand. Steve Holtzman will conduct the direct examination of Professor Felten for the DOJ. Mr. Holly will conduct the cross examination for Microsoft.

June 11, 1999 - Friday

9:35 AM PDT -

The transcripts from June 10th (yesterday) have yet to be posted on the Microsoft web site.  When they are posted I will resume this column.

June 10, 1999 - Thursday (Wednesday transcript review: Garry Norris, IBM on the stand. Mr. Pepperman is conducting the cross examination for Microsoft)

1:19 PM PDT - On last shot for Microsoft - Misleading as usual.

q. At the top under "goals" this document reads: "the goals for this marketing plan are to position IBM `chicago ready' pc's in the market early, establish early market momentum for chicago and establish the IBM pc as the industry leading platform for chicago." Now the reference in this document to "pc 95" that Mr. Malone pointed out to you, that's a reference to Microsoft's pc 95 initiative, not to chicago, correct, sir?

a. What statement are you reading from now?

q. Various bullets that Mr. Malone pointed to, such as "pc 95 shipping at chicago launch," "pc 95 press release," the references to pc 95 are not to chicago, are they?

a. Pc 95 should be a reference to the pc 95 guidelines and logo.

q. And that deals with hardware compliance, correct?

a. Yes.

q. And would deal with whether the hardware that was shipped at that time was certified as being compliant with windows 95, correct?

a. That's correct.

Well. Yes. But remember that OS/2 ran on systems with lower memory requirements than Windows 95/NT. So even a requirement to support Windows 95 on the hardware reduced the ability of IBM to promote lower cost systems running Os/2 which it could otherwise do. You know how OEMs like to quote systems without monitors to get a low price in the advertisement.

1:12 PM PDT - Microsoft's effort to preclude competition and strengthen its monopoly is very clear

q. The last point that i want to ask you about, top of the next page, page 9, it says "pc 95 shipping within one month of chicago launch," whereas the one we looked at before was "pc shipping at chicago launch," and again, "minimum, 75 percent, exceed, 90 percent, far exceed, 100 percent of desktops and portables." In order to earn any MDA royalties that are similar to this, what if anything--what if any impact would that have had on IBM's ability to ship os/2?

a. It would have forced us to reduce, eliminate or drop os/2.

Clearly Microsoft offered to pay IBM to stop competing. And, it clearly acted to increase IBM's costs for Windows if it did not do so.

1:03 PM PDT - Microsoft wanted IBM to make a false statement in public that Windows 95 was superior to other operating systems?

From Mr. Malone on redirect: q. And then below that, far exceed, "statement that Chicago is superior to other OS's." What, if any, impact on IBM's ability to ship-sell os/2 would it have had if you had either only mentioned windows 95 in your ads or said that windows 95 was better than other operating systems?

a. Well, we certainly would not have shipped OS/2 for much longer, had we done that.

Microsoft actually expects IBM to falsely disparage its own products? Microsoft is truly arrogant and naive. But, I guess they figured their monopoly power is so strong that they can get IBM to promote Windows even over IBM's own superior technology.

I can understand how some people may think that Microsoft does not have a monopoly. But, whenever a Microsoft persons says that, I know they are lying about their own beliefs. Actions by Microsoft prove that they they themselves know for a fact they have a monopoly or at least enormous monopoly power.

12:45 PM PDT - Time and time again Microsoft tries to get IBM to stop competing all to eventual detriment of consumers and the further establishment of Microsoft's monopoly power

q. In any event, prior to this time IBM had rejected Microsoft's proposal, correct, regarding--the proposal regarding removing applications from IBM's aptiva computers. correct?

a. We did reject the proposal that was made regarding what bengt termed as the objectionable applications. We rejected the proposal on exclusivity for IE 4.0, and we rejected the proposal on the bpc, if it was tied to the exclusivity. Yes.

Time and time again IBM and Netscape reject Microsoft's attempts to remove competition from the industry. IBM and Netscape should be commended from refusing these illegal deals. Rather what we hear in this trial is Microsoft wanting snacks when they do not violate the law.

What is really interesting here is the attitude of the Microsoft attorneys in even asking these kinds of questions.

12:27 PM PDT - Again the implication is that Microsoft should get some kind of snack

q. And Microsoft also gave IBM permission to modify windows such that if the user clicked on the IE icon on the desktop, the user would go to IBM's internet service provider rather than Microsoft's internet referral server, is that correct?

a. That's correct.

q. And Microsoft gave IBM the freedom to do so, notwithstanding the fact that IBM was still shipping Netscape Navigator with its machines, is that correct?

a. Yes, that's correct.

Is the Netscape Navigator supposed to damage the normal operations of Windows or something? Microsoft not violating the law is not a gift from Microsoft, it is right held by IBM. (Not according to Microsoft lawyers though. Apparently they think each time Microsoft does not violate the law some kind of "gift" is involved).

I guess one should be considered to be blessed if you get a threatening phone call but the threat does not materialize? Grow up, Microsoft.

12:15 PM PDT - Does Microsoft expect a cracker or cookie each time it does not violate the law?

q. Now, Microsoft ultimately gave IBM a $1 million royalty reduction to fund internet explorer promotional activities, is that correct?

a. Yes, they did.

q. And Microsoft did that notwithstanding the fact that IBM was shipping netscape navigator with its computers, is is that correct?

a. Yes, they did.

It is just fine if Microsoft wants to pay money in exchange for promotional activities by IBM. That is the normal way business is conducted in a lot of industries. But, here Mr. Pepperman implies that somehow Microsoft should be commented for a legal act. As if they deserve a cookie or cracker or something.

The problem that Microsoft runs into is trying to control or manipulate how OEMs deal with Microsoft competitors. The tip off occurs whenever a competitors product is mentioned by Microsoft. In other words, every time Microsoft mentions an IBM product or a Netscape product it is a problem.

Microsoft does not deserve a cracker simply because it compensated IBM for promotional work on IE while IBM was doing business with Netscape. That should be the normal case not the exception. Mr. Pepperman here suggested that Microsoft should be given some kind of aware for not always violating the antitrust laws. I guess that habit is hard to break or something.
 

10:36 AM PDT - Jim Miller misunderstood the relative positions of the two companies in regard to the audits

q. The three paragraphs there read, "while the meeting with joachim and mark baber was cordial, the overall relationship is rocky and needs to improve. "we discussed the role of jim miller -- suggested that he be removed from his current role with Microsoft. "Baber said the reason the win 95 contract was being tied to the audits was that Jim Miller suggested if the audits could not be resolved, IBM would be unwilling to sign the windows 95 agreement." do you see that?

a. I do.

It does appear that Jim Miller of IBM first suggested that the Windows 95 contract be held up pending the audits. I guess he may have thought that Microsoft was so anxious to get Windows 95 going that Microsoft might be willing to settle the audit issue prematurely. My guess is that he was wrong. It was not in the best interest of IBM to delay the Windows 95 license for any reason. IBM did want to sell Windows 95. And, the sooner an agreement could be reached on that the better it would be for IBM.

I can only surmise that when Microsoft heard that idea, they thought about it awhile and realized that they did have reasons why they wanted to hold off the 95 license but could not be so blunt about them. Sometimes a gift horse just shows up in the yard. No one can blame Microsoft for riding the horse if they felt they might be better off to delay the license and see if they can squeeze out OS/2 or Smartsuite.

It is rather clear that Microsoft wanted IBM to disadvantage IBM products in exchange for a signed Windows 95 license. And, any exchange or pressure of that kind would have and does have antitrust implications. IBM did have to sign a Windows 95 deal or lose a lot of business.

10:18 AM PDT - Microsoft simply did not delay licensing Windows 95 with IBM over some silly audit - that suggestion by Microsoft is absurd.

q. And it's your understanding, though, that the audit had begun before april of 1995, correct?

a. Yes, it is my understanding.

q. Now, on direct, you testified that, on july 19th, i believe it was, mark baber called you and cut off negotiations of the windows 95 license agreement until the audit was resolved; is that correct?

a. We need to check the record. I believe i said july 20th.

There is absolutely no reason for Microsoft to use the pending audit of prior deals to hold up a new license agreement with Windows 95. Microsoft simply wanted to put the squeeze on IBM to see if it could force IBM to drop OS/2. That is obvious.

Yes. License agreements often have audit provisions to verify that the royalty paid is the correct amount. And, those provisions fully protected Microsoft. Audits were underway. Microsoft could certainly expect to be paid any and all amounts that the audit might require. There is almost no likelihood that Microsoft would not be paid (i.e. IBM does maintain a bank account). If Microsoft was dealing with a shaky OEM, then holding up a license pending an audit might make business sense. But, this is IBM. There were not even close to being financially unsound in the mid 90's.

It is a pure squeeze play based upon what Microsoft felt its monopoly power was at that time. "We have this power." "What can we get IBM to do with it?" Crystal clear.

9:18 AM PDT - OS/2 was and still remains superior to Windows 95/98 for the reason stated in the white paper

q. Starting with "so what about chicago? Good question. with one foot still buried in the dos/windows grave, chicago is yesterday's technology dressed-up to look like tomorrow's 32-bit os/2. Why wait for an impostor? Os/2 is here today, and represents the real future in personal computer operating systems." to your knowledge, was IBM saying the same or similar things about windows 95 in 1994 and 1995 publicly?

a. I don't understand your question. I'm not sure what you want me to answer.

Aside from the fact that the white paper is a promotional piece which you would expect IBM to publish, the conclusions drawn by that paper were and remain fairly accurate. To this day, Windows 95/98 remain less than a true 32 bit operating system and of an inferior design. I recall reading that white paper at the time. It simply explained the different memory models used by Windows 95 versus OS/2 and how Windows 3.1 and DOS applications were supported. As far as I know, that paper was technically correct in all of its statements.

I can understand that Microsoft does not want anyone to point out the defective technology they use in their products but the way to fix that is not to design bad operating systems. Microsoft seems to suggest here that you simply prevent others from speaking out rather than develop better software.

OS/2 provided protected memory areas for all applications (including multiple Windows 3.1 applications and even DOS applications). Windows 95 did not (and still does not to my knowledge).

OS/2 provided preemptive multitasking for all applications (OS/2, Windows 3.1 and even DOS). Windows 95 on the other hand even was designed such that Windows 95 applications might be held up if an old DOS application hung in just the wrong place. It is a design difference between OS/2 and Windows 95. As far as I know, Windows 98 still has that defect.

If that white paper is technically incorrect, then Microsoft might have a point. But, Mr. Pepperman does not even suggest that. He only whines that IBM pointed out the technical deficiencies of Windows 95 and thus concludes that Windows 95 is only an impostor. That is a rather accurate conclusion.

Dear Bill Gates: Fix your operating system.

(Actually, since Microsoft and IBM jointly developed OS/2 and Windows Microsoft is clearly aware of the technical differences between the products as well as their relative technical merits. So again. If the white paper was technically incorrect, I am sure Mr. Pepperman would have point that out, right?)

q. Well, i read you a quote from this document. I recognize you haven't seen this document, but to your knowledge -- now, you worked for a while marketing os/2 to large computer manufacturers and you also worked on a dual boot of windows 3.1 and os/2. And then you worked negotiating license agreements with Microsoft. in your experience at IBM, to your knowledge, was IBM saying the same or similar things publicly as is in that paragraph that i read from this document?

a. Was IBM saying the same thing publicly that you just read?

q. Same or similar, that "chicago is yesterday's technology dressed-up to look like tomorrow's 32-bit os"?

a. I can't say whether we were saying the same or similar from what i just read in this document.

IBM should have done more to point out how lousy Windows 95/98 was/is from a technical standpoint. The technical reasons why Windows 95/98 is so unreliable and crashes all the time are explained in that white paper. Mr. Pepperman really should ascertain the technical accuracy of the paper perform he suggests that IBM should never speak ill of Microsoft.

q. Your answer is you don't know?

a. I don't know. But here is what i do know, since you presented this document into evidence. Okay. Referring back to your defendant's exhibit 2632 --

q. Mr. Norris, we've moved from that document. If the government wants to ask you questions about it during redirect, he can.

a. You asked a question. There's a context that needs to be added here.

Mr. Pepperman: i'm moving on to another subject.

(...or at least trying to ...)

Mr. Malone: your honor, if the witness needs to explain this answer to this question -

the court: He can explain the answer that he gave to that question.

by Mr. Pepperman: q. My question was, was IBM saying the same or similar things publicly as is that bottom quote in the document that i gave you? And you said you don't know. now, what context do you need to provide, sir?

a. You asked me as to whether or not we were engaged in a public campaign to disparage windows 95 from this document. And then you read from the bottom three paragraphs without going on to the next paragraph that said that Microsoft stated -- and then it goes on to talk about all the salt that Microsoft rubs into the wounds, stating, "the os/2 applications market is small and getting smaller. Windows applications account for almost 60 percent of all dollars spent worldwide on applications software." And then the document goes on to talk about how the two were engaging in a fight between os/2 and windows. So i was just going to put it in context from reading from this document that it appears that there was some sort of competitive engagement going on. Whether I knew at this time, no, i don't know.

q. But the two companies were going at it pretty hard, weren't they? They were competing very hard?

a. The two companies were competing.

The two companies were competing as they should be. It was Microsoft that acted using its monopoly power to preclude competition not by improving the Windows 95 product (which it has never done) but rather by trying to force IBM out of competing.

This is very strong evidence of why you do not want a monopolist in this industry. And, why everyone benefits enormously if you have active and strong competition. With competition technology advances. Without competition it does not. Observe that Windows 98 still does not incorporate known technologies to protect the OS from bugs and mistakes in applications.

Another hint to Bill Gates: No user application should ever be able to crash the OS. Superior technology in OS design prevents it. Windows 95/98 does not. Windows 95/98 is accurately described as inferior for that reason alone.

And, it is not disparaging a product to point out the truth.

q. Are you surprised that IBM -- that Microsoft wasn't making public statements of support and cooperation and endorsement of IBM? IBM wasn't making those sort of statements towards Microsoft, was it?

a. The IBM personal computer company, i don't think you've shown me anywhere in this set of documents, made these statements.

Well. Microsoft is not selling IBM products. But, Microsoft wanted IBM to sell Microsoft products. It is in Microsoft's own interest to cooperate with IBM as far as Windows 95 is concerned even if IBM continues to actively market and promote IBM's own products. The fact that IBM might point out the technical differences between Windows 95 and OS/2 does not justify Microsoft trying to harm IBM's Windows 95 business.

Mr. Pepperman is suggesting that Microsoft should without marketing support with IBM because IBM published the white paper or made a technical comparison between the products.

What do you want to bet that Microsoft tells all their OEMs that they are never to speak ill of Microsoft products if they want to continue in business? Do you think maybe that is the message that Microsoft gives to OEMs? Only about 6 months ago, a fellow from HP was asked about the reliability of Windows NT from Microsoft and what HP was doing about it. In a rather muted reply the fellow from HP said "we are working with them on that".

Well. It sounds to me like HP knows that Windows NT is highly unreliable and it is embarrassing to HP. The fellow from HP did refrain from correctly characterizing NT problem. I guess HP feels that protecting their "good relationship with Microsoft" is more important than telling the truth.
 

As you recall, I have proposed that the windows source code be sold non-exclusively to 6 or 8 industry players. If that were done, I could bet some pretty good money that at least 3 or 4 of those new owners would create a much more reliable version of Windows (95/98 and NT). Why? Because everyone knows Windows is horribly unreliable and a reliable version would have a real advantage in the marketplace. HP would fix their version. IBM would certainly do likewise. And, any of the other 4 or 6 would be required to do the same.

Microsoft just ignores the problem and blames the customer for doing this or doing that and crashing the system. It is never the users fault when a system crashes. It is always the operating system's fault.

