6139 1 IN THE IOWA DISTRICT COURT FOR POLK COUNTY ----------------------------------------------- 2 JOE COMES; RILEY PAINT, ) 3 INC., an Iowa Corporation;) SKEFFINGTON'S FORMAL ) 4 WEAR OF IOWA, INC., an ) NO. CL82311 Iowa Corporation; and ) 5 PATRICIA ANNE LARSEN; ) ) TRANSCRIPT OF 6 Plaintiffs, ) PROCEEDINGS ) VOLUME XXIII 7 vs. ) ) 8 MICROSOFT CORPORATION, ) a Washington Corporation, ) 9 ) Defendant. ) 10 ----------------------------------------------- 11 The above-entitled matter came on for 12 trial before the Honorable Scott D. Rosenberg 13 and a jury commencing at 8 a.m., December 21, 14 2006, in Room 302 of the Polk County 15 Courthouse, Des Moines, Iowa. 16 17 18 19 20 HUNEY-VAUGHN COURT REPORTERS, LTD. 21 Suite 307, 604 Locust Street 22 Des Moines, Iowa 50309 23 (515)288-4910 24 25 6140 1 A P P E A R A N C E S 2 Plaintiffs by: ROXANNE BARTON CONLIN 3 Attorney at Law Roxanne Conlin & Associates, PC 4 Suite 600 319 Seventh Street 5 Des Moines, IA 50309 (515) 283-1111 6 RICHARD M. HAGSTROM 7 MICHAEL R. CASHMAN Attorneys at Law 8 Zelle, Hofmann, Voelbel, Mason & Gette, LLP 9 500 Washington Avenue South Suite 4000 10 Minneapolis, MN 55415 (612) 339-2020 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6141 1 Defendant by: DAVID B. TULCHIN 2 SHARON L. NELLES Attorneys at Law 3 Sullivan & Cromwell, LLP 125 Broad Street 4 New York, NY 10004-2498 (212) 558-3749 5 STEPHEN A. TUGGY 6 Attorney at Law Heller Ehrman, LLP 7 333 South Hope Street Suite 3900 8 Los Angeles, CA 90071-3043 (213) 689-0200 9 BRENT B. GREEN 10 Attorney at Law Duncan, Green, Brown & 11 Langeness, PC Suite 380 12 400 Locust Street Des Moines, IA 50309 13 (515) 288-6440 14 15 16 17 18 19 20 21 22 23 24 25 6142 1 (The following record was made out of 2 the presence of the jury at 8 a.m.) 3 THE COURT: What are we discussing? 4 MR. CASHMAN: Good morning, Your 5 Honor. Michael Cashman for Plaintiffs. 6 I guess this morning we're discussing 7 exhibits that were referenced in the testimony 8 of Mr. Gates. 9 THE COURT: Okay. 10 MR. CASHMAN: And I believe that the 11 Plaintiffs and Microsoft have reached agreement 12 on most everything. 13 THE COURT: Good. 14 MR. CASHMAN: And it may depend on 15 what Mr. Tuggy says, but at the conclusion of 16 Mr. Gates' testimony, Ms. Conlin will move in 17 the exhibits. 18 And I have a chart of the exhibits 19 that will be moved in, and the parties have 20 agreed that from this chart and that charts 21 like it will be used for exhibits that are 22 moved in subsequently for most of the 23 witnesses. 24 THE COURT: Great. I appreciate that. 25 Thank you very much. Excellent. The Court 6143 1 likes charts. 2 MS. NELLES: And the Court is in good 3 hands because there's a lot of chart making. 4 THE COURT: I love charts. 5 MR. CASHMAN: Ms. Conlin will hand up 6 hard copies of the exhibits at the time she 7 offers them in to go with that chart. 8 I believe that Mr. Tuggy has an issue 9 to raise, and then I'm going to respond as 10 necessary. 11 MR. TUGGY: What we envision with this 12 chart is that it would be covered by a short 13 memo by you adopting these -- admitting the 14 exhibits as referenced in the chart. 15 And the only issue that it appears 16 that Plaintiffs and Microsoft may not see eye 17 to eye on so we wanted to make it clear our 18 position, and that is with respect to these 19 exhibits you had overruled Microsoft's 20 collateral estoppel objections sometime in 21 early December. 22 THE COURT: Yeah. 23 MR. TUGGY: Thereafter you issued a 24 ruling on December 7th on the proper use of 25 evidence in light of the collateral estoppel 6144 1 findings. And that ruling included the 2 proposition that evidence could not be used to 3 support or solely bolster findings of fact, but 4 it had to have alternate purposes. 