Maritz on… Netscape

"We did conclude marketing arrangements whereby gave preference to our product over competing browsers"

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Microsoft VP Paul Maritz' said in direst testimony: "I never said, in the presence of Intel personnel or otherwise, that Microsoft would 'cut off Netscape's air supply', or words to that effect." Maritz slagged off Intel VP Steven McGeady: "I believe that Mr McGeady's accusation in this regard [that Microsoft would 'kill HTML'] speaks volumes about his attitude toward Microsoft and the credibility of his testimony," and "these examples demonstrate that Microsoft cannot alter Intel's business goals, and undermine Mr McGeady's assertion that Intel buckles under to pressure from Microsoft." But when McGeady's opinion supposedly helped the Microsoft case, it was therefore silly for Maritz (or an over-tired Microsoft lawyer) to include: "Intel's Steve McGeady [not "Mr McGeady", you'll note] testified in this case that others at Netscape had told him the same thing [that Netscape was focused on selling server software]." This from a witness that Microsoft was saying was not credible. Maritz' protestation about air supply were less pronounced when he was deposed on 2 October 1998, as this extract shows: Question: In the course of any of your meetings with Intel, did you tell any of their executives that Microsoft would cut off Netscape's air supply by giving away for free everything that Netscape was selling? Maritz: I have no recollection of saying that. Q: Is it possible you said that and you just don't remember? M: It's possible, but I just don't recall it. I don't believe it's something that I would likely have said. The DoJ's David Boies was relentless in his harassment, asking if Maritz had said he was going to smother Netscape. Having ascertained that Rob Sullivan was competent, had integrity, and that Maritz held him in high regard, Boies produced Sullivan's deposition in which he had said that he remembered Maritz using the phrase 'embrace and smother' with reference to Netscape. Maritz' reply was that the phrase was used by Microsoft's competitors as a parody of Microsoft's declared policy of "embrace and extend". Another deposition from Russell Barck said: "There was, in relation to Netscape, a conversation with Paul Maritz, where he had said the term 'embrace and smother' with respect to a strategy with respect to Netscape." It has become increasingly clear, except to the DoJ, that the important issue with Netscape is not when Microsoft started 'integrating' Internet Explorer with Windows, but the manner in which it was done, and Microsoft's motives for making it difficult to remove. Microsoft's Jim Allchin made an error in an email on 17 February 1998 by saying: "I am very concerned over how IE is presented in Windows 98 (and NT 5). Even the simple things, like the About box, make it appear separate. I think it is critical that somebody does a thorough walkthrough, looking for places in the UI that can be corrected (hopefully just text) easily before Win98 ships. Furthermore, our IE Web site needs a sweep (I mentioned this to Brad) where we ensure it is clear the IE is just a capability of windows (and that it is available cross-platform also)." The recipient, Yusuf Mehdi, said in response: "Agreed. Brad [Chase] set up a review of Windows 98 with me, BillV and someone from legal staff, and we will ensure ie is properly presented. On the web site I am making good progress reviewing the language of IE as a feature of Windows with the Web team. (We don't refer to it as a product or even a browser; it is browsing software.)" Maritz said he was unaware that this was being done in February 1998. In his 3 April 1998 deposition Maritz said: "We have been told on various occasions over the last couple of years by our counsel that we have to be very careful... not 'very careful'; we have to be 'aware' of the fact that certain terms have specific meanings in the context of the law and, you know, we might naively use a word and not realize that it could be completely misinterpreted if taken out of context." Maritz tried to wriggle out of this by saying the context of the statement was with respect to "leverage" so far as he could remember. A less convincing wriggle was when Maritz was unable to explain Nathan Myhrvold's 15 February 1998 memo that said: "'Putting the browser in the OS' is already a statement prejudicial to us. The name browser suggests a separate thing." All wriggle credibility was lost, however, when Maritz tried to claim that Gates' observation that "winning Internet browser share is a very, very important goal for us", meant users in total. He avoided completely the word 'share' and it seemed that witness training school had caused an alarm bell to ring. Boies then produced a document where Maritz had written a lengthy analysis, one section of which dealt with "the problem: browser market share". All wriggling ceased for a time, but resumed when Boies asked about Microsoft's efforts to get companies to agree not to promote Netscape's browser: "In certain specific situations, I believe that we did conclude marketing arrangements whereby the partners in question gave preference to our product over competing browsers or competing software, depending upon the particular deals." Bingo! It was interesting to see how Maritz came to Gates' defence when he was confronted with Gates' remark that Microsoft's business model works even if all IE software is free. Apparently "Mr. Gates was reacting to a tremendous amount of industry hype to the [idea] that Netscape was going to basically take over the world, and what he's pointing out here is that Microsoft has a business model that works, which is selling operating systems. And if Internet features are built into those operating systems, then our business model continues to work." Asked if this meant that Netscape's business model does not work, Maritz said: "No." Maritz was unconvincing when Boies confronted him with a New York Times article in which the phrase "cutting off Netscape's air supply" was attributed to him. He said: "I don't recall