And what do we see here from Mr. Pepperman? Whining about how IBM published the technical reasons for Microsofts defective product.

q. Was IBM giving Microsoft quotes for windows 95 press releases prior to the release of windows 95? Or were they saying the sort of things that these documents indicate?

Mr. Malone: objection. Compound.

the court: sustained. Rephrase it.

by Mr. Pepperman: q. Prior to the release of windows 95, in april/may of 1995, was IBM or IBM executives giving quotes for Microsoft press releases about windows 95 -- supportive quotes?

a. At this time, i don't recall whether we were requested to have quotes or not, but we did release press releases announcing that we were supporting windows 95 and would be preinstalling it. I don't recall whether we received a quote from Microsoft, though.

Microsoft obviously expects everyone to ignore the technical deficiencies of their products and say nothing but nice things about it and stop competing with superior technology. I think that just about covers what Microsoft wants. Oh. And, they act like they think they can force it.

8:41 AM PDT - Microsoft is trying to draw a line in the sand but they are swimming out past the breakers

q My question was a little different. I am asking for your understanding, sir. And so whatever your understanding is, that's all i can ask for. But my question was different. isn't it true that this royalty reduction milestone there had nothing to do with what IBM was shipping externally into the marketplace; it dealt with what operating system was loaded on p.c.'s in IBM internally?

a. I don't have that understanding.

q. Well, taking your understanding, it's true that this milestone -- this royalty reduction did not require IBM to stop shipping or eliminate os/2?

a. Again, I stand by the explanation I gave earlier on all of these milestones, that, combined, they had the effect of IBM reducing, eliminating or dropping os/2 in the market. Second, we were told that by Microsoft, that they wanted us to eliminate, drop, reduce or stop shipping os/2. And, thirdly, for Microsoft to have presented financial incentives to us amounting in the amount of $48 million when you combine these, it would have the effect of killing OS/2 in the market.

What Mr. Pepperman is trying to suggest is that bribes should not be considered illegal because the other person always has the option to refuse. To continue with the analogy it is the offering of the bribe that is illegal, not only the acceptance of it or some term in an agreement requiring the acceptance of bribes.

For Mr. Pepperman's information: It is illegal for Microsoft to use its monopoly power in an effort to preclude competition. Mr. Pepperman had better try to explain what Microsoft is trying to do with this MDA if that is not the case here. Those terms in the MDA have no other purpose but to preclude competition. Precisely which words were used is just not relevant. The oral and written message is crystal clear. The money offered to IBM is clear and real even if Microsoft retains some subjective control. In fact the subjective control retained by Microsoft even proves that Microsoft itself knew for certain that it had enormous monopoly power and that it can in fact exercise it (more or less) over time as required to achieve their goals. Again, compare this agreement with an employment contract where the employer decides each month how much salary will be paid without any guidelines.

8:18 AM PDT - The Microsoft lawyer continues to emphasize that Microsoft was very clear about what it wanted IBM to do to remove competition

q. Look at other one you mentioned, "ship windows 95 preinstalled with at least 50 percent of IBM systems in the month immediately following the period ending 60 days after Microsoft release to manufacturing of Microsoft windows 95." you agree that that royalty reduction does not require IBM to stop shipping or eliminate os/2?

a. I will answer "yes" in the same context as i answered before. That provision, coupled with the other provisions that require you to put 50 percent of another manufacturer's operating system on your system, ahead of the operating systems which you were shipping, along with exclusive advertising that are following in the next few pages, and also along with adopting windows as the standard operating system for your company, has the effect in the marketplace of reduce, eliminate or dropping your own product.

q. It does not require IBM to drop or eliminate os/2, does it?

a. That's correct.

q. Okay. Now, look at the last bullet point on this page we're looking at, 81834. Now, that bullet point carries over on to the top of the next page and includes the "exceed" element that you mentioned, correct?

a. Yes, it does.

q. Now, the full bullet reads "display windows 95 logo in all IBM windows 95 advertisements." And then, "exceed. windows 95 is the only os mentioned in advertisement." now, that royalty reduction did not require IBM to stop shipping or eliminate os/2, did it?

a. Again, i will answer your question. The word "requirement" is not listed here, that is correct. However, again, the effect in the marketplace, when you advertise another manufacturer's products only, when you have a competing product in the marketplace, sends a message to your customers, "they are promoting and advertising windows 95 only. They must not be promoting or shipping os/2."

q. The next one -

a. And, by the way, coupled with the fact that, in my briefings, i was told verbally that that's what Microsoft wanted us to do.

q. And you were told that by Mr. Dubinsky?

a. Yes.

q. Who said that Mr. Baber said it?

a. Yes.

q. And your information on that is secondhand, correct?

a. I am relaying what i was told in my briefing.

q. Now, the bullets two down from there, which refers to reference to windows 95 in IBM product advertisements -- is your answer with respect to that bullet the same as it was with respect to the other one we discussed, that there is no requirement that IBM stop shipping or eliminate os/2?

a. The word "required" is not written. I reiterate what i said before. Verbally, it was told to us. And these activities, once executed with Microsoft, have the effect of killing os/2 in the market.

q. Finally, the bullet four up from the bottom, "adopt windows 95 as the standard operating system for IBM," now, is it your understanding, sir, that what that required is that IBM internally adopt windows 95 as a standard operating system?

a. Mr. Pepperman, let me think about your question for a second. here's my understanding. We asked Microsoft on many occasions what the "adopt windows 95 as the standard operating system for IBM" meant. Microsoft would not quantify what that meant. Did it mean that we had to ship a hundred percent to make it the standard? Did it mean we had to ship 90 percent for it to be standard, 80 percent, or what have you? we also asked how it would be measured. We were informed, according to my briefing, that it was up to the discretion of Microsoft as to whether or not we met that milestone. That's my understanding.

Let me ask you a question. Do you prefer to sign a real estate lease or mortgage where the monthly payment is specified or where the monthly payment is determined by the other party at their sole discretion each month? What you are looking at here is a contract the terms of which were dictated by Microsoft Corporation and the terms of which could be changed by Microsoft Corporation at any time. At any time, if Microsoft "felt" IBM's adoption of Windows 95 was not sufficient it could just tighten the screws right? No one signs contracts like this unless they have no other choice, period.

This contract is very strong evidence of just how much raw power Microsoft thought it had over IBM due to its monopoly position.

Do you suppose Microsoft forced all other OEMs to sign similar contracts allowing Microsoft the subjective decision on whether the OEM was working hard enough to rub out OS/2 or Navigator? And as is Microsoft's practice here the written MDA says one thing but the Microsoft boys orally tell IBM about more restrictive terms such that the real agreement that Microsoft forces upon IBM is clear and understood.

Mr. Pepperman wants to suggest that the Microsoft MDA is somehow okay because it omits the written "requirement" word. Bull. I am sure that the employment contract used by organized crime does not say in writing that no one is testify against another in court, but anyone in that business knows that their live is on the line should they choose to do so. In this case, Microsoft made certain that IBM understood what Microsoft wanted IBM to do. It is silly to suggest as Mr. Pepperman does here that Microsoft did not insist that IBM stop competing simply because of the omission of this word or that word in the MDA. The meaning of the MDA is very clear. Mr. Norris clearly got the message and understood it correctly.

Bill Gates himself made certain of that in his phone calls.

8:05 AM PDT - IBMs deal is most likely the least restrictive of all OEM agreements as far as OS/2 (or any other competing OS) is concerned

q. Look at other one you mentioned, "ship windows 95 preinstalled with at least 50 percent of IBM systems in the month immediately following the period ending 60 days after Microsoft release to manufacturing of Microsoft windows 95." you agree that that royalty reduction does not require IBM to stop shipping or eliminate os/2?

a. I will answer "yes" in the same context as i answered before. That provision, coupled with the other provisions that require you to put 50 percent of another manufacturer's operating system on your system, ahead of the operating systems which you were shipping, along with exclusive advertising that are following in the next few pages, and also along with adopting windows as the standard operating system for your company, has the effect in the marketplace of reduce, eliminate or dropping your own product.

If Microsoft wants to suggests that they have not acted to preclude OS/2 from the market, they need to bring in all OEM agreements (written and oral). It is deceitful for Microsoft to suggest that the IBM agreement is a typical MDA. The IBM MDA is most likely the least restrictive of them all. The IBM MDA only provides financial incentives to do as Microsoft wants. Everyone else is told what they must do in order to have a business. You do not think so? Lets bring in the OEMs under conditions where they can not be intimidated by Microsoft and their business is not dependant upon "great" relations with Microsoft and not subject to irate phone calls from Bill Gates.

7:44 AM PDT - Microsoft did not require IBM to drop OS/2 but it may have required other OEMs to do so

q. But you agree it did not require IBM to stop shipping or eliminate os/2?

a. The word "requirement" is not written here, i agree.

Were other OEMs "required" to not sell OS/2 in order to do business with Microsoft? Were other OEMs "required" to not sell OS/2 in order to get marketing assistance or other discounts on the wholesale cost for Windows? Were other OEMs "told" they had to sell only Microsoft products to get the best terms and conditions?

Whatever conclusions you reach do not base your decision upon public statements they may have made. This testimony from Mr. Norris clearly indicates that Microsoft uses secret meetings to discuss illegal demands and acts and uses Bill Gates himself with stubborn OEMs who might want to sell products from other companies. Bill Gates runs Microsoft just as organized crime runs their respective families (I.E. if it means you have to cross over the line and break the law to get a deal, that is what you do). Ever hear about the "code of silence"? Usually it applies to police officers not testifying against each other or members of a crime unit not turning upon each other. Well. OEMs have operated there business under the fear of what Microsoft might do to them should they openly discuss what Microsoft has forced them to do. It has taken IBM to break the ice. Compaq still does precisely as Microsoft requests. Does not Compaq have better terms and conditions than IBM for Windows? And did not Compaq surprise everyone by offering Navigator right in the middle of this trial (even if Netscape had to pay them to do it)?

And clearly if an OEM speaks up now and testifies that it was also forced or given monetary incentives to sell only Microsoft products, its future is on the line for as long as the monopoly remains in existence. This is a very good reason for the court to seriously consider splitting up Microsoft in such a manner such that monopoly power is completely removed (i.e. no one company sells the product ...6 or 8 companies sell Windows at the wholesale level such that any OEM has more than one manufacturer to deal with if one of them tries to force their hand).

7:04 AM PDT - Try to erase as it may, Microsoft is still portrayed as the monopolist trying to get IBM itself to stop competing with OS/2 with the offer of monopoly money

q. You did tell me at your deposition that Microsoft had offered IBM $8 in MDA royalty reductions to stop shipping or eliminate os/2?

a. That's correct.

q. Now, it's true, isn't it, that Microsoft never included in any MDA proposal a milestone that actually required IBM to stop shipping or eliminate os/2?

a. In the mda's that were given to us -

q. If you could, sir, answer my question "yes," "no" or "i don't know," and then provide whatever context you need.

a. Repeat the question for me again, please.

q. It's true, isn't it, that Microsoft never included in any MDA proposal a milestone that required IBM to stop shipping or eliminate os/2? Is that true?

a. That Microsoft never -- repeat it one more time, please.

q. Microsoft never included -- there was never, in any mda proposal, any milestone that required IBM to stop shipping or eliminate os/2?

a. Define --

the court: you mean in writing?

Mr. Pepperman: in writing. In any MDA proposal.

the witness: okay. And define "required."

q (by Mr. Pepperman) A milestone that said if IBM stops shipping or eliminates os/2, then it will receive the following royalty reductions.

a. We have nothing in writing that reads what you just said.

q. Well, you were negotiating with Microsoft a contract; were you not?

a. No. In this timeframe?

q. Well, IBM was. This predates your involvement, correct?

a. In october of 1995, i was not in my position at that point.

q. October '94.

a. Excuse me. October of '94, that's correct.

q. But IBM was negotiating with Microsoft a contract that would provide for market development agreement royalty reductions, correct?
 

a. IBM was presented with a market development agreement in october that would provide for royalty reductions against the price of windows 95.

q. And it's that contract that was what would be enforceable, correct?

a. The market development agreement?

q. Yes. you have government exhibit 2132 in front of you, sir?

a. Yes, i do.

q. And that is the draft of the market development agreement that Microsoft sent IBM in october of '94?

Mr. Pepperman: your honor, do you have a copy of this exhibit? We could hand up to the court another copy.

the court: what's your exhibit number?

Mr. Pepperman: it's 2132.

the court: if you have quickly to hand another copy, i would appreciate it. (passing up to the court.)

the court: thank you.

the witness: this appears to be the draft of the MDA that was given to IBM in 1994.

by Mr. Pepperman:

q. Now, you told me in your deposition that Microsoft had offered IBM $8 in MDA royalty reductions to stop shipping or eliminate os/2. Will you please show me where those $8 of royalty reductions are in this agreement?

a. Certainly. And also again, since you've offered for me to put it in context, earlier on in the deposition and also later on, i used the terms "reduce," "eliminate" or "drop" os/2 intermittently, and that's what i was referring to here in the mda. so while i may have said "drop" -- "stop shipping" or "eliminate" os/2 in this line, there are others areas in the deposition where, as you said yesterday, i said "reduce, eliminate or drop" os/2.

q. Well, is it your testimony that the "drop" or "eliminate" part of your answer is inaccurate?

a. No. Absolutely not.

q. All right. Show me in this agreement where there is a royalty reduction which requires IBM or is dependent upon IBM to drop or eliminate os/2?

a. Again, i will keep it in context to show you where they are -- "reduce, drop or eliminate" os/2.

q. Okay.

a. If you turn to --

q. I'm focusing on "drop" or "eliminate," unless you want to amend your testimony and say that the MDA simply required IBM to reduce shipments of os/2. If that's what your testimony is now, we can move on. I'm interested in the "drop" or "eliminate" part of your answer.

a. My testimony is not changing.

q. Okay. Well, show me the royalty reductions.

a. At the top of what you refer to as bates 81835?

q. Yes.

a. "exceed. Windows 95 is the only operating system mentioned in the advertisements."

q. That's $1.

a. Okay.
 

a. The next bullet below "reference to windows 95 in IBM product advertisement," "exceed, windows 95 is the only operating system mentioned in the advertisement."

q. Now we have $2.

a. Four bullets up from the bottom, "adopt windows 95 as the standard operating system for IBM."

q. Now we have $5.

a. That's 6 -- that's 5. Okay. Let's see. Go up to bates 81834. One, two, three, four, five bullets down from the top. "ship windows 95 preinstalled with at least 50 percent of IBM systems in the month immediately following the period ending 60 days after Microsoft release to manufacturing of Microsoft windows 95."

q. Okay. Now, let's go back through those, starting with the one you just read.

a. Well, since you asked, counsel, there is one other one that i didn't mention in the 8, but i see it here now. And that is the third bullet from the top, for $2, "participate in windows 95-based marketing message program from effective date until Microsoft windows 95 release to manufacturing."

q. Okay. We'll start with that one, then. "participate in windows 95-base marketing message program."

a. Uh-huh.

q. Did that royalty -- did that reduction there require you to stop shipping or eliminate os/2?

a. The answer is "no." And as you offered me to put it in context, your honor, essentially, once you take that mda item, coupled with the other MDA items that now total $10, you have the effect on the marketplace of presenting a marketing message to your customers and your end users that you are promoting and leading with another manufacturer's products before your own, which effectively puts your os/2 product to the grave.

Mr. Pepperman made a big mistake in asking this question. It may be that the MDA does not actually provide a benchmark for OS/2 sales reductions, but so what? The meaning of the terms of the MDA are very clear, obvious and intentional. Microsoft wanted to use its monopoly power to get IBM itself to disfavor OS/2. And, here Mr. Norris upped his figure from $8 to $10 since Mr. Pepperman drew even more attention to the matter.