5 And Microsoft's position is that your 6 December 7th ruling applies to these exhibits, 7 notwithstanding the fact that earlier you had 8 overruled specific collateral estoppel 9 objections to them. 10 THE COURT: Okay. 11 MR. TUGGY: The other item I wanted to 12 mention -- and this has to do I think more with 13 housekeeping. 14 Typically, when exhibits have hearsay, 15 are hearsay, or embedded hearsay and they are 16 admitted for that limited use, you state that 17 the parties have the right, at their request, 18 to receive an instruction related to that 19 nonhearsay use. 20 And we can put the statement you 21 typically use in the charts or if it's just as 22 easy, it can go on a form you create that goes 23 on top of these charts. 24 THE COURT: You want me to read that 25 when I -- 6145 1 MR. TUGGY: No. 2 MR. CASHMAN: Are you finished, 3 Mr. Tuggy? 4 MR. TUGGY: No. 5 The question is whether a party -- 6 when these are being admitted, Microsoft is not 7 requesting an instruction. 8 THE COURT: Okay. 9 MR. TUGGY: But Microsoft would like 10 the right to have an instruction. For example, 11 if at some later time the Plaintiffs use 12 something that's admitted only for a nonhearsay 13 use for its truth, then we would want an 14 instruction that it's admitted only for 15 nonhearsay. 16 THE COURT: I see what you're saying. 17 Okay. 18 MR. TUGGY: I think that's all I have. 19 THE COURT: This chart here, though, 20 has it admit -- does that mean -- 21 MR. CASHMAN: It means, Your Honor, 22 that the parties agree that the exhibit is 23 admitted once it's moved for admission. 24 THE COURT: Oh, okay. Good. Okay. 25 MR. CASHMAN: Let me just make a 6146 1 couple of comments. I'll go backwards from 2 where Mr. Tuggy started. 3 First, the nonhearsay use issue. 4 This may not be an issue, but just so 5 the record is clear, the Plaintiffs don't 6 believe that it's appropriate on the chart to 7 -- or elsewhere to say what the nonhearsay use 8 is for these exhibits because it will create 9 confusion. 10 These exhibits may be used with other 11 witnesses and there may be a nonhearsay use for 12 these particular nonhearsay -- pardon me, 13 embedded hearsay or hearsay documents with 14 different witnesses, which is why the 15 Plaintiffs believe it's not appropriate or 16 necessary to identify on the chart what the 17 specific nonhearsay use is because it would 18 create potentially quite a bit of confusion 19 later. 20 If Microsoft thinks there's a reason 21 on a particular exhibit to identify the 22 nonhearsay purpose, I think it's more 23 appropriate we just do that on the record 24 rather than putting it in a chart. 25 And that may not be an issue. It's 6147 1 not an issue here anyway I don't think on these 2 specific exhibits. 3 Secondly, I wanted to address for a 4 second Mr. Tuggy's comments about collateral 5 estoppel. 6 And, in particular, Plaintiffs note 7 that the objections were all overruled, and, by 8 necessity, the Plaintiffs submit, that means 9 that the Court has determined that these 10 exhibits, along with Mr. Gates' testimony, go 11 to issues other than solely bolstering the 12 findings of fact. 13 So the Plaintiffs believe that the 14 ruling of the Court on the Gates' exhibits and 15 the Gates' testimony on November 28th took care 16 of all the issues and is fully consistent with 17 the Court's oral order on December 7th. So 18 there is no issue as it relates to collateral 19 estoppel on these exhibits. 20 And I think the only other issue is 21 how to implement the admission. And, as I said 22 before, I think when Ms. Conlin makes the 23 motion for admission and the Court says 24 granted, I think that's all that has to be 25 done. I don't think there is a necessity for a 6148 1 memo, or, if there is, it would just be an 2 order attaching the chart. 