whether I read it or not." This may be a good witness training school response, but it is most unlikely that he does not recall this. He also denied saying that "everything they're selling, we're giving away for free". Boies was very patient in trying to get Maritz to answer questions. He frequently asked the same question two or three times (even four times when Maritz was being particularly evasive in responding to the question about what Gates said to a Financial Times reporter. Maritz was quizzed as to whether Microsoft's desire was to drive down Netscape's stock price in December 1995. A report in the Seattle Times that day had noted that Greg Maffei, then Microsoft's treasurer, saying that Netscape was down, and Maritz replying that was good. Maritz was unhelpful with Boies' line of questioning about financial matters, giving conflicting answers in his deposition and cross-examination as to whether Microsoft kept records of how much it spent on developing browsers. Boies wanted to know if such records had been produced. To everybody's amazement, Judge Jackson instantly showed he was thoroughly on top of the facts: "I think that was the testimony that he [John Warden, Microsoft's counsel] gave after he looked at his deposition excerpt here. I have here in my notes that prior to looking at his deposition, he said that the development of browser costs were tracked by Microsoft from 94 on, and then he became aware of it sometime in fiscal 96. But now, from that I inferred that he knew that there was some specific accounting of the investment in the browser. And then after he looked as his deposition, he seemed to think that the figures that he had were only bits of information which related generally to the development of windows, I guess." Maritz was instructed to produce the next day any documents pertaining to ball park figures for IE development cost. An interesting Microsoft email in July 1997 from Joe Belfiore had discussed the splitting of IE4 into two parts and charging for part of it. The idea was rejected by Mehdi because of the potential "terrible PR and customer backlash". The next sentence in Mehdi's 10 July email was noteworthy: "We screw NT 4.0 users." That's blunt, but it doesn't seem to have been brought up by the DoJ. His last paragraph provided some good copy for Netscape: "Netscape has shipped a good product far ahead of us and is still very savvy," and Microsoft's intentions were reflected in the observation that Netscape was "very interested in keeping their stock price up." Judge Jackson enquired how splitting up IE might be done. The witness replied "it would have been essentially a packaging question here". Apparently IE was not welded to Windows after all. A few minutes later, the judge asked a series of questions about charging for part of IE and how this was compatible with IE being an integrated product. His questioning had become sharper than Boies'. To make matters worse, Maritz had made admitted in his 3 April 1998 deposition: Question: when you wrote this and described the proposal by Mr Belfiore and Mr Dunie as tempting, do I understand from that you thought it was a proposal with merit, but that it was outweighed by the desire to increase browser share? Is that a fair interpretation of what you're writing here? Maritz: Yes. The Windows PlusPack, previously called "Frosting" was not a successful product, it was admitted -- Maritz said that only one or two million copies were sold at a street price of $49, giving Microsoft only $50-100 million. Consideration had been given to shipping IE in Frosting, simultaneously with Windows 95. Boies again returned to the Microsoft-Netscape meetings, asking if Microsoft's purpose was to get Netscape to change the focus of its business so that it did not compete with Microsoft. Maritz avoided responding about Microsoft's intentions. It was also silly of Maritz to claim that he did not know what Dan Rosen meant when he wrote: "We should try to strike a close relationship with Netscape. In this relationship, our goal should be to wrest leadership of the client evolution from them." Thomas Reardon emailed Maritz on 1 June 1995 saying that a working goal was to "move Netscape out of the Win32 Internet client arena". When Maritz was taxed with this, he suggested, with little conviction, that Microsoft hoped Netscape would give up working on browsers and move to "invest in Java technologies or invest in value-added technology". Reardon's next point was: "Avoid hot or cold war with Netscape. Keep them from sabotaging our platform evolution." Again, Maritz had no suitable response to questions about this. At the same time, Boies was either getting tired or he lacked sufficient knowledge to challenge Maritz on some of his replies. Boies hit Maritz with the suggestion that Netscape's browser ran more slowly and less efficiently on Windows 98 than on Windows 95, to which he replied: "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." Maritz had admitted in his April 1998 deposition that Netscape's browser ran 10-15 per cent slower on Windows 98. It was naughty of Warden to feed outdated information to Maritz concerning the AOL/Netscape intention with respect to Windows. Warden used just the original announcement in which it was said that they would compete with Windows, but a more recent, more considered statement from AOL CEO Steve Case said that this would not, in fact, be the case. Maritz gave what appeared to be a rehearsed speech on the subject of Microsoft's innovation and the integrity of the platform. This was the reason, Maritz proclaimed, "why we are so passionate about defending the case". Perhaps he thought this potted sentiment was insufficient, so he embarked on some pragmatic management speak, except that it sounded absurd: "[Without the innovation and integrity] we would not be able to maintain the same kind of value proposition that we have for users going forward. And I believe that would be detrimental to the whole PC industry as well." But what about the users? Maritz had nothing to say on that subject. Complete Register trial coverage

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