If Microsoft thinks it has the power to get IBM itself to disfavor OS/2 what do you suppose Microsoft told all of the other OEMs in the business? Go ahead, guess. Do you suppose Microsoft told the other OEMs that selling OS/2 and Windows 95 side by side was a good idea? Do you suppose they suggested some kind of a joint marketing agreement where Microsoft would help pay for advertisements promoting both OS/2 and Windows? Or do you suppose that Microsoft told all other OEMs that if they even called IBM up on the phone, the deal was off and they were out of business?

This is extremely important testimony. Why? Because it helps prove why and how Microsoft got its monopoly power in the first place with Windows 95. Clearly Microsoft got its power not on the merits of its products but rather by being able to muscle OS/2 off the shelf. Sure, as an attorney, I would want to depose all OEMs to ascertain precisely what Microsoft told them about what they must do in order to do business with Microsoft. But, now knowing what Microsoft tried to force IBM to do, it does not take much imagination to pretty much know what they would say if they had the freedom to do so.

A lot of OEMs have made public statements that they sell Windows because that is what customers ask for. Well. Once the monopoly is in full strength, that would be the case. And, of course, such a public statement is for Microsoft's consumption. No OEM is going to jeopardize their entire company but letting it be known they were forced to sell Microsoft and Microsoft Only products. The use of the term "force" here can easily include oral statements, written statements, oral suggestions, connotations, marketing incentives that only apply is Microsoft exclusive or down right intimidation (you know, goon style).

The true OS/2 story is not yet known. If all OEMs felt free to testify, I would fully expect to find out that Microsoft illegally blocked OS/2 from the market. And that would lead to the conclusion that the Windows monopoly itself has been achieved in large part through illegal means. IBM has a real interesting law suit to consider filing. It may seem strange to see IBM file an antitrust action for damages, but do not count them out yet. If they can get the OEMs to testify truthfully, they may have a hell of a damage claim to file.

Right here Mr. Pepperman suggests that he thinks the lack of a specific benchmark is the "bright line" that Microsoft did not cross over. That is pure bull. It is simply a line drawn one foot past the distance Microsoft went to get IBM itself to drop competition. The real question for the OS/2 story is just how far did Microsoft go with the other lessor OEMs. IBM is not a fly-by-night OEM. At or around this time, they were the largest OEM.
 

June 9, 1999 - Wednesday (Garry Norris of IBM continues on the stand. Mr. Pepperman is conducting the cross examination for Microsoft)

6:51 PM PDT - Microsoft again shows its raw arrogance by the nature of its questions

q. And IBM's position was that although it would support Microsoft products like windows, if customers selected them, that IBM's first priority was to sell and promote IBM solutions on IBM platforms; correct?

a. First, yes.

Is Microsoft really so arrogant to think that IBM would not promote its own products first and foremost? Microsoft does not promote anyone else's products at all. The implication here is that IBM is wrong somehow in deciding to promote its own products first. I know that Microsoft thought they had enough raw monopoly power to change that but it is truly arrogant for the Microsoft attorney to know suggest in court that the decision by IBM was somehow wrong or inappropriate.

Microsoft is naive as well as arrogant.

IBM has the absolute right not to sell Microsoft products at all if that is what they want to do. Somehow Microsoft thinks it can force the sale of its products upon all consumers and expect other companies to promote Microsoft products despite their own interests.

6:34 PM PDT - Does Microsoft really think that the lowest wholesale cost should only go to those companies who only sell Microsoft products or must discontinue their own competing products first? Regardless of their volume of business?

q. Did IBM, nevertheless, believe it should receive the lowest royalty for windows 95?

a. That IBM believed that we should receive the lowest royalties for windows 95?

q. Correct.

a. Yes, and we had a number of reasons for believing so.

q. Lower than Compaq that had jointly developed the product with Microsoft?

a. We certainly believe that as well, yes.

Compaq did not jointly develop Windows 95 as Mr. Pepperman wants to suggest. They helped on a few drivers. Big deal. If Compaq jointly developed Windows 95 they would be in court suing Microsoft for half the monopoly money, right?

q. Okay. Now, just to sum up, IBM had requested a relationship on par with Compaq's relationship with Microsoft; correct?

a. We did, yes.

q. And IBM had done so several times in 1994, to your knowledge; correct?

a. Again, my comments as to several and constant and consistent was during my two-year period. My understanding coming into the job was that we certainly had requested to be on par with compaq.

q. And at IBM's request, Microsoft offered IBM or frontline partnership comparable to compaq's; correct?

a. My understanding is through the documents that IBM was offered a frontline partnership somewhat comparable to compaq, yes.

Somewhat comparable but it actually required a lot more of IBM than Compaq. Compaq did not have any competing products it was required to disfavor.

q. And IBM rejected that frontline partnership; correct?

a. IBM rejected it because we could not perform the requirements of the agreement, such as promoting Microsoft products exclusively or jointly; such as the MDA, even, which required us to ship windows 95 as a standard operating system; such as getting rebates for making windows 95 the only operating system we advertised in advertisements. It was collectively those things that said promote jointly or exclusively.

This is really a rather stupid line of questions. Certainly Mr. Pepperman knows that the terms of the MDA are not what is important. What is important is how burdensome those terms are to the particular company. Compaq would have no problem signing the deal offered IBM. But, IBM clearly had reason to reject it out of hand.

Somehow I get the feeling that either the Microsoft attorney do not understand antitrust law at all or they simply feel that Microsoft should have some right to violate those laws without regard to the liability the corporation might be incurring.

On the other, they may be just wasting their time in court with meaningless questions.

6:01 PM PDT - Compaq co-developed Windows 95?

q. I was referring you, sir, to the first two entries under ms-dos/windows 3.1, which read, "ibm codeveloped dos/windows with Microsoft." "as a result, IBM enjoys the best t's and c's and the lowest royalties in the industry for these products." do you see that?

a. I do.

q. Are t's and c's a reference to terms and conditions?

a. Yes.

q. And are the two entries under the heading ms-dos/windows 3.1 consistent with your understanding of what the facts were in 1996?

a. Yes.

q. Now, if you could look at the first two entries under the heading "windows 95," which read, "compaq codeveloped windows 95 with Microsoft." "as a result, compaq enjoys the best t's and c's and the lowest royalties in the industry." do you see that?

a. Yes, i do.

q. And those statements also accurately reflected your understanding in may of 1996, didn't they?

a. As we were preparing this presentation, certainly did at that point.

q. In other words, is it fair to say that compaq received the lowest royalty for windows 95, in part, so that it could recoup the investment it had made in codeveloping that product, much like the reason why IBM received the lowest royalty for windows 3.x?

a. As you said, in part, you would be correct, but they also didn't compete with IBM--excuse me--compete with Microsoft.

Well. Compaq might have helped Microsoft with the development of Windows 95 but it in no way compares to the effort that IBM contributed with DOS, Windows and OS/2 under the joint Microsoft-IBM agreement. The suggestion that both account for their respective favorable terms and conditions is a bit ridiculous. Working on a few drivers does not make an operating system much less 3 of them. And any benefit that Compaq thought it might have for working on the Plug and Play stuff certainly went out the window when they evaluated what Microsoft might do to them if they did not go along with the demands of Microsoft. Similar concepts does not equate the relative values of the contributions.

4:22 PM PDT - Sounds like it is about time Microsoft pick up a citation?

q. Well, let me ask you a more specific question. Do you know how many times the United States Department of Justice has sued IBM under the antitrust laws?

Mr. Malone: objection, your honor. Relevance.

the court: Sustained.

Mr. Pepperman: The information is on IBM's web site, so --

Might be on the web site, but it is still not relevant. It is an important observation to make however but not for the inference that Mr. Pepperman wanted to draw. It is true that IBM has been in court many times for antitrust charges. HP has too. So has Data General as well as others. Just about every major computer company has had to explain its activities in this regard. This is just Microsoft's turn so to speak. This despite some Microsoft supporters want to argue that the antitrust laws are not relevant to this industry or Microsoft is just being picked on because they are successful or some other silly reason. Looking at the evidence so far, Microsoft is in court because they freely and fragrantly violated the antitrust laws as well as laws against unfair competition as charged by some 19 states.

4:03 PM PDT - Mr. Pepperman begins the cross examination of Garry Norris, IBM

q. (by Mr. Pepperman, Microsoft) And I believe you told me at your deposition that you had been meeting with IBM's counsel approximately two to four times a week over the preceding three weeks before your deposition?

a. Off and on. Not all day, yes.

q. But two to four times a week. That number is accurate?

a. That's accurate.

Keep in mind that the DOJ action is one seeking primarily injunctive relief. The DOJ is not asking for monetary damages for any company. Clearly IBM has been harmed by the illegal acts of Microsoft. In the event the court decides that Microsoft does have a monopoly and has violated the antitrust laws, it is entirely possible that IBM would file its own law suit to recover damages. I have discussed this before and will likely bring it up again. Nothing in this legal action prevents individual companies harmed by Microsoft from suing for damages and nothing in this action prevents consumers from filing any legal action for damages caused to them should that be the case.

I do not speak for IBM, Netscape or any party to this action or any other action currently filed (i.e. Caldera, Bristol, Blue Mountain, etc). However, a finding that Microsoft has violated the antitrust laws does make other litigation for the recovery of damages much more likely.

3:43 PM PDT - What is that song with the lyics "and suddenly the light came on"?

q. Yes. He writes, referring to IBM, "i said they continue to use their p.c.'s to distribute things against us." and then he begins the next paragraph down by saying, "overall, we will never have the same relationship with IBM that we have with compaq, dell and even hp, because of their software ambitions." Mr. Norris, is that statement by Mr. Gates consistent with what you were told by Microsoft representatives about IBM offering competing software products throughout the time that you handled the p.c. company's software relationship with Microsoft?

a. It makes sense now, yes.

q. And is this statement by Mr. Gates consistent with what you personally experienced in terms of the treatment you received from Microsoft during this time?

a. It's very consistent.

The song has been often sung by the Igor Jazz Band but I am not sure of the title or the writer. The lyrics are rather cute and discuss how significant facts in our daily lives eventually become obvious even if we are a bit slow to pick them up.

Microsoft is a monopolist and they use their monopoly power to suppress competition all to the detriment of its own customers. It does so by raising the costs for competing products, getting other companies to discontinue business with third parties and getting companies to stop promoting their own products all of which are illegal if done for the purpose of establishing, strengthening or maintaining a monopoly. And, that is precisely what Microsoft has been doing.

3:18 PM PDT - Is IBM going to get the Compaq deal or is Compaq going to get the IBM deal? Either way they seem to agree on what the shaft is if competition for Microsoft is permitted to exist

q. Mr. Norris, let me ask you to look overall now, during your two years that you were program director of software strategy and strategic relations at the IBM p.c. Company, as well as based on what you learned about previous events when you were learning or preparing to do your job -- during that entire time, what if anything did Microsoft say that the p.c. Company would have to do to improve its relationship with Microsoft and to receive the same treatment from Microsoft as compaq?

a. Again, they said IBM could have compaq's deal when it quits competing. Compaq is a frontline partner because they don't compete. they had problems from time to time with various applications: first, os/2, then smartsuite, then notes, then worldbook, and then netscape.

q. When you say "they had problems," who do you mean?

a. Microsoft. Microsoft in general.

q. And when you say they had problems, what specifically are you referring to?

a. That they objected to us preloading those applications by dropping them in the box, as bengt referred to them as removing the objectionable applications.

q. Mr. Norris, i would like to show you part of a compaq document that is already in evidence.

Mr. Malone: your honor, this is exhibit 433, which was received under seal. One page of the document, the only page that i intend to show Mr. Norris, was shown on the screens and used in open court during the cross-examination.

the court: is it a compaq document?

Mr. Malone: it is, yes. one page was used publicly in open court during Mr. Rose's cross-examination, with the permission of Compaq's counsel, who was here. And i propose to give the entire exhibit to the court and to counsel, but only the one page that was used publicly to the witness.

the court: very well.

Mr. Malone: i'd ask that just slide 8, a single page of exhibit 433, be shown to the witness and the entire 433 be provided to counsel and the court.

by Mr. Malone: q. Mr. Norris, the page that you have is from a document that is entitled "Microsoft meeting preparation." It was prepared by compaq executives in january of 1993, and the page that i have shown you has the heading at the top, "judgment: how retaliatory would they get"? do you see that?

a. Yes, i do.

q. And there was testimony from Mr. Rose when this document was used that he expected that that heading referred to possible retaliation by Microsoft. the first item of possible retaliation that compaq wrote about here is pricing advantage. do you see that?

a. I do.

q. Based on what Microsoft told you over your two years, and what you personally experienced, how, if at all, did the fact that the IBM p.c. Company continued to ship competing products with its p.c.'s affect any IBM pricing advantage for windows?

a. As we discussed yesterday, Microsoft told us that as long as we were competing, that we would suffer consequences of higher prices, different terms and conditions, et cetera. specific to the pricing advantage, they told us and they showed it by increasing the price for windows from windows 3.1 -- which had a price of $9.00 -- to windows 95, a 5x increase of $45.90.

q. Moving down, i just want to hit a few of these. Moving down to the third bullet point, another item of possible retaliation by Microsoft that compaq wrote here is "access to early sdk's." how, if at all, did IBM p.c. Company's decision to continue to ship competing products affect IBM's access to early sdk's? perhaps you can begin by explaining quickly what an "sdk" is?

a. I can recall one specifically just off the top of my head. It's software development kits. i remember we wanted one for a direct draw, i believe it was, and they denied that. And it was consistent whenever we wanted access to software development kits, early beta code, or any type of access to code which was under development, because we competed, we knew that we weren't going to get to take advantage of those.

q. And how, if at all, would access to sdk's and early development code be important at all to the business of the IBM p.c. Company?

a. Time to market. Time to market is certainly one of the key ones that allows you to better integrate your products with their products and also to insure that you get a fast start when a new technology is developed.

q. Another item of possible retaliation by Microsoft that compaq wrote about here was "field sales activities." how, if at all, did the IBM p.c. Company's continuing to ship competing non-mircosoft products affect IBM's access to field sales activities with Microsoft?

a. There was none. It was denied, even when we offered. I can recall two specific instances. We offered to set up - look at setting up separate IBM sales forces in australia and the nordics. I traveled over to the nordics to work on getting it set up. They agreed that we would go look at doing it. They looked at it. It was denied.

q. And was that something that was important to IBM? Would that have made a difference to you?

a. Certainly. The nordics is an area where we enjoy a very good market share -- one of the best market shares for IBM p.c.'s in the world, and we wanted to be able to maintain that share, as well as be able to enhance it, where possible. so they were certainly willing to look at doing joint sales with Microsoft. So when we offered this up to kempin and his team, they said, "sure, let's look at it," but it was, again, the same thing that happened with the enabling programs. We basically got the runaround.

q. Another item of possible retaliation by Microsoft that compaq wrote about was support and training. how, if at all, did the IBM p.c. Company's decision to continue to ship competing products affect your access to support and training?

a. From the support perspective, there was some support from Microsoft, and that was in the areas of doing the testing that was required to get through the hardware design guide and the logo, but beyond a minimum level of support, we certainly didn't have support in terms of making joint calls to a customer to support that customer in their environment, or any of the support programs that were blessed through the enabling programs, like the certified solution provider program, and the asc or the atec. we could pay for support programs, by the way, and that's the only way that we could get those programs. others were able to get them through the certifications.

q. Was IBM able to pay for the four enabling programs that you have talked about?

a. Couldn't buy them.

q. So even if you paid for those, you weren't able to get in?

a. Couldn't buy them.

q. Another item that compaq wrote about possible retaliation by Microsoft was "tone toward compaq in press and with customers." do you see that?

a. Yes.

q. And how, if at all, did the IBM p.c. Company's decision to continue to ship products that competed with Microsoft affect Microsoft's tone toward IBM in press and with customers?

a. Because we competed, it was lukewarm at best. certainly, as we discussed yesterday, no quotes and no public statements regarding how good or not so good the relationship was. And, as we discussed, with customers, it was, in fact, just the opposite where they would go in with compaq, dec and hp and create uncertainties in our customers' minds that made them question our ability to support their environments, resulting in real lost business.