3 Thank you. 4 THE COURT: I don't think Mr. Tuggy 5 was even proposing that. You weren't proposing 6 I make any comment. Just submit them or not; 7 right? 8 MR. TUGGY: Correct. 9 THE COURT: Okay. Anything else? 10 MR. CASHMAN: No, that's all, Your 11 Honor. 12 MR. TUGGY: This will only come up, I 13 think, with this set of exhibits, the ambiguity 14 relating to collateral estoppel. 15 So our request is that when the Court 16 enters the order admitting these exhibits with 17 a cover sheet that it state expressly that it 18 is subject to your December 7th order relating 19 to collateral estoppel so that there isn't any 20 ambiguity about whether these exhibits can be 21 used to support findings of fact. 22 In our view, that clarification is 23 useful and shouldn't be controversial. 24 THE COURT: So you want a written 25 ruling, then, on the admission of these rather 6149 1 than just on the record? 2 MR. TUGGY: The record is fine, and 3 then that could be stated then, or as you've 4 done with other witnesses where we've submitted 5 the rulings charts on testimony, it can be with 6 a cover memo admitting the exhibits, you know, 7 with whatever -- 8 THE COURT: Okay. So what you're 9 proposing then, if I hear this right, is once 10 Ms. Conlin offers these, I guess, at the end of 11 the Gates' deposition, I could just say denied 12 or admitted. And then later you want something 13 in writing as to what I did or something; is 14 that right? 15 MS. NELLES: Your Honor, I think what 16 we are proposing -- we didn't think it would be 17 controversial -- but when Ms. Conlin moved 18 these into evidence, we will say without 19 objection subject to the Court's December 7th 20 ruling. 21 THE COURT: Oh, okay. 22 MS. NELLES: And then Your Honor would 23 be free to grant it at that time if you so 24 chose. 25 And then what Mr. Tuggy would like is 6150 1 just some kind of notation so both parties have 2 that for the record. 3 MR. CASHMAN: Your Honor, Plaintiffs 4 oppose that because that's a conditional -- 5 they aren't really saying it's admitted without 6 objection because they are putting a condition 7 on it. 8 And the Plaintiffs submit that this 9 issue has already been taken care of by your 10 November 28th order where you overruled the 11 collateral estoppel objections and you stated 12 in your order for the reasons stated in 13 argument by the Plaintiffs. 14 And, in argument by the Plaintiffs, we 15 pointed out all of the reasons why the 16 testimony and the exhibits of Mr. Gates went 17 beyond just bolstering the findings of fact 18 from the government case. 19 So this has already been resolved and 20 it's not necessary to make it a conditional as 21 Ms. Nelles is suggesting. 22 THE COURT: Okay. Anything else? 23 MS. NELLES: No, Your Honor. 24 But just to be perfectly clear so that 25 -- I'm afraid perhaps Mr. Cashman is confused. 6151 1 When -- we have no objection to these 2 coming in with the Gates' deposition. You did 3 overrule the collateral estoppel objections. 4 However, now, once these exhibits are 5 in, they can be used with another witness. 6 They can be used in summation, and they have to 7 be used consistent with the Court's December 8 7th order and that's all we want to be clear 9 on. 10 Thank you. 11 MR. CASHMAN: Nothing further, Your 12 Honor. 13 THE COURT: Are you okay with that? 14 MR. CASHMAN: No, I think it's 15 unnecessary. 16 I mean, I think it's already clear 17 from what the Court has ordered that the 18 collateral estoppel objections are overruled 19 because these exhibits and their testimony go 20 to issues other than just bolstering the 21 findings and it's unnecessary to do anything 22 else. 23 THE COURT: Okay. Anything else? 24 MS. NELLES: No, Your Honor. Thank 25 you. 6152 1 THE COURT: Okay. 2 MR. CASHMAN: Nothing for the 3 Plaintiffs, Your Honor. 