Microsoft paid AOL ‘bounty’ for conversions from rivals, says exec

Apple was forced into its 'peace treaty' with Microsoft last year, claimed Department of Justice attorney David Boies yesterday. After the company's shock defection from the anti-Microsoft camp Steve Jobs was booed by former fans, but according to a note produced in court by the DoJ, Apple had no choice. After Jobs announced the decision to support Internet Explorer rather than Netscape Navigator, Apple CFO Fred Anderson wrote to Netscape's Jim Barksdale saying that Microsoft had threatened to stop Mac development if the company didn't make IE its default browser. But the DoJ's case here may be weaker than it first appears. At the time of the announcement last year Apple was in serious trouble, and in order to survive it desperately needed to ensure the continued availability of key applications, Microsoft Office being a major priority. That certainly made the threat of withdrawal of Office development a possible weapon for Microsoft, but it also meant that Jobs must surely have been prepared to beg in order to keep it going. As Anderson said to Barksdale, the loss of Office would mean "we were dead." But it would have been perfectly justified for Microsoft execs to muse out loud about stopping development. The Mac was a minority platform, at the time one that might be seen as being in terminal decline, and software developers had been dumping it for quite some time. Microsoft can point to Intuit as an example of a company that abandoned the Mac in the same timeframe, but promised to come back in response to Jobs' blandishments. So no smoking pistol here. AOL testimony made public yesterday was more damaging. AOL's version of IE is now a major slice of the browser's total market share, and the reasoning behind its decision to go with IE has been the subject of some considerable argument. AOL's official line that it decided on quality has been somewhat undermined by its own internal documentation. Senior VP David Colburn said AOL chose IE because Microsoft agreed to place an AOL icon on the Windows 95 desktop, and said: "to bundle America Online in some form with the Windows operating system was a critically important competitive factor that was impossible for Netscape to match." He also said that AOL's contract required that 85 per cent of the browsers it shipped be IE. Microsoft also ran a promotional deal with AOL whereby Microsoft paid the ISP 25 cents for every user of a rival browser 'converted' to IE. ® Complete Register trial coverage Click for more stories