Clearly Microsoft attempts to force any OEM to discontinue any and all competitive action. Strange that Compaq has not ended up with IBMs deal. But, then Mr. Rose from Compaq has testified on the behalf of Microsoft. Some more quid pro quo, do you suppose? I am certainly not aware of any reason why Compaq or Mr. Rose would have done that. The testimony from Mr. Rose pretty much pinned Microsoft as a monopolist anyway. And, he disclosed rather significant price increases even for Compaq over time.

What is very clear is that any claim coming from Microsoft that they do not attempt to suppress or preclude competition using their monopoly power is a bit silly and immature on their part. It is absolutely clear that Microsoft does that all of the time. They are consistent in their effort to get IBM to stop competing and promote only Microsoft products instead of IBM products or to block out Netscape products. And, they are clearly willing to use money and their monopoly power to accomplish that.

2:49 PM PDT - More demands/requests/carrots from Microsoft to limit competition by non-Microsoft or non-monopoly products

q. Let's go through those one at a time. The first line, "cdt, no ship with ntw and ss." Can you explain what that meant?

a. Ted said that Microsoft did not want the commercial desktop brand of products to ship a system that was loaded with nt work station -- windows nt work station -- and smartsuite. and, in exchange, if we would not do that, the quid pro quo would be that we would get access to source code from Microsoft for windows nt and back office and windows 95. we would also get a t1 line that would allow quick access for data to go back and forth between redmond and kirkland and better support.

q. And the entry in the fourth line here, "qpq," what does that refer to?

a. Quid pro quo.

QPQ simply means that the access to NT source code is being offered in exchange for a non-competition agreement. This evidence strangely enough also supports the claims of Bristol Corporation. Microsoft uses access to its source code for NT as a lever to get other concessions rather than a straight up business deal. Microsoft is claiming in that case that it is properly pricing access to its code and Bristol just does not like the deal. But, here we see Microsoft wheels and deals with its source code to get IBM to stop competing. Could Microsoft be over charging companies that offer cross platform tools which might lessen the value of the monopoly product? Clearly Microsoft could do that. And, if Microsoft is going to try to get IBM to stop loading SmartSuite, the suggestions offered by Bristol are clearly believable.

The fact that this meeting was supposed to remain secret suggests that Microsoft people were advised of the antitrust implications of the deal they were suggesting. Clearly they should have been so advised. But, the advice should have been do not do it. Not hold it in secret.

Organized crime is always advised of their illegal acts. And, as is the apparent case here, their lawyers are powerless to prevent the crime from occuring.

2:35 PM PDT - Microsoft used its monopoly power in an attempt to monopolize many markets

q. And what was your understanding of what Mr. Akerlind from Microsoft meant by "remove objectionable apps"?

a. In the discussion, we were continuing to talk about the applications and what they wanted us to do. And bengt said that smartsuite, world book, and notes were applications that were objectionable to Microsoft because they competed. and they wanted us to stop loading those applications, remove them, and start loading Microsoft applications. Neutral.

There is that word again. Microsoft thinks it is "neutral" when only their products are promoted and sold.

2:26 PM PDT - Microsoft continues to single out Netscape as a target of their illegal acts

q. And just so we're clear before i go on, the items on the previous page that we just read -- "Microsoft wants IBM to exclusively promote IE and active desktop and no netscape and receive more MDA dollars across the p.c. Company" -- who said that from Microsoft?

a. Bengt akerlind.

q. And why next to the first of those two entries did you put in your notes the two asterisks?

a. Well, i was writing as he was talking. The first one i thought was important, that they wanted us to exclusively promote IE and active desktop. When he said "no netscape," i thought that was very important.

q. And why did you think that was important?

a. While they had indicated to us before that they were interested in us loading IE and not doing work on competitive systems, this was the first time that I had heard him actually say it directly to us, that they wanted us to not load Netscape.

I think anyone in the industry (lay or professional) would understand that this kind of conduct would have antitrust implications. (Maybe Microsoft was just trying to protect IBM customers from harm caused by Navigator bugs?)

2:17 PM PDT - Microsoft puts money behind their demand that IBM help rub out Netscape and sell the Microsoft only systems

q. Could you read those four lines or so into the record, please.

a. Sure. The two asterisks, "ms" -- Microsoft -- "wants IBM to exclusively promotion" -- that should say "promote"; sorry about that -- "ie and active desktop."

q. And the next two lines?

a. With 3 asterisks, "no netscape and receive more mda dollars across the p.c. Company."

q. What did Mr. Akerlind tell you about Microsoft wanting IBM to exclusively promote IE and active desktop and no netscape and receive more MDA dollars across the p.c. company?

a. Bengt said the they wanted IBM to actively load and promote internet explorer 4.0. They wanted it to be done in a -- on a neutral system. we would not be able to load netscape on that system. It would have to be internet explorer only. And if we did, we would receive more MDA dollars, not just on consumer systems, but also on thinkpad systems and also on desktop systems. So every system that we shipped from the p.c. Company.

q. And when you say "more MDA dollars," was it your understanding that meant more royalty reductions on windows 95 on all those systems across the company?

a. If not on windows 95 -- remember, we had the family agreement at this point in time. So reductions against that current agreement.

q. So that would include windows 95 and other versions of windows?

a. Yes.

Microsoft clearly offers money to IBM to help rub out Netscape.

2:04 PM PDT - Again, Microsoft specifically targets Netscape Navigator

q. And what understanding, if any, did you have of what competitive software could not be on a neutral system that had IE 4 on it?

a. Bengt was very specific. He said, "no netscape."

Did not one or more Microsoft witnesses testify in this case how competitive things were because OS/2 came with Navigator or could easily be downloaded from OS/2? This trial is just filled with examples of illegal acts by Microsoft and each time their act fails in the marketplace they stand up and attempt to use that failure as evidence of viable competition in the industry. It is beginning to sound like Microsoft freely conducted every illegal act they could think of short of actually blowing up buildings.

It is true that each time Microsoft fails, competition survives. If Microsoft's monopoly power is completely removed, competition will thrive. I have already gone on record suggesting that innovative and competitive products would increase 10 fold if Microsoft were split and the monopoly power completely removed from that corporation. I am beginning to think that estimate is very low.
 

1:54 PM PDT - Just another illegal attempt by Microsoft to remove competition from the market

q. Let me ask you about the last entry here. This says "ie 4.0. In exchange, neutral system and soft dollars." can you explain that discussion?

a. Yes. Similar to the bpc, internet explorer 4.0 was being offered for us to load on our systems or drop in the box, depending on when it was available. But, in exchange, we would have to agree to load a neutral system, meaning IE 4.0, without any competitive software. and, in exchange, we would also get some soft dollars, soft dollars being defined as Microsoft paying, perhaps, for advertising for IBM, or Microsoft giving us reductions against royalty, or paying for joint marketing events that we both attended, but with no funds coming from IBM.

This testimony would support a charge that Microsoft has in fact used its monopoly power in Windows to gain a monopoly in the word processing market. Actually, if you accept Microsoft's definition of a neutral system, Microsoft has attempted to gain a monopoly in all computer software markets. After all, Microsoft has claimed that any pre-loaded software not written by them is hostel and they will begin to harm OEMs dependant upon their monopoly products. Hear we see Navigator and Smartsuite both being disadvantaged directly by Microsoft defining a neutral system.

1:43 PM PDT - Non monopolists simply do not have the luxury to abuse customers as Microsoft clearly thinks it can

q. And, again, can you explain what the exchange was here that Microsoft was offering in return for a "neutral," as they defined it, "ibm p.c. System"?

a. Sure. They were offering to have the Kirkland programming center, which is just outside of Redmond, become a self-certification laboratory or WHQL, the windows hardware qualification laboratory. That the Kirkland programming center could serve as an escalation point for critical customer issues. We would be able to retain the NT source code on site at the Kirkland programming center, where we already had the rights to it; that we would jointly work on Microsoft and IBM future products together; that we would have our engineers work together; and that we would get new access to the Windows 95 and Back Office source code.

q. Let me ask you about one of those in particular, the self-certify for WHQL. Was that something that was at all important to IBM?

a. Yes. We thought so.

q. Why did you think that?

a. The reason being that oftentimes when we would send systems to Microsoft to get them certified and placed on the compatibility list, we would send them and somehow they got lost. It would take 60 to 90 days to get systems certified on their compatibility list. Competitors were taking one to two weeks. we'd send systems in may and they'd come back in August finally on the list. We'd get complaints sometimes from Microsoft that they were having technical problems, but we couldn't get work units together to go work on them. so we were losing valuable time to market. systems would be on the list from our competitors, but those same lists -- those same configurations would not be on list from IBM. So we wanted to have the right to do self-certification, or at least self-certification testing and just submit the results so that we didn't lose that time to market any longer.

All that was required of IBM was to cease competing? Sounds a lot like the same illegal suggestion Microsoft made to Netscape and Intel?

Where is that economist for Microsoft, anyway? I thought he was suggesting that the only reason no one offered competition was because they either did not have programmers or could not pay them. And, he is a Dean at MIT? Increditable stupidity on his part.
 

1:28 PM PDT - Microsoft calls a Microsoft only solution "neutral"?

q. And jump down to the third point here, the "kpc in exchange for neutral system."

a. Yes.

q. Can you explain what that meant?

a. Sure. Microsoft defined the neutral system as a system that contained a Microsoft software, application software, and no IBM or competing software. and no IBM or competing software.

q. How did you know that that was Microsoft's definition of a neutral system?

a. I asked and they told me.

A system with only Microsoft software is neutral and Microsoft does not have a monopoly. Both true statements according to the use of the English language by Microsoft Corporation. I think that is called deceit, misinformation, false testimony, perjury and fraud. But, at least now we all know what Microsoft means when they speak. They do not know the normal definitions of words or they intend to deceive.

I really think that the Microsoft lawyers should explain to Microsoft witnesses what perjury is. Perhaps they have already had that conversation and do not care? Witnesses do not have the freedom to use their own set of definitions for the words they use.

The credibility of Microsoft has been reduced to zero.
 

1:24 PM PDT - Microsoft continues to offer incentives and business deals to remove competition

q. And what was the part about "in exchange" that was discussed?

a. In exchange for Microsoft offering IBM the first chair, we would have to agree to load systems with Microsoft office.

q. And what, if anything, would that mean for the competing products that you were currently putting onto your p.c. systems?

a. Well, we would have to stop putting the product on that set of systems, the product being smartsuite.

q. And jump down to the third point here, the "kpc in

Microsoft continues to "trade" its monopoly power for the removal of competition by competitors.
 

1:06 PM PDT - Bill Gates sounds more and more like a crime boss

q. Did you or anyone else at IBM ever receive any reaction from Microsoft about the p.c. Company's decision to ship World Book?

a. Yes, we did.

q. Okay. Can you describe when the first reaction from Microsoft that you're aware of occurred?

a. One was through an e-mail from Roy Clauson, who was the resident manager out at the Kirkland programming center as i recall, saying that Gates was very upset about the deal we did with World Book and wanting to know why it wasn't Encarta.

Maybe Encarta is a lousy product, Bill. Remember, you claimed Netscape was losing business because it was lousy, right?

I can not help but compare the reaction that Bill Gates expresses when another company gets some business. Bill Gates sounds just like the organized crime family that calls up the Italian restaurant to query why they are buying their booze from another source. Bill reacts the same way too, send over the goons to break some knees.

12:07 PM PDT - Microsoft continues to try to preclude competition whenever it can

q. Two bullets point below that one you have the entry, "Microsoft will undertake no marketing initiatives with IBM due to lotus bundles." do you see that?

a. Yes, I do.

q. And what did you mean by that statement?

a. Up to now, we had asked Microsoft to participate in joint marketing events with us, and marketing initiatives such as giving us a statement in a press release as we discussed earlier. Anything that involved creating public awareness or public interest in the IBM Microsoft relationship. They told us that there would be no marketing initiatives with IBM as long as we were doing the Lotus Smartsuite bundles.

I can only reflect upon the interest that Inprise has shown up until just recently in writing development software for Unix and Linux. But, now Microsoft invests in Inprise all but removing that company from the list of ISVs that might offer products for other platforms.

12:02 PM PDT - And, for consumers the extra cost is related to the forced purchase of unwanted applications

q. And your first bullet point there is, quote, cost of doing business with Microsoft, end quote. can you describe for the court what you meant by that.

a. In summarizing and finalizing the windows desktop family agreement, this was a quote that was stated to me by mark baber. We wanted to know why this was so difficult to process, to get terms that were less burdensome and prices that didn't increase as much. And his response was it was the cost of doing business with Microsoft.

What is very clear is that Microsoft does not have the interests of consumers in mind when it conducts its business. The interests of consumers are completely ignored by Microsoft's business practices.

11:53 AM PDT - Microsoft seeks to harm consumers despite their own determination

q. And when, in the course of the events that we are talking about, did they tell you that?

a. Sometime between the August, September, October, can't pinpoint the exact date because when you ask, i guess, without going into detail now, we actually showed our front of screen to the team at Microsoft and asked them about that, and we took them through an entire demonstration, and they said that they liked it, but this restriction would be imposed on all pc manufacturers.

Microsoft thinks it is in Microsoft's best interest to harm consumers or sell an inferior product? Sounds a lot like Microsoft thinks so.

What is consistent in all of this testimony is that Microsoft acts in a way that is inconsistent and illogical unless you connect the act to the maintenance of their monopoly power. Then and only then it makes complete sense.

11:27 AM PDT - Advancement of the technology is needed if computers are going to be easier to use

q. And finally, just one other example, the third bullet point up from the bottom, applications that differentiate IBM from other oem's to enhance customer "out of box" experience, and then it gives an example. Can you describe generally what this category of things was.

a. This really is linked, actually. There were two separate items here, and i would like to take them one at a time.

q. Please do.

a. The applications that differentiate IBM from other oem's to enhance customers' "out of box" experience is one item. For example, if we wanted to add an application for a user to learn a tutorial on a given piece of software that we had installed, or any other application, for that matter, that gave the user choices and running a productivity set of applications versus a game, according to the contract changes, we would be precluded from doing that. and what we mean by differentiating IBM is that if we were restricted to not interrupt the sequence at all, it meant that IBM's front of screen, hp's front of screen, packard-bell's front of screen, would all look the same until we got to the desktop. And once it got to the windows desktop, then you would be begin to see differences. but even with that, the icon size all had to be the same size of the other icons that were on that front of screen. So, any user would simply look at any manufacturer's hardware and say, "okay, i don't really see a difference up front. I will buy the one i want to buy."

q. And what, if any, benefits to customers did IBM see of the ability it had prior to these restrictions to differentiate its machines and its startup and screens from those of other oem's?

a. Well, again we did usability studies, and we also performed focus groups, where we did blind comparisons of IBM's systems and competitor's systems and their "out of box" experience, using the welcome center, using the windows startup screen, using packard-bell and others. those usability studies confirmed that users liked the welcome screen better than they liked any of the others. They thought that they would make purchases of that because they were easier to use, versus what they saw in some of the other pc manufacturers' startups.

q. And in general, how, if at all, did IBM believe that being able to offer these kind of features through differentiating your screens or your bootup helped or benefited your customers, your end users?

a. First, our users found that the systems that they purchased using the welcome center that the systems were easier to use. second, that they enjoyed the aptiva experience, "out of box" experience. And let me define that for you. that means from the time the customer gets that box home, take it out of the box, unwrap it, put the system together, and plug it in, and then turn it on to work, just how productive can they be and how much did they enjoy the "out of box" experience, versus having difficulty putting the system together, having difficulty once they turn the computer on and getting to the startup screen and not knowing exactly where to go or where to start. If, for example, they wanted to learn how to use a given application, where to go for help, things like that.

q. And under the restrictions as told to you by Microsoft in this time period in 1996, how, if at all, would the ability of IBM and other oem's to offer these kind of different or differentiated experiences for users be affected?

a. They could no longer differentiate between the startup--the time you flipped on the system--and the time it got to the windows front of screen; therefore, there would be no differentiation. The first thing that a user saw on any pc manufacturers' system would be the windows 95 start screen.