4 THE COURT: Thank you for narrowing it 5 down for me. I appreciate it. 6 MR. TUGGY: Thank you. 7 (A recess was taken from 8:11 a.m. 8 to 8:37 a.m.) 9 (The following record was made out of 10 the presence of the jury.) 11 THE COURT: The Court has considered 12 the preliminary instruction regarding 13 deposition testimony. I'm sorry it took me so 14 long to go through it, but I tried different 15 ways and looked at different combinations. 16 At this time the Court is going to 17 give a Preliminary Jury Instruction Number 19A, 18 deposition testimony. 19 It will state as follows: You are 20 instructed not to give any more or less weight 21 to deposition testimony solely because of when 22 the deposition was given. 23 The Court also has reviewed the motion 24 made yesterday in regard to the 3,760 exhibits 25 offered by the Plaintiffs. 6153 1 The Court finds that the Special 2 Master order left open for the trial court to 3 rule upon evidentiary objections. Based upon 4 relevancy, prejudice, confusion and waste of 5 time and set out in the Iowa Rules of Evidence 6 5.401, 5.402, and 5.403. Misunderstanding or 7 confusion between the parties at this time 8 notwithstanding, the Court intends to rule upon 9 the objections, if any, to the 3,760 exhibits 10 now offered by the Plaintiffs. 11 It is the Court's belief also, based 12 upon the pretrial Special Master order, that 13 the only objections that can be made to these 14 exhibits are those as set out in Iowa Rules of 15 Evidence 5.401, 5.402, and 5.403 as any other 16 objection based upon such matters as hearsay, 17 lack of foundation, and improper opinion were 18 either already made and ruled upon by the 19 Special Master and not appealed, ruled on by 20 the Special Master and appealed, waived or 21 withdrawn. 22 Therefore, the Court will begin to 23 rule upon the remaining proper objections to 24 the offered exhibits on January 12th, 2007. 25 The Jury will not be in session that 6154 1 day and the Court will so inform them. The 2 Court intends to rule on as many exhibits as 3 possible that day. Thereafter, each Friday 4 will be set aside to hear the objections to 5 these exhibits and rule upon them with a target 6 date for completion to be January 26, 2007. 7 If it appears that the process will 8 not be completed by January 26, 2007, the Court 9 will order additional days between January 12th 10 and January 26th, 2007, to review the exhibits 11 and objections thereto with the Jury not 12 present. 13 The exhibits will be objected and 14 ruled upon in the order in which they have been 15 presented to the Court as shown by the printed 16 list provided to the Court. 17 MS. NELLES: Your Honor, just for the 18 record, note my exception to Instruction 19A 19 not including reference to the testimony being 20 limited to the period at issue. 21 THE COURT: Okay. 22 MS. CONLIN: We have no objection to 23 the instruction as provided. 24 THE COURT: Very well. Anything else 25 before we bring in the Jury? 6155 1 MS. CONLIN: Well, Your Honor, at what 2 point does the Defendant have to make its 3 objections to the exhibits? 4 THE COURT: January 12th. 5 MS. CONLIN: Okay. Not until then? 6 THE COURT: They can wait until that 7 day and we are going to go right through. 8 MS. CONLIN: All right, Your Honor. 9 THE COURT: I have the list here, I 10 think. You've got the list; right? 