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Microsoft attacks Intuit exec's testimony

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Microsoft has released a 'prebuttal' of as yet unreleased testimony to be given next week by Intuit CEO William Harris. Once upon a time (1994) Intuit was ready to sell out to Microsoft, but nevertheless Harris' testimony will accuse the company of setting out to wreck Intuit. The aborted 1994 deal between the two companies seems to be the source of Harris' grievances. Intuit's Quicken was the dominant personal finance package, but was threatened by Microsoft's Money (aren't we all, brethren?). Harris claims that Intuit agreed to sell to Microsoft because it was afraid that Microsoft would tie Money into Windows, and thus destroy the company's business. Also of concern to Harris are deals that involve exclusive or near-exclusive tie-ins with the operating system. Microsoft's prebuttal points out that the company didn't integrate Money with Windows, and notes that Quicken is still the leading personal finance package. The company also says that more than 10 per cent of Harris' testimony is spent "describing a litany of 'hypothetical' behaviour, which Microsoft is not involved in, that he claims warrant certain exceedingly vague remedies. "This portion of his testimony also contains a legal analysis of the 1995 consent decree, an economic analysis of supposed 'network effects' in the software industry and an entirely new and irrelevant concept Mr. Harris cooked up on his own - ' operating system neutrality.'" So how right is Microsoft? In contrast to the matter of Netscape, the Microsoft-Intuit battle is the dog that didn't bark. Or at least, it hasn't done so thus far. Microsoft didn't integrate Money, and Intuit's business didn't go down the toilet. But in 1994, did Microsoft menace Intuit into agreeing a deal? Integration of Money at that time was certainly being planned by Microsoft. The company was then preparing its own online system, and saw electronic commerce and billing as being a major expansion area. The rise of the Internet forced Microsoft to shelve much of this planning work, but if it had gone ahead the attractions of bundling personal finance software with Windows would have been compelling. Even without overt threats, Intuit was absolutely right to be worried. Intuit's independence was however saved by the DoJ. After the announcement of the deal it became abundantly clear that Microsoft would have to fight every step of the way to get it approved, and rather than do that the company decided to walk away. This left Intuit to deal with Harris' "supposed 'network effects.'" Despite Microsoft's claims to the contrary, these are pretty easy to define. Discount structures, integration, bundling and exclusivity deals all tend to tilt the playing field in Microsoft's direction. Harris says Intuit was forced to use Explorer, and found itself unable to do business with Netscape because restrictions in Microsoft's contract with it made it too expensive to do so. Microsoft denies this, pointing out that other companies with similar deals with Microsoft (e.g. Disney) were able to work with Netscape during this period. But the fact that Disney and CBS could afford it doesn't automatically mean Intuit could, and Microsoft kind of spoils things by pointing out: "In any event, Microsoft later waived the promotional and distribution restrictions… that Mr Harris complains about, and yet Intuit has still not entered into any significant promotional or distribution arrangements with Netscape, nine months later." ® Complete Register trial coverage

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