The importance of this testimony is not based upon the need that all systems must be customized or differentiated by the OEM but rather that those OEMs who wish should have every right to customize the system for the intended market. It is stupid to suggest that systems intended for business use have the same start up as one intended for a family. So clearly a single startup sequence is harmful. But, what if Microsoft wrote several startup screens? Better, but who says Microsoft knows how to do that? After all, they wrote "BOB" and they did not invent the mouse nor even develop the idea of a GUI.

Arguably, Microsoft has no truly innovative products or ideas in its own name. It has either borrowed, bought or stolen all of them from someone else. So the worst solution to this problem would be to allow Microsoft to decide what all consumers must see.

Yes. Microsoft wants a monopoly. Yes. Microsoft wants to keep its monopoly. And, yes, Microsoft will do everything in its power (assuming it does not run out of money) to maintain, expand and strengthen that monopoly. But, it is a very bad idea and harms all consumers. Right now Microsoft forces all consumers to purchase IE regardless of their needs and restricts OEMs such as IBM, HP, Packard Bell and others from helping their own customers all in the name of maintaining monopoly power and exclusive advertising and promotion options. (Which in turn it can use to strengthen the monopoly even more - The AOL and Intuit deals.) Monopolists generally do not operate in the interest of consumers at all. Microsoft has proven it is no exception.

11:10 AM PDT - Microsoft suppresses technology and harms consumers by restricting improvements intended to make computers easier to use

q. Let me turn now to the subject of Microsoft's restrictions on the front of screen or the bootup sequence for windows 95 and ask you, in the course of your negotiating with Microsoft the windows desktop family agreement that we have been talking about, did Microsoft inform IBM at some point that it would impose restrictions on IBM adding shells or welcome programs and changing the bootup sequence?

a. Yes. I recall somewhere towards the end of june that we received notification from Microsoft that there were two new terms that would be imposed as part of the license agreement and conditions of license, one of which was restrictions on the front end--front of screen are gui, graphical user interface; and also limitation, 90-days limitations in terms of from the time you received product to get it loaded on your systems and shipped.

q. I'm sorry, the restrictions on the gui, those were separate from the 90-day restrictions?

a. Yes, two separate restrictions.

q. Okay. And can you describe very generally what, if anything, was IBM doing with the pc's that it built and shipped to its customers that would be affected by these restrictions that Microsoft told you about in june of 1996? Just generally.

a. At that time, in order to differentiate pc's that were shipping from IBM versus those shipping from competitors, we had performed usability studies to find out what consumers wanted in terms of ease of use of their personal computer systems. we had designed a front of screen called the "ibm welcome center" which brought the users to a screen that showed them how to use a mouse, how to run windows 95, what an icon is, what a folder is. We did that because a large percentage of new users are novices, and we wanted to ensure that they understood how to navigate, so to speak, through their pc. we also wanted to make it as easy as possible for them to use it so they wouldn't feel compelled to call the help center just to learn how to use a mouse.

q. And can you describe for the court where in the course of a user's--a new user's operation or use of an IBM pc, where this welcome center would appear.

a. Once you flip the switch to turn on the system, and prior to it coming up to the windows desktop screen with the start screen, right there.

q. And why did IBM choose to put its welcome center with this tutorial and these instructions you described right there at very beginning of the bootup process?

a. The usability studies that we had performed confirmed that that's where users wanted it. It confirmed that they found that easier to use than the windows start screen, and confirmed that it gave them ease of use, and again in navigating through the system, to learn what a mouse was, how to open a desktop folder, how to get to a certain icon, how to go for help.

Microsoft was obviously afraid it would lose a monopoly position on the boot up screens if it permitted OEMs to customize the first user experience. Suggesting as Microsoft has done that the first boot up must be identical for any reason is completely bogus. Microsoft will argue that copyright law somehow applies here. It does not. Copyright law does not give you complete freedom to write books as you see fit nor to design products as you see fit. It only prevents others from selling your products illegally. It is not a "designright" as Microsoft lawyers have suggested on this point.

IBM is not alone on the desire to customize the first screen so that their particular customers can benefit. Several OEMs have seen the need to do this. In fact there is no reason why all systems must boot up identically the first time. What do I care if the machine I buy looks identical to the machine purchased by some company in New York? If that machine is an Apple, it will not be the same anyway. Besides, any company that wants to customize the first screen assumes the burden of supporting that customer when they boot up the first time. That is the purpose of the customization.

Microsoft has tried to control this process purely so it can maintain an exclusive advertising position with all consumers. End of story.

10:57 AM PDT - Microsoft tightens the screws on IBM and all consumers as the power of the monopoly grows

q. Let me turn to a slightly different subject now, Mr. Norris. Were you involved at all in negotiating the 1997 market development agreement for IBM with Microsoft?

a. I don't recall the exact date we received it. I was there only on the initial discussions, as few months later I had accepted another assignment.

q. And that assignment was to your present--not to your present position, but to your present organization within the networking hardware division?

a. Yes.

q. And so you were still in the pc company when the 1997 MDA proposal from Microsoft arrived?

a. That's correct.

q. Okay. And how, if at all, did this 1997 MDA compare to the MDA that you had had the previous year?

a. From what i can recall in the early analysis, we analyzed that we would qualify for roughly $5 less in reductions. Or conversely, the effective price for windows 95 would be increased by $5.

q. And during the time such as it was that you were involved with evaluating this 1997 MDA, was there any indication that Microsoft was willing to negotiate the amount or the maximum amount allowed under this MDA?

a. Not that I can recall.

The price of windows has increased over the years. The evidence is very clear on that. Microsoft has openly mislead consumers on this precise point. But, then, deceit is one tool that Microsoft uses over and over again. If the wholesale cost of windows is rising all of the time but consumers are not paying more over time, then the margins for all OEMs are being squeezed. Funny thing. But, when competition does exist margins do get squeezed. When competition does not exist such as in a monopoly margins increase. Margins have been increasing for Microsoft. At least their gross margin is the highest in the industry due simply to the lack of competition. As you recall, Bill Gates was not happy at the news of IBM buying Lotus or the possible competition that might provide in what he feared might be the future. Hence the illegal screws were turned.

10:41 AM PDT - Microsoft wanted a dis-incentive to apply to sales of Windows 3.11 to close out DOS, OS/2 and strengthen its monopoly power in Windows 95

q. I wanted to back up a second and finish out the story on the windows desktop family agreement we were talking about. I believe you said you ultimately signed that agreement in the middle of August. can you describe for the court what the final terms were as they related to IBM's windows 3.11 royalty, the one that had been $9 before.

a. Okay. The final terms which we agreed to was as follows: the windows 3.11 price, we agreed to drop the agreement that ended in september of 1997, and we accepted a price of $40. That $40 was gross of the mda. With an applicable MDA roughly around $15, the price would end up around 25 u.s. Dollars. It represented about two and a half "x" increase. there were two other portions to this agreement on the windows 3.11 agreement, one of which Microsoft offered IBM an incentive, and the incentive was that if IBM's shipments of windows 3.11 fell below eight percent of its total Microsoft operating shipments, Microsoft would rebate to IBM 5 million u.s. Dollars, which had been agreed upon in a previous settlement agreement in 1995. the second aspect of that was that after shipments did, in fact, fall below eight percent, then the price for windows 3.11 would receive an additional $6 rebate.

q. Let me be sure i have that right. Under this agreement, if the total number of copies of windows 3.11 that IBM shipped was less than eight percent of your total windows shipments-

a. Total windows shipments of all Microsoft operating systems.

q. --then first you would receive $5 million back?

a. Yes.

q. And what was the second thing that would happen if IBM shipments of windows 3.11 stayed below eight percent of its total?

a. That we would get a rebate of $6 per license off of that $40 price, net the mda, then net $6.

q. So, if IBM had sold a few more, 8.01 percent, of its total of windows 3.11, its price per copy of 3.11 would have increased $6; is that correct?

a. We simply would not have received the $6 rebate, i believe.

q. And did the $6 rebate apply to all copies of 3.11 that were sold?

a. Well, reasonably it could not because if we exceeded the eight percent, then it didn't apply.

q. I'm sorry, if--let me ask it a different way: if IBM had sold--had shipped nine percent of its total as 3.11 missing this eight percent mark, would you have received the six percent--the $6 per copy reduction for any of the copies of 3.11 you sold?

a. No.

q. You only got that if the total stayed below the eight percent?

a. Stayed below the eight percent.

q. Did IBM try to negotiate this eight percent figure with Microsoft at all?

a. Yes, we did. there was one other provision of this--this eight percent.

q. Go ahead.

a. They put one other term in there, and that was if the shipments fell below 12 percent in the fourth quarter of 1996, then IBM would receive half of the $5 million at the end of 1996.

q. And what, if anything, did IBM try to do to negotiate any different terms or different percentages relating to the volume of 3.11 that would be shipped, or could be shipped?
 

a. We thought we would have difficulty meeting the eight or the twelve percent, so we asked Microsoft to make the total fifteen percent that we could fall below. They declined the offer.

q. And during these negotiations, did Microsoft tell you at all why they wanted to offer incentives to IBM to keep--offer incentives that IBM would receive if its shipments of 3.11 stayed below eight percent of your total?

a. Yes.

q. What did they will you?

a. They wanted to limit the shipments of windows 3.11.

q. You mentioned that you had made a counterproposal to Microsoft about what the percentage should be. when did IBM finally accept Microsoft's eight percent proposal?

a. I believe they sent us a letter--once they made the final offer, they sent the letter on the 28th of june, and we had until the close of business on july 1st to accept.

q. And why did IBM accept? Why did you agree to that term?

a. We had no choice. They said you have until the first of july to accept. There wasn't a reject portion to that. so, i called near the close of business on the first of july to wolfgang and mark and said we accept.

Clearly there must be a reason why Microsoft would insist that a dis-incentive apply to the sale of Windows 3.1. Sure they claim it is related to the support of the old stuff. But, the truth is that OS/2 run Windows 3.1 better than DOS and NT plus Microsoft wanted all consumers to use Windows 95 applications that would not run on OS/2 nor DOS systems (PC-DOS, Dr-Dos and even MS-Dos). This whole scheme was to strengthen or establish a monopoly in the consumer OS marketplace. And, if you evaluate the power that Microsoft itself thought it had at that time, you have to conclude that it though it already had a monopoly position and was just strengthening it.

10:14 AM PDT - I wonder how many OEMs and ISVs still think they are being dealt with fairly?

q. I'm sorry to interrupt. When you saw the "oem team," you mean at Microsoft?

a. Mark baber at the time, and later it became bengt akerlind and ted hannum. We asked them for applications to the program, were the programs open to anyone that had the qualifications. And in some cases, the qualifications were a minimum of two certified professionals, a certain percentage of your revenue coming from those services, and that was it. We went on the internet and found that the programs were described as being open to anyone that met those qualifications. we attempted to work with baber to get into the programs. They would send us to various places in Microsoft. We would chase those contacts down. Once we made the contact with who they pointed us to, the contact said, "i can't talk to you. The oem group is supposed to do this for you." We go back to the oem group, and the oem would point you back to where you just came from. So, we basically got the runarounds. and then finally, eventually, bengt akerlind said to me--he said, "you could get in these program when the two chairmen kiss and make up."

What he really meant was that when IBM discontinues competition Microsoft will play "fair again". This conduct coming from Microsoft proves more than just about anything how strong Microsoft thinks its monopoly power really is. If there was true competition in the consumer OS business, Microsoft would not afford to act in such a manner.

Everyone at Microsoft is lying about the monopoly power they think they have.

It is also important that the Microsoft economist respond to this testimony. What kind of economic power permits such conduct and how does that affect the ability of other companies to compete in the present case as well as the future. If IBM is having this kind of difficulty just who does that economist think might compete?

As to any OEM or ISV who claims to have a good relationship with Microsoft, I would have to conclude that is only the case because they do precisely as Microsoft tells them to. And, clearly, they have no plans to ever compete. It is called capitulation. It is called supporting the monopolist in everything they do out of fear of losing their business should they do otherwise. Netscape rejected Microsoft. Netscape is gone. LANtastic at one time offered networking products across multiple operating systems. Last time I checked they only do so now for Microsoft. Inprise (formerly Borland) used to offer a fair amount of competition but Microsoft hired off their best people and now has invested millions in Inprise itself. So, as a possible competitor, Inprise is gone.

Do as the monopolist says or you are history. No Microsoft ISV or OEM has free choice despite what they claim. No consumer has a free choice either.

10:00 AM PDT - The threat to the entire industry by Microsoft is very clear - DO NOT COMPETE WITH US

q. Okay. And the first entry, could you read that, please, next to "jk."

a. Sure. "aptiva bundles smartsuite, no quote."

q. And then next to "ts."

a. "any time smartsuite is loaded on a machine, Microsoft will not give quote."

q. Next to your initials, "gn."

a. "why was nt quote pulled?"

q. And the final "jk" point.

a. "same issue: smartsuite in boxes."

q. Can you describe what's being referred to here in terms of no quotes if smartsuite is bundled?

a. Since it appeared that we were very close to signing the windows desktop family agreement, and the fact that we had a number of products, new products, in what we call "our pipeline" that were being prepared to be announced into the marketplace, we would issue press releases to the news wires to announce the new product offerings. we were asking Microsoft to provide quotes complimenting IBM on using windows 95 or on signing license agreement, or just quotes to say that we had worked--we were working together, or quotes that simply stated that they were delighted that we were pre-loading windows 95.

q. These are quotes that would be used in advertising or promotional materials, things like that, by IBM?

a. Sometimes not even to that extent. Some were just as simple as in one single press release.

q. And what was IBM's purpose in asking Microsoft for these quotes to use in connection-

the court: you're not talking about price quotes?

the witness: no, no, no, sir.

the court: this is a quotation that could be used?

the witness: it would be a quotation that would show--

the court: a statement?

the witness: a statement showing support.

the court: okay.

by Mr. Malone: q. And why was it IBM wanted these statements of support from Microsoft in connection with its product plans?

a. It was primarily for market perception. Customers perceived that when IBM and Microsoft or when compaq and Microsoft or hp and Microsoft, did things together publicly, that they were working together. And the perception was that those two companies make good products together. You could rely upon the two companies to support those products, et cetera.
 

What you have to realize here is that if IBM is treated this way by Microsoft and Intel was treated in much a similar way, what chance does a up and coming ISV or OEM have to offer competition to Microsoft in the future much less the present? Anyone who even suggests that OS competition is possible must first come up with a plan to either remove entirely Microsoft's monopoly power or figure out how you are going to constrain their acts. The court has the power to eliminate the monopoly. The court could try to address Microsoft's conduct but it has already tried to do that. Microsoft even agreed in writing with this judge to do that. But, Microsoft just laughs as they go back home.

9:48 AM PDT - IBM did sign the Family agreement with Microsoft.

q. Did IBM ultimately sign a windows desktop family agreement with Microsoft?

a. We did.

IBM had little choice but to sign. Consumers now have not choice but to buy IE. Monopoly power forced both situations. IBM could have chosen to go out of business I suppose. And, any OEM or ISV can choose to quit the business too if they want to compete with Microsoft. Real funny has this so called economist paid by Microsoft to testify completely missed the real dynamics of the computer software business. Gosh. You would really think he would be aware of this stuff. And, he certainly should be expected to understand the economic and antitrust implications of this kind of behavior by Microsoft. After all, he is expected to give his "expert" opinion in this area of economics and not just present false evidence in an attempt to avoid antitrust liability on the part of Microsoft. (If Bill Gates were the devil his testimony might make more sense.)

9:41 AM PDT - By the way, what ever happened to Next Wave from HP?

Did Microsoft tell HP that NextWave must be dropped if Hp expects favorable terms and conditions for Windows products? If anyone knows the reason why NextWave was dropped by HP, I would like to be informed.

9:15 AM PDT - Microsoft acts warn ISVs and OEMs to do not even consider competing against Microsoft

q. Can you explain how you knew the information that you were writing here about Joachim not available to meet and will not meet.

a. We scheduled conference calls with Joachim from time to time, and Tony Santelli, to bring an executive-to-executive peer. We had scheduled a conference call on this occasion with Joachim to meet with Tony, myself, Mark Baber, and Wolfgang Struss. Baber got on the telephone and said that Joachim would not be available to meet with Tony at all, and he was not going to meet with Tony on any royalties or relationship-improvement measures because we were bundling or packaging or dropping Lotus Smartsuite into the box.

Remember that economist that claimed that anyone could compete with Microsoft if they just had a few programmers and could pay them? Remember that? Well what you are seeing here is that Microsoft will do everything it can to prevent anyone from offering a competing product. So. If you are a OEM or ISV and deal with Microsoft in anyway, your ability to participate in this industry may be dependant upon you willingness to stay out of any market where Microsoft wants to roam. That means any internet application is very risky. Clearly Real Networks is aware of this fact. Any audio or visual application comes under the same heading as a risky venture.

The message that this kind of arrogance sends is that in order to compete against Microsoft you may have to come from outside the industry itself in order to compete. Almost any ISV or OEM would be risking their main business if they were to adopt a business plan that offered competition to Microsoft. Microsoft knows full well that if they try to suppress any company trying to compete ten more companies will not put together a plan at all. Smart money stays away when a monopolist cares less about whether they violate antitrust law and laws against unfair competition in their daily business practices.

Above you have an example of a monopolist refusing to even discuss important matters with a competitor. Why? Because the refusal to do business actually strengthens the monopoly power.

Anyone who suggests a monopoly is good for this industry is uninformed or uneducated. A monopoly is the worse thing this industry needs. Even when monopolies are necessary they harm consumers. They are not at all necessary in this industry. Consumers are not harmed by the presence of Apple products in the market place. And, they would not be harmed if Apple were to achieve a 30 or 50 percent market share. Neither would a single consumer be harmed if a version of Windows were available on the market without networking and a browser being bundled with it. (Please assume competitive price reductions as bundled products are unbundled and not the price fixing that Microsoft would implement). Unbundling the applications from the OS should drop the price for the OS in half. And, please do not ask Microsoft what prices they would set. They can not even tell you the truth about whether they have a monopoly or not.

9:04 AM PDT - IBM could get the same deal as Compaq?

q. And the entry here says, "4660 is not out of parity with any oem, except compaq, not dec and hp. Microsoft would match compaq if we made the same commitment that Compaq did." do you see that?

a. Um-hmm.

q. Was that something that Mr. Baber and others from Microsoft had told you?

a. Yes.

q. And what did they tell you about the commitment, the same commitment, that compaq did that IBM would have to make in order to match compaq's windows 95 price?

a. It didn't change from the previous time. It was still--when IBM stops competing with Microsoft, then we can have compaq's deal: prices, terms and conditions.

q. And when you say when "ibm stops competing," are you referring to the pc company in the products it shipped on its pc's, or something else?

a. I think it was both, but he was referring here, we were shipping or beginning to ship smartsuite, we had been shipping os/2. So, he was referring to the competitive offerings that we load on our systems.

This is interesting dialog because as you know Compaq has since bought DEC. At this time Compaq also competes directly against Microsoft. How that dynamic plays out is going to be interesting to watch were it not for this law suit. Compaq could have ended up with the same deal as IBM were it not careful? The fellow from Compaq did testify for Microsoft but I do not think his testimony helped Microsoft at all. He pretty much testified that Microsoft has a monopoly (as has just about everyone in this case with the exception of false testimony).

8:41 AM PDT - Microsoft thought it wanted to leverage the power of Windows 95 into a strong position for Windows NT

q. Was having a license for NT 4.0 something that was important to IBM at this time?

a. Yes. The market had begun to catch on to Windows NT, and we were certainly beginning to understand that Windows NT would become an important factor in the market, so we felt we needed to have a license in order to distribute it as we were beginning to prepare plans to load Windows NT on our systems.

Microsoft has wanted to use the monopoly position of Windows 95 to help sell Windows NT. Windows NT does have competition in Unix, Linux and even OS/2. Microsoft here is trying to create a uniformity between Windows 95 and NT. Technically it has never done so. Sure. Some applications do run on both systems. But, many utilities do not. With this family agreement Microsoft was actually using the demand for NT to help secure the obsolescence of Windows 3.1 and help lessen some of the advantages that OS/2 had over both NT and Windows 95.

This interplay between NT and Windows 95 is very interesting today because of this law suit by the DOJ and the law suit by Bristol. I for one believe this law suit and its possible outcome has changed Microsoft's mind about dropping the code base for Windows 95/98 and simply offering what use to be called NT Lite in the press. Now I suppose it is referred to as Windows 2000 Consumer Version or something like that.

The interplay is this. If Microsoft loses this case and Microsoft is declared to have a monopoly in the consumer OS marketplace, that decision would apply equally to Windows 95/98 and Windows NT should they ever become a single code base. Of course, if they were a single code base and Microsoft loses this case, they would argue that it "changes nothing" just like they did when they decided to ignore Judge Jackson's consent decree which the judge thought would prevent IE from being a precondition to the use of a Microsoft OS. Microsoft could argue that it needs a second bite at the apple since it is now a banana, but that will most likely fail.

My guess is that Microsoft will hedge it bets and not combine the two code bases until after this litigation blows away on its own.

Bristol will argue for sure that Microsoft has a monopoly in the consumer version of their OS and NT is sufficiently similar to bring it under the same rules as the consumer version. If you treat NT separately, Windows NT alone does not enjoy a monopoly position. Linux is coming on strong in areas where NT plays and Unix will hold its own for some time. And, OS/2 is not going away although it might be described as the walking dead.

8:28 AM PDT - IBM had little choice but to sign the Family agreement and help obsolete OS/2

q. And did that offer result in an agreement to extend the $9 price for 3.11 through September '97?

a. Yes. And it also gave us an opportunity to recoup the investment that we had made in the early eighties into the early nineties.

q. In the course of the negotiations that followed, did IBM consider and ultimately agree to a substantially higher price for 3.11 than its $9 price?

a. Yes, we did.

q. And why did you do that? Why would you agree to pay more if you had a year and a half left under this contract?

a. We didn't have a choice. We did not have a choice. We had no place else to go. We had to have windows 95 in order to be in the pc business. and there were two leverage factors that Microsoft had with us: The first one is, if you don't sign a family agreement, you get no nt 4.0 license. The second one is, if you don't sign a family agreement, you get no market development agreement; therefore, your costs will increase by $75 million. And third, while we enjoyed the windows 3.11 price, we knew that demand would decline over time, but we were still enjoying favorable prices on that product, as well.

Whether you agree that IBM had a choice to sign the family agreement or not is up to you. But, the testimony here that IBM felt it had no choice is powerful evidence of the monopoly power that Microsoft had at that time. Again, it is important to note that when you see one company or another capable of getting a very one sided agreement over a competitor that is evidence that the power side of the agreement is well aware of their raw monopoly power. I doubt is any monopolist is unaware of the power they hold. They can lie about it all they wish. But, their acts always disclose their true feelings. In this case, it is possible that Microsoft did not know the raw monopoly power they held or hold. But, I doubt that. All Microsoft supports know it as well. Most simply deny it publicly in the hopes that it will be maintained.

Do you really think that President Bill Clinton does not understand the raw military and political power that GPS guided cruise missiles have? Microsoft knows precisely what they have and always did. Public statements to the contrary are pure deceit.

8:13 AM PDT - Microsoft really wanted Windows 3.1 to go away

q. Did Microsoft explain to IBM at any point why it wanted you to give up the $9 royalty that you had for windows 3.11 and agree to a significantly higher royalty for that product?

a. Yes, they did.

q. And what did they tell you?

a. They wanted to limit shipments of Windows 3.11.

q. Did they explain why they wanted to limit the shipments of 3.11?

a. Yes, they did. They wanted more customers to move to Windows 95, and more customers to move to Windows NT. They wanted to not have to support Windows 3.11 as much.

Microsoft really did want Windows 3.1 to go away. It is natural that they would not want to support an older version. It is also true that IBM was supporting Windows 3.1 applications in a superior way. (IBM via OS/2 also supported DOS applications in a superior way as well.) Windows 3.1 was really just a Graphic User Interface, a GUI. MS-DOS ran it. DR-DOS ran it. And, OS/2 ran it as well. It was important for Microsoft to obsolete DOS and any GUI that ran on it so that a monopoly position could be established in Windows 95/NT. According to some information coming from the Caldera vs. Microsoft antitrust suit, Dr-Dos also runs the Windows 95 GUI but the details on that are still to be fully disclosed.

The problem with Microsofts moves in this regard are that they harm consumers by putting additional pressure on them to upgrade their OS and applications and lower the value of applications code owned by OEMs and ISVs. Those customers who might wish to upgrade to Windows 95 applications would do so regardless of this extra pressure applied by Microsoft. Those customers who were quite happy with their 3.1 applications running under OS/2 or DOS were harmed by Microsoft's attempt to hasten the obsolescence of Windows 3.1.
 

7:35 AM PDT - Microsoft uses the Windows Desktop Family Agreement to put futher pressure upon IBM

q. And can you describe for the court, generally at first, what was referred to by the term "windows desktop family agreement."

a. This was an agreement that was presented to IBM that contained a single license agreement for the following Microsoft products: windows 3.11, ms-dos, the ms-dos tools, windows 95, and windows for work groups, and windows nt 4.0.

q. And who proposed the idea of a single license that would cover a variety or several Microsoft products?

a. Microsoft proposed the windows desktop family agreement.

q. And can you describe, again generally, how the--as proposed by Microsoft, how the windows desktop family agreement would work. What were the primary terms?

a. Sure. The desktop family agreement provided for the following terms and conditions: first, IBM would have to give up its favorable price for windows 3.11, and the price would go from $9 to $62. We were already--we had already contracted with Microsoft for an agreement that ran through september of 1997 for windows 3.11. They wanted IBM to relinquish the terms of that agreement and give it up. second, the family agreement required IBM to sign a license for windows family--for the windows desktop family in order to obtain a license for windows nt 4.0. unless you sign the family, you could not have a license for nt 4.0. third, if IBM did not sign the windows desktop family, Microsoft did agree to allow us to negotiate a separate windows 95 license agreement. However, if we did without signing a desktop family license agreement, we would lose the market development agreement, thereby losing $75 million in cost savings.

Combining all products into a family agreement is an interesting move on the part of Microsoft.

First, it required IBM to give up its favorable agreement on Windows 3.11 which (I assume) was being bundled with OS/2 to provide the older Windows compatibility for OS/2. Requiring IBM to forgo Windows 3.11 is significant since at that time there was considerable resistance in the marketplace for users to upgrade to Windows 95. Many consumers had Windows 3.1 applications and did not feel any real reason to spend the money to upgrade to Windows 95 and Windows 95 applications. It is also appropriate to point out that Os/2's use of Windows 3.1 was superior to that of Microsoft itself. While running under OS/2, Windows 3.1 applications could benefit from preemptive multitasking. Under Windows 95 or Windows 3.1 they could not. I believe NT 3.51 also failed to provide preemptive multitasking for multiple Windows 3.1 applications. So it was in Microsoft's interest to discourage Windows 3.1 as much as possible. Changing the price from $9 to $62 for an old product clearly discloses the fact that Microsoft wanted Windows 3.1 to go away as soon as possible. It also wanted to make it more difficult for IBM to compete with OS/2 running Windows 3.1 applications.

Other that observing the big picture in this attempt by Microsoft to convert to a family agreement, there is little wrong with trying to place several products under one agreement. As leverage Microsoft suggested that NT 4.0 would only be available if IBM agreed to the Family agreement. Windows NT 4.0 is not a monopoly product. However, I am sure IBM felt it would be necessary to provide NT 4.0 as well as Windows 95 considering the nature of their business.

What you have to do when evaluating these kinds of agreements is to look at the combination and relationships of the products. Combining products in a marketing agreement is similar to bundling at the retail level. Generally speaking if products are only available as a bundle, the cost of that bundle puts the combined products at a disadvantage in the marketplace. It is for this reason that Microsoft today still sells Word separately. They do not want to loose the sales where the customer only wants a word processor. If however, one component of the bundle is so important for all customers to acquire such as an operating system (or word processor), such a product can force the sale of the lessor products. However, that critical product must be a required product and not have any ready alternative or competitive product. Microsoft has not done this bundling with Word perhaps because WordPerfect is right there to pick up those lost sales if Microsoft only markets an office suite.

So. Looking at the family agreement, if you decide that Microsoft could force IBM to give up its current favorable agreements on Windows 3.1 and sign onto the family agreement in order to keep the benefits of the MDA and license Windows NT 4.0, you may be witnessing the exchange of monopoly power for a disincentive on the part of IBM to compete with Microsoft via Windows 3.1 running under OS/2. But, what is that? In antitrust terms, that is the use of monopoly power to further increase the monopoly or to sustain the monopoly. Microsoft wanted Windows 3.1 and OS/2 to go away. In this family agreement, Microsoft is exercising its monopoly power to help accomplish that.

Another way to look at this agreement is to ask yourself whether you wish you could accomplish the same result when you negotiate sales agreements. In other words, could you combine products in such a way as to disadvantage or obsolete a product sold by your competitor (i.e. the same party you are negotiating with). Most agreements that violate antitrust laws are really slick in the way they operate. This is the reason why companies such as Microsoft have such a hard time avoiding antitrust problems. The agreements that do violate the law really are effective marketing agreements. It is just that they are illegal when participated in by a monopolist.

7:22 AM PDT - It is easy for Microsoft to be a tough negotiator when they hold an established monopoly market

q. Okay. And can you describe for the court generally what, if any, major differences there were in the negotiating process for the 1996 MDA as compared to the 1995 MDA you described negotiating earlier in your testimony.

a. Sure. The 1996 market development agreement was an agreement that was handed to us on the--in the middle of february. That market development agreement contained $20 worth of activities that IBM could have performed in order to get the reduction in royalties. compared to 1995, the 1995 original mda, as presented to IBM in october of 1994, contained an opportunity for $27 worth of discounts to which IBM could work to get the discounts against the royalties. the 1996 market development agreement was nonnegotiable. Microsoft said, "this is the opportunity that you have. There will be no further opportunities to negotiate. We will not accept proposals from IBM to get additional discounts towards the price of windows 95." versus the 1995, since we only were able to qualify for eight, and then include--and ask for additional opportunities to a total of 15, that opportunity was not afforded us in the 1996 mda.

q. During the 1996 MDA negotiations, did you, in fact, either ask Microsoft or propose to Microsoft additional or different MDA activities that might go beyond the $20 maximum they had offered you?

a. We did both. We both asked orally, and also presented proposals to Microsoft from time to time during the next two months for additional discounts on the mda, and they were--they were all denied.

q. And what, if anything, did Microsoft representatives tell you about why they were not considering additional or different MDA activities in 1996 where they had done so in 1995?

a. Microsoft said to us that in 1995, "we were looking for IBM to help us make a market for windows 95." in 1996, they said, "we don't need you to help us make a market now. Therefore, what you see is what you get. This is the opportunity that you have."

Circumstances did change between 1995 and 1996. To that extent any MDA would expected to be different. However, you still need to look at the terms and conditions of any agreement to ascertain whether it has any legal problems as far as antitrust and unfair competition is concerned. At first blush, just handing IBM a non-negotiable agreement is a rather strong signal that Microsoft feels themselves like they hold all of the "properties" (monopoly) and can therefore just set the terms themselves without any need for negotiations.

5:35 PM PDT - Microsoft to IBM ... unless you quit competing you will continue to pay a higher price

q. What, if any, understanding did you have, from the meeting with Mr. Kempin and the follow-up to that, about what it would mean to IBM if, in fact, you did agree to become a frontline partner and to reduce or eliminate shipments of competing products?

a. As baber had referred to earlier in 1995, that IBM could have Compaq's price when it quits competing. We understood it to mean that it would mean reduced royalties. It would mean better than par support for our marketing programs, for technical programs, and perhaps engagement and invitation to their enabling programs, like their Microsoft certified solution provider program.

How is any of this stuff related to technology? And, where is the Microsoft economist? Does he think these business practices are not violations of antitrust law, unfair competition or just being highly competitive?

5:17 PM PDT - "Only game in town" sounds like a monopoly to me.

q. Before we go on, let me just ask you. You said that you analyzed what would happen if you had to get windows 95 through some other means, at retail or some other way. did you analyze what would happen if you simply used some other operating system, other than windows 95, and loaded that onto the p.c. Company's computers?

a. Yes, we did.

q. And what did that analysis tell you?

a. It told us that we he would lose anywhere from 70 to 90 percent in terms of volume. If we tried to install only os/2 on the systems, that there was enough demand for windows 95 that customers would not buy the os/2 systems. therefore, they would not buy our hardware or the software that was installed. So the volume impact could be anywhere from 70 to 90 percent.

q. In the course of your analysis, did you conclude whether or not there was any commercially viable alternative to the IBM p.c. Company for windows 95?

a. There was no place to go. Without windows 95, you couldn't be in the p.c. Business. There was no commercially viable alternative, no.

q. In the course of your negotiations with Microsoft, did anybody from Microsoft ever, in substance, say that to you, "there is nowhere else to go"?

a. Yes. They did.

q. Who told you that?

a. Mark Baber did.

q. And can you describe for the court when or how Mr. Baber said that?

a. Somewhere during the course of the negotiations in the spring or summer of '95, Baber said to me, "where else are you going to go? This is the only game in town."

When Microsoft says they do not have a monopoly they themselves do not believe it. It is only a false representation intended to mislead. But, you do not even have to find their words. Acts alone prove it. Monopolists can do certain things that just do not work well without that power. If you have competition in a market, the acts conducted here by Microsoft will only result in a lost account and a fired salesman. With a monopoly, other companies are harmed directly and forced to sign unfavorable contracts. Microsoft clearly tried to prevent IBM from actively promoting SmartSuite. What we do not know is what the industry would look like today if Microsoft did not have a monopoly position when Windows 95 was introduced. OS/2 was and still is a superior product. SmartSuite is certainly a useful package. IBM might have been able to survive without Windows 95. Microsoft did not think so. IBM did not think so. But, it looks pretty stupid for Microsoft to act as if it knows it has monopoly power yet proclaim in a court of law that it does not.

What was that line again? All competitors need is a few good programmers and a small amount of money to pay them. Yep. This is it. Direct from an economist hired by Microsoft to testify in court. Pure bull.
 

5:10 PM PDT - Microsoft clearly knew just how harmful their threatened acts were to IBM financially

q. And can you describe just generally for the court what you did to assess or to analyze the impact -- in particular, the impact if you weren't able to get the windows 95 license at all?

a. Sure. The analyses that we conducted looked at whether we got a license one week after announce, one month after announce, three months after announce, or that we never received the license for windows 95. we looked at alternative means in which to obtain the code, including buying it at retail, the shrink-wrap version and paying distributors, integrators or resellers to install the software for us. the analysis concluded that we would lose volume -- anywhere from 30 to 90 percent -- depending on the brand. It also included the fact that we would incur tens of millions of dollars of costs because of the increased cost to buy the retail package and the cost to pay someone to install it, since we didn't have the right. and then, third, it would amount to hundreds of millions of dollars of impact to our gross profit and the matter of lost sales and the increased costs.

Microsoft has a habit of harming OEMs and competitors by using the withdrawal of their monopoly products. The Bristol case is just another example. Do what Microsoft wants or they will violate the law to harm your company if necessary.

This is a clear warning to all OEMs and ISVs.

5:04 PM PDT - Microsoft harms IBM's business by delaying the Windows 95 contract illegally.

q. And when did you sign the agreement and receive that license?

a. We signed it at the launch event on August 24, 1995, about 15 minutes before the launch occurred.

q. Would you've liked to have signed it and received the license and the code sooner?

a. Absolutely.

q. What, if anything, happened to the audit that was ongoing and that Microsoft had said was the reason that they were stopping further negotiations on the windows 95 license back on july 20^th?

a. On that same day, we signed a settlement agreement and that was the end of the audit.

q. Can you describe for the court how, if at all, the delay until 15 minutes before the launch of windows 95 adversely affected IBM -- the business of the IBM p.c. Company?

a. Yes, I can. windows 95 had been delayed a couple of times already from the original planned date. There was a lot of pent-up demand for windows 95. As a result of that pent-up demand, consumers were particularly expected to go right to windows 95 and get it as soon as they can. as a result, we would miss the initial spurt in sales. So we missed that. The back-to-school market -- we missed that. We were late to market certainly with the Christmas market as well. the upgrade program that would be offered in the channel -- we were late or delayed as to that as well. We were impacted measurably in our business.

Certainly, if IBM does file a law suit against Microsoft for antitrust violations, these damages will be added to the pot.
 

4:50 PM PDT - Microsoft offers to pay IBM money (offset an unknown audit amount) if IBM does not compete

q. What, if any, understanding did you have of Mr. Kempin's statement that they -- Microsoft -- view the threat of bundling as a core issue in the relationship?

a. In other words, as long as we were competing with smartsuite at this point in time, that it was a core issue in how good or not so good the relationship would be.

q. And was it your understanding, based on this meeting, that Mr. Kempin was suggesting that, if IBM agreed not to bundle smartsuite on the p.c. Company's systems for a minimum of six months to one year, that that might reduce the payments necessary to resolve the audit?

a. That was my understanding.

Almost any act can be considered to violate antitrust law if it precludes competition or furthers or maintains a monopoly. Sure sounds like Microsoft has acted again in that regard.

Notice how none of this has anything to do with the price or performance of Microsoft technology. So the next time a Microsoft spokesmen chimes "superior technology" or "they made mistakes" or "all you need to do is hire a programmer", you know Microsoft is not talking about their illegal acts and the impact those acts have on precluding competition.

4:30 PM PDT - Sounds a bit like an attempt at extortion.

q. And on the first page, the beginning of the last paragraph, Mr. Thoman writes that, "ibm is very serious about pursuing a windows 95 license agreement. IBM has already announced that it will ship windows 95 and put plans in place to do so. Those plans are being impacted by this delay in obtaining the code." do you see that?

a. Yes, I do.

q. And why did Mr. Thoman feel it was necessary to tell Microsoft that IBM's plans were being impacted by the delay in obtaining the windows 95 code?

a. The development process in IBM is one that starts from the development of the hardware, the tests and evaluation of the software, and then the integration of such before they finally go out to consumers and commercial customers. They had cut off access to the code. Without the code, we couldn't continue development of our products. we had also begun to design new things into the hardware and also into the software, but needed to continue to get access to the code in order to complete the engineering and the verification testing.

q. And had you personally previously told representatives at Microsoft that having negotiations cut off and not having access to the code was in any way affecting IBM's ability to move forward with its product plans?

a. Yes, I did.

q. Who did you tell?

a. I told this to mark baber.

q. Now, you talked a few moments ago about the events around IBM's acquisition of lotus in July and then the announcement, just three days before Microsoft cut off the windows 95 negotiations, that IBM would be making lotus smartsuite the p.c. Company's primary desktop application. Let me move forward a little bit now and ask you what, if anything, did Microsoft representatives tell IBM during this time, the late july and august timeframe, about the audit being resolved in part by IBM doing or not doing something related to smartsuite?

a. Joachim Kempin said to Tony SantellI that, if IBM would agree to not ship Lotus Smartsuite for six months to a year, that they would settle the audit. He also said that if the IBM p.c. Company would take other relationship measures, that Microsoft would be willing to settle the audit.

the court: who said this?

the witness: Joachim Kempin.

the court: Kempin.

the witness: to Tony Santelli.

I guess Microsoft will use whatever means available to preclude competition, legal or not. Calling off the audit if IBM does not ship SmartSuite reaks of antitrust problems. What does Microsoft technology have to do with IBM shipping or not shipping SmartSuite? Nothing is the answer. It is a pure antitrust act.

4:20 PM PDT - The audit will take care of itself. Microsoft wanted to put pressure on IBM for trying to offer competition.

q. What, if any, understanding did you have about whether Mr. Gates said whose decision it was to cut off windows 95 negotiations and link them to completion of this audit you described?

a. Senior management. Gates and ballmer.

q. Now, following this call, what, if anything, did IBM do to try to resolve the audit issue and remove it as an obstacle to getting your windows 95 license?

a. The two that come clearest to mind are the following: we sent letters to Microsoft saying that there was no reason to link the audit to the windows 95 license agreement, and we asked to have it delinked. We offered $10 million to Microsoft in order to have them delink the audit, such that that $10 million could be used to clear up any discrepancies that might be found.

the court: tell me again what was being audited.

the witness: the audit concerned IBM's shipments of the local area network manager software. And I forget the exact timeframes. I think it was in '93 and '94 that it was being audited.

the court: and who was doing the audit?

the witness: ernst & young were the auditors that were hired to do it.

One of the reasons you have audit procedures in contracts is so that any dispute as to payment under that contract can be resolved without resorting to blackmail or extortion.

This is nothing more than Microsoft trying to exert pressure upon IBM to back off of any plans to compete. Where is the economist now? Remember? He said all anyone needs to compete with Microsoft is hire a few good programmers and have the money to pay them. Well. IBM bought Lotus. I think they have both. So, the economists must be falsifying his testimony? You also have to be free of any undue influence that Microsoft will certainly try to place upon your company (or any company you deal with in the industry such as Apple, AOL, Intuit, etc.). Even if you are IBM, you do not have what it takes when a monopolist ignores the antitrust laws.

4:10 PM PDT - Bill Gates hates real competition

q. In addition to Mr. Thoman's end of the call, could you hear any part of what Mr. Gates was saying?

a. Yes, I could.

q. And how was that possible?

a. He was pretty loud.

q. Did you have an understanding, either from what you heard Mr. Gates loudly saying, or what Mr. Thoman told you immediately after, of why Mr. Gates was so loud?

a. Yes, I do.

q. And what's that understanding?

a. He was complaining about Smartsuite, competing with Smartsuite, complaining about the audit, and complaining about OS/2. Those are three general items.

Was he complaining that the quality of those products was below par? Was he complaining that he was required to buy them, install them or maintain them? Was he complaining that he was required to re-sell them and stop promoting Microsoft products?

Again. I will offer to buy IE if Bill Gates permits me to select software that he must buy, install and maintain. Otherwise, what Bill Gates wants is simply not relevant.

10:00 AM PDT - Could Microsoft choose not to allow IBM to sell Windows 95?

q. I want to return to some smartsuite-related events in a few moments, but before I do that, let's rejoin the story of the windows 95 negotiations at the july 20th point. Were you and others -- your superiors at IBM concerned about Microsoft halting all windows 95 negotiations at this stage?

a. Yes. Very much so.

q. And is that for the reasons that you described earlier about IBM's competitive position if it did not have windows 95?

a. Yes.

Some people think that since Microsoft owns Windows it can license or sell it (or not sell it) to whomever it chooses. This is not so. Generally speaking, antitrust law requires that the same or similar terms be available to all potential customers or OEMs in the same category as the case may be. In other words, all large customers should have roughly the same chance to conduct business with Microsoft. All medium sized customers should have roughly the same chance. And, so on. In other words, when companies discriminate between customers on the basis of price or product availability they run afoul of antitrust laws.

Clearly if Microsoft could refuse to license Windows 95 to IBM, it could seriously affect IBM. Just because IBM may have a competing product is not a legal excuse for dealing with IBM.

Remember, this is not a sporting event with no rules. Some people might think that as long as your favorite team wins, it does not matter how. Well. That is incorrect. We have the federal antitrust laws. And, as Microsoft has found out (they knew before, but just ignored it), many states have laws against unfair competition as well. All of these laws provide a set or rules by which all companies must abide.

So no. Just because you develop a product does not mean you can do with it as you damn well please.

At this point, halting negotiations for Windows 95 can be considered to be an illegal act. An act conducted by a monopolist used to extract special terms and/or conditions from certain other companies/competitors. What could they (Microsoft) do? The simple safe answer is "similar terms and conditions" for all buyers. Otherwise you run the risk of being charged with discrimination between buyers and thus antitrust problems. Monopolists do not like this because they know they can get higher prices and better terms from different customers. And, as can be seen by this testimony, when Microsoft wants a competitor to stop competing, they may be able to force a competitor to leave the marketplace.

What is clear in the above fact pattern is that Microsoft does not know what to do next OR just does not intent to compete fairly. Microsoft here is acting almost like an athlete who does not want to run the race if it will be a fair race. If fair, Microsoft will not run. Microsoft will only play if it can cheat. So, it holds off on the Windows 95 license knowing that holding off alone can significantly harm IBM.

Word of warning to anyone contracting with Microsoft or using any Microsoft technology.
 

9:45 AM PDT - Microsoft cut off negotiations for Windows 95 due to the Lotus buy and IBM offering competition.

q. Now, the announcement that the IBM p.c. Was going to make a competing nonMicrosoft application its primary desktop offering came how long before Microsoft informed you that senior management had instructed it to cut off all further Windows 95 negotiations?

a. Three days before I received the call from Mark Baber.

It is rather plain that Microsoft wanted to prevent any real competition coming from IBM and the Lotus SmartSuite.

9:32 AM PDT - IBM buying Lotus was significant. The audit of past royalties was not.

q. And is that consistent with your understanding at the time that the linking between the audit and any further windows 95 negotiations was a complete reversal of Microsoft's prior position?

a. Yes.

q. Now, Mr. Norris, before we go further in the story of Microsoft's decision to cut off windows 95 negotiations with IBM, I want to ask you about another series of events that were happening at the same time, here in june and july of 1995. in early june of '95, as the windows 95 negotiations were proceeding, did IBM make any kind of announcement about a relationship or dealings with any competitor of Microsoft's?

a. We certainly did. On june 5th of 1995, IBM announced the hostile takeover and acquisition of lotus development corporation.

q. And what did lotus do at that time? What were its products?

a. Lotus was a direct competitor of Microsoft. They were a software manufacturer that offered competing products against Microsoft.

Anytime you see a sudden change in negotiations something is causing it. Here it is very unlikely that the audit would hold up negotiating a contract for a new version of Windows. For one, Windows 95 is a new product. It is completely within Microsoft's interest to have IBM on board with a Windows 95 license. It is very unlikely they would compromise the impact of Windows 95 coming onto the market over some old audit issues. The audit is just a money issue. It can be worked out in time.

However, IBM buying Lotus changes the competitive landscape. Microsoft did not know what IBM was going to do with Lotus. IBM most likely did not really know either. So it is likely that Microsoft would take a step back and reassess where it now stands. There is a very good chance that Microsoft was just looking for some reason to hold up the Windows 95 license deal and the old audit came in handy.

9:10 AM PDT - The fact that IBM did not agree to the terms of the MDA is not important.

q. And I believe you said -- and correct me if i'm wrong - that the total royalty reductions that Microsoft was proposing in this MDA proposal that would have required IBM to reduce or eliminate their competition through os/2 was $8 per copy; is that correct?

a. That's correct. There are three other provisions that amount to $8, when you combine them as a whole, that would have required us to reduce, drop or eliminate os/2 from IBM.

q. And did IBM, in fact, agree to those provisions?

a. We could not agree to those provisions, no.

q. And, again, quantifying it out across the entire volume of p.c.'s shipped, as you did a moment ago, what was the overall impact of your unwillingness to agree to limit or reduce os/2 competition?

a. Certainly the minimum impact would have been $8 per license. It comes to $40 million or as much as $48 million over a 12-month period of time.

In case you are wondering, it is not that significant that IBM did not agree to the terms of the MDA. Clearly they could have just signed the MDA but not completed the tasks required to get the discounts. Or, they could have done all those tasks and benefitted from the discounts. What is important in this case is the attempt by Microsoft to suppress competition. They even offered money to do so.

Keep in mind, almost any act can be considered to be a violation of antitrust law if it furthers or maintains monopoly power. There is absolutely no conclusion that can be drawn from this evidence except that Microsoft attempted to preclude competition from OS/2. Putting better technology into Windows 95 is competitive. Offering Windows 95 at a lower cost is price competition. Offering to pay a competitor to stop competing is 100% pure anti-competitive. The proposed MDA was simply an attempt to further the monopoly power of Windows by paying for the removal of competition.

8:50 AM PDT - Microsoft offers to pay IBM money to drop a competing product (OS/2)?

q. Could you describe, not specifically, but in general, what are the activities that are listed here? What is the purpose of these in the mda?

a. These are the milestone activities which IBM was required to meet in order to achieve the associated royalty reduction per activity.

q. And look, if you would, please, at the next page of the proposed mda, the one with the number 81835 at the bottom. do you see that?

a. Yes, I do.

q. The fourth bullet point up from the bottom, which reads "adopt windows 95 as the standard operating system for ibm," and then "$3.00."

a. Yes.

q. How does that relate to what you were describing a moment ago about milestone activities that would reduce the windows royalty if ibm did things that would reduce or eliminate their competition through os/2?

a. This was certainly one of the activities from this entire mda that would have required us to reduce, eliminate or drop os/2. Adopting windows 95 as the standard operating system for ibm would mean not having ibm as the standard operating system, or IBM/s os/2.

q. Let me ask you about a couple more on this page. Right near the top, there is the entry that says "exceed. windows 95 is the only os mentioned in advertisement." do you see that?

a. Yes, I do.

q. And what royalty reduction would you receive if you only mentioned windows 95 and didn't mention at all IBM's own os/2 operating system?

a. It would be $1 per system. And to quantify it, just so you understand the impact to us, we were shipping between 5 and 6 million systems at this point per year. That was worth $5 million to ibm.

Now we know why OS/2 lost favor in the marketplace. IBM was being offered incentives to disfavor it. What is most interesting about this MDA is that Microsoft thought it had enough monopoly power to force IBM to drop OS/2 or severely disfavor it. This turns Microsoft's claims that it does not have monopoly power into pure deceit. One who does not themselves think they have monopoly power would never even consider doing such a thing.

Microsoft Corporation does not even believe their own claims. Yet they continue to offer them in the hope to deceive others. It is a knowing and intentional fraud.

8:15 AM PDT - Microsoft's MDAs prove that Microsoft discriminates between OEMs on price

q. I would like to come back during the course of your testimony and ask you about a number of specific occasions where that may have happened. before we do that, let me turn to the first specific negotiation. You mentioned the 1995 market development agreement or MDA; is that correct?

a. Yes.

q. Before we begin, can you just explain very briefly for the court what -- in the Microsoft/ibm relationship, what an MDA was?

a. Your honor, the market development agreement is an agreement that was presented to IBM and other p.c. manufacturers that lists a set of activities that a p.c. manufacturer can perform, primarily for the benefit of Microsoft, but for which the p.c. Manufacturer would receive royalty reductions against the price of windows 95. As you completed those activities, once Microsoft decided whether you were entitled to them, then those reductions were applied against your price of windows 95.

q. You say once Microsoft decided if you were entitled. whose discretion or whose responsibility was it to decide whether the ibm p.c. Company had met any of the milestones in the MDA?

a. It was Microsoft's sole discretion whether or not we meet those milestones.

The fact that Microsoft's subjective decision was required for the discounts is significant. It means that what IBM did or did not do is totally unclear. Microsoft could unilaterally and orally add additional requirements in order to approve the discount. This is street thug lawyering. The MDA is written to give Microsoft a club to get any future concession it might want. In a competitive market, this kind of agreement just would not fly.

q. And did you, in your time at IBM, consider the MDA's to be simply discounts off the windows license royalty price?

a. No, absolutely not.

q. Why not?

a. The MDA was a vehicle that Microsoft used in order for us to perform activities that benefited them in many ways. It was a vehicle that also gave royalty reductions that imposed costs on the p.c. Manufacturer in order to attain the royalty reductions. There were several provisions in it, for example, that would have required us to reduce or eliminate our shipments of os/2, one of which I can specifically recall where it said, "make windows 95 the standard operating system of your company."

Microsoft attempts to force IBM to use Windows 95 for their internal use? Sound familiar? Gosh. And, I though Microsoft claimed that only technical reasons encouraged people to use Windows and IE. That claim by Microsoft is pure garbage.

Microsoft directly acts to reduce the sale quantity of a competing product. In this case, it appears that Microsoft wants to force IBM to buy more copies of Windows 95 rather than use their own product, OS/2. This is a pure sign that Microsoft Corporation knows it has strong monopoly power. Do you really think Ford could get General Motors to buy Ford cars for GM executives simply because they buy some parts from Ford? Well. If Ford had a patent or monopoly on a key component, you might actually find Ford trying to do that. But, please notice, that Ford would have to know it has such a control over a required part or it would not even suggest the idea to GM.

Microsoft KNOWS it has monopoly power. They continue to lie about it, but it is very clear that they know they have it and choose to lie anyway.

q. Now, the "it" you're referring to there -- was that a specific proposed MDA that Microsoft sent to ibm at some point?

a. Yes. I am speaking of the 1995 MDA, which was presented to us in 1994.

q. Okay. And how is it that you know about both what that MDA said and what may have happened concerning it?

a. In my briefing in march 1995, I asked to see the documents that we had agreed with Microsoft upon at that point in time. The team showed me the original market development agreement that was presented to them in October of 1994. They also showed me an agreement that they eventually signed in february of 1995, and some additional proposals which we had made. the october '94 market development agreement listed $27 in discounts that IBM had the opportunity to try to achieve. Ibm determined that we could only meet $8 of those discounts against that $75 price versus the 27, for various reasons, including some of which would require us to reduce, eliminate or drop shipments of os/2, and others of which would have required us to do some process and operational changes that we couldn't do in the time frame they were asking us to do them in.

It is very clear just how much raw monopoly power Microsoft thinks it has. Apparently Microsoft thinks it has enough power to ask for impossible tasks.

7:55 AM PDT - Microsoft told IBM not to compete

q. Now, after you received this information to prepare you to do your job, over the next two years that you were dealing with Microsoft as the lead negotiator, did Microsoft representatives ever tell you personally that IBM should reduce or eliminate its shipment of any products that competed with Microsoft?

a. On several occasions. I remember several specific occasions that I was told IBM can have Compaq's deal when it quits competing. I was told, "as long as you're competing with Microsoft, you will suffer in the market in terms of prices, terms and conditions, marketing support programs, and technical support programs."

This is a clear warning and threat to all Microsoft ISVs and OEMs. Do as Microsoft wants you to do or you will suffer. Does Microsoft sound like organized crime yet?

Now what was that claim that Microsoft made? All a competitor needs is a few good programmers and money to pay them? Microsoft sounds just like the street thugs that say all you have to do is sign a lease and hire a few clerks in order to open a local deli. Of course if you do not want to replace that front window every other week, you will need to pay "protection money".

Please name a single OEM or ISV that would consider competing with Microsoft when Microsoft's business practices are known to be corrupt. Please name a single OEM or ISV that would consider competing with Microsoft when they are so willing to ignore the law of the federal government and 19 states if it means harming a competitor.

And please notice that technology has nothing to do with this activity. Competition has nothing to do with this activity. Microsoft was acting to remove competition not improve the technology in Windows or sell Windows at a better price than OS/2. All of this activity is simply engaged in to remove a competitor.

Microsoft rightly deserves to lose its ability to conduct business.

8:45 AM PDT - Sounds similar to the threats Microsoft made to Apple

q. The first thing you mentioned was that the Microsoft account team or account representatives that were dealing with IBM would be cut -- were cut from three to one. What, if any, impact did that have on the IBM P.C. Company's ability to do its business?

a. Well, with four brands in the P.C. Company, there needs to be lots of daily contact because of the software development that goes on inside the P.C. Company and the relations that we needed to have with Microsoft in order to test our systems, manufacture our systems and ship them out to customers. Without daily contact, we were not able to get things done, like shipping our systems to Microsoft, and getting them on what's called the hardware compatibility test list in a timely fashion. so we were losing time to market as a result.

Did Microsoft threaten to slow up the development of Word for the Mac? Certainly we have seen testimony to the affect. Would Microsoft threaten such action in order to get what it wants with major corporations? Well. If you accept this testimony from Norris, Microsoft does attempt to harm certain other companies when they do not go along with their monopoly plans. Keep in mind here, that if Microsoft does not have a monopoly, this kind of activity would harm the business for Microsoft and therefore would most likely not be engaged in. Competitive companies can not afford to disadvantage a key OEM or distributor. The opposite is true when a monopoly is present. And, this is the reason why the antitrust laws are written to catch activities that further or maintain monopoly power.

Do not focus on the act. The act itself is just fine. (Remember the claim by Microsoft attorneys that Microsoft is only doing what every one else is doing?) But, almost any act can be in violation of the antitrust laws when conducted by a monopolist. The conduct standards are different.

7:20 AM PDT - Garry Norris from IBM takes the stand. Mr. Malone is conducting the direct examination for the DOJ.

q. In the course of preparing to be able to do your job, did you learn how it was that the p.c. Company had come to have such a poor relationship with Microsoft?

a. Yes, I did.

q. Can you tell the court what it was that you learned?

a. When I was briefed in march of 1995, the team told me that sometime in the second half of 1994, that there were - that there was an alliance proposal that was made by Microsoft and discussed between Microsoft and ibm regarding ibm becoming a frontline partner, which meant that Microsoft would give certain reduced royalties, additional terms and conditions and additional marketing and support to ibm, in return for which ibm would have to reduce, drop or eliminate os/2, primarily promote Microsoft products, and, in fact, lead with Microsoft products.

q. And os/2 at that point was what?

a. Os/2 was the competitive operating system to windows 3.1 and also later to windows 95.

q. Did you learn what, if anything -- what, if any, reaction ibm had to Microsoft's proposal that, in return for the things you described, it either -- it reduce or eliminate its promotion and shipping of os/2?

a. My understanding from the march briefing is that the senior executives considered it and went back to Microsoft in a fall comdex meeting in november of 1995 where they informed Microsoft that we would not exclusively promote Microsoft products, that we would not lead with Microsoft products, that we would not drop or eliminate shipments of os/2, and that we would, in fact, begin shipping os/2 in as many systems as we possibly could, through a project that we called dual boot where we installed windows 3.1 and we installed os/2 on the same system, which gave users a choice of selecting which operating system they wanted.

q. Now, at the time that you were just beginning your job and you were learning things you needed to know, what, if any, consequences did you learn had resulted from ibm's decision not to accept Microsoft's frontline partnership offer and not to reduce or eliminate its competition through os/2?

a. The team informed me that there were several consequences or actions that were taken as a result of the rejection of the offer. first of all, since ibm is such a large p.c. manufacturer and considered a top-tier manufacturer, they had three account managers from Microsoft that handled the ibm relationship on a day-to-day basis. my understanding is that the team was reduced from three people to one. That IBM was informed that it would be treated as any other OEM. And what the team meant by that is that there are several tiers of p.c. Manufacturers, but that they would be treated not like a Compaq, or a Dell, or an HP, but like any one of the hundreds of other p.c. manufacturers that simply are off-the-shelf manufacturers that ship products out. the starting price for Windows 95 would be $75 versus the $9 which we enjoyed on windows 3.1. And there were some other actions which I can't recall at the moment.

The dual-boot process spoke of here by Mr. Norris is not adequately explained. OS/2 did and still does toggle back and forth between DOS and OS/2 with a re-boot of the alternate OS. OS/2 also supported Windows 3.1 under a DOS session which would run multiple Windows 3.1 sessions with true preemptive multitasking between Windows 3.1 applications and OS/2 applications simultaneously. OS/2 provided a superior solution to Windows 3.1 running on DOS and even Windows 3.1 applications running under Windows 95 and NT at that time. But, that is not what is significant in this testimony.

What is significant is that Microsoft tried to get a prime competitor to drop a competing product solidifying Microsoft's monopoly position and when that effort failed ceased to offer IBM the terms other comparable companies were getting. Microsoft wanted to harm IBM simply because it failed to buy into their monopoly plan. It is appropriate to categorize your customers as Microsoft has done here and as most major companies do with their customers as well. However, it appears from this testimony that Microsoft intended to punish IBM as much as possible by refusing to afford IBM the same or similar terms and services as other key OEMs in the industry.

The warning here is rather direct. Do as the monopolist wants or you will be seriously disadvantaged. Those ISVs and OEMs in the industry today always do as Microsoft wants for fear of similar actions from Microsoft (i.e. higher wholesale prices, reduced services, less favorable terms, etc.). Does this sound like Bristol or not?

Companies that do not maintain a monopoly position in their markets generally do not treat any customers in this way. Why? Primarily because it reduces sales. A monopolist on the other hand knows that the other party (IBM in this case) must buy from them or suffer a loss in sales. If there were active and fair competition, then IBM could simply purchase "Windows 95" from another source. Keep in mind that IBM has OS/2 in this case. They could have just said "to hell" with Windows and gone with OS/2 completely. But, obviously, they ascertained that they would have to sell Windows 95 even if it competed with OS/2 directly.

June 7, 1999 - Monday

7:59 AM PDT - The IBM witness might make Microsoft look more like a member of organized crime rather than a technology company

7:42 AM PdT - IBM gets back on the stand

Maybe we will find out just what happened to OS/2, the only real competitor Windows has ever had.

Daily Wrap and Flow - Week 24 (court back in session)
Daily Wrap and Flow - Week 23 - Break
Daily Wrap and Flow - Week 22 (court not in session)
Daily Wrap and Flow - Week 21 (court not in session)
Daily Wrap and Flow - Week20 (Count not in session)
Daily Wrap and Flow - Week19 (Court not in session)
Daily Wrap and Flow - Week18 (Engstrom, Kempin)
Daily Wrap and Flow - Week17 (Rose, Rosen)
Daily Wrap and Flow - Week16 (Myhrvold, Chase)
Daily Wrap and Flow - Week15 (Allchin 98Lite)
Daily Wrap and Flow - Week 14 (Maritz, 98Lite)
Daily Wrap and Flow - Week 13
Daily Wrap and Flow - Week 12
Daily Wrap and Flow - Week 11
Daily Wrap and Flow - Week 10
Daily Wrap and Flow - Week Nine
Daily Wrap and Flow - Week Eight
Daily Wrap and Flow - Week Seven
Daily Wrap and Flow - Week Six
Daily Wrap and Flow - Week Five
Daily Wrap and Flow - Week Four
Daily Wrap and Flow - Week Three
Daily Wrap and Flow - Week Two
Daily Wrap and Flow - Week One