11 MS. NELLES: I received the CD from 12 which we were able to create a list. 13 THE COURT: Did you get the hard copy 14 too? 15 MS. NELLES: I did not. 16 THE COURT: Do you want a copy of 17 this? 18 MS. NELLES: That would be very nice. 19 MS. CONLIN: Your Honor, are we just 20 taking the 12th off with the Jury? 21 THE COURT: And each Friday until the 22 26th. 23 MS. CONLIN: Okay. Here is a problem 24 for us, Your Honor. We have Mr. Alepin and 25 Mr. Constant coming -- Mr. Constant is from 6156 1 England. And if his testimony doesn't get -- 2 these two witnesses' testimony -- 3 THE COURT: Oh, if he's coming that 4 far, we'll get it done. I don't want to 5 interrupt his travel plans. Yeah, we'll do 6 that. It's no problem. But target start the 7 12th. 8 MS. CONLIN: Thank you, Your Honor. 9 THE COURT: As soon as Carrie comes, 10 I'll get you a copy of this. I thought you had 11 one. 12 MS. NELLES: I appreciate it, Your 13 Honor. 14 THE COURT: It just goes right in 15 order. I think it's -- yeah, it's even in 16 numerical order. 17 (The following record was made in the 18 presence of the jury at 8:42 a.m.) 19 THE CLERK: All rise. 20 THE COURT: Members of the jury, I 21 think Carrie already talked to you about trying 22 to extend some time. We are going to go with 23 that schedule then 8:30 to 3:00. We'll try to 24 limit the breaks to 10 minutes. 25 For the smokers, she's going to try to 6157 1 find an alternative for that, but no promises 2 on that. 3 And, also, I need to read to you an 4 instruction. You'll be given a copy of it to 5 put in your book at some time here when Carrie 6 gets a chance to make a copy. 7 Preliminary Instruction Number 19A. 8 Deposition testimony. 9 You are instructed not to give any 10 more or less weight to deposition testimony 11 solely because of when the deposition was 12 given. 13 And with that -- all right. You may 14 begin. 15 MS. CONLIN: Thank you, Your Honor. 16 There's about 40 to 45 more minutes of 17 Mr. Gates' deposition. 18 THE COURT: Okay. 19 (Whereupon, the following video was 20 played to the jury.) 21 Question: Let me ask you to look at a 22 document that's been previously marked as 23 Government Exhibit 398. 24 The first message here is one from 25 Brad Silverberg to you and others including 6158 1 Mr. Maritz and Mr. Allchin dated October 3, 2 1994, at 6:42 p.m. 3 Do you see that? 4 Answer: Say again. 5 Question: The first message here is a 6 message to you and others, including 7 Mr. Allchin and Mr. Maritz, from Mr. Silverberg 8 dated October 3, 1994, at 6:42 p.m.; correct? 9 Answer: It appears to be. 10 Question: And he references Marvel 11 and Capone. 12 Do you see that? 13 Answer: Yes. 14 Question: Marvel is a code word for 15 what became MSN; is that correct? 16 Answer: Not the way he uses it here. 17 Question: Oh, what does Marvel refer 18 to here? 19 Answer: Blackbird. 20 Question: So here Marvel refers to 21 Blackbird. 22 And what does Capone refer to? 23 Answer: I think an e-mail client that 24 was a feature of Windows. 25 Question: And it also refers to 6159 1 Chicago. 2 Answer: In the next sentence. 3 Question: Yes. The next sentence of 4 Mr. Silverberg's message to you. 5 What is Chicago, as you understand it 6 here? 7 Answer: The name for the project that 8 resulted eventually in the product Windows 95. 9 Question: And Mr. Silverberg writes 10 you and Mr. Maritz and others that there is no 11 one in the world outside of Microsoft who will 12 buy the argument that Marvel and Capone are, 13 quote, part of Chicago, close quote. 14 Answer: No, that's not -- 15 Question: That's not so? 16 Answer: No. 17 Question: Well, let me see. 18 He says, quote, I will jump in, dash, 19 yes, we have to take them out of Marvel and 20 Capone too. There is no one in the world 21 outside of Microsoft who will buy the argument 22 that they are, quote, part of Chicago, close 23 quote, so get the interfaces while others 24 don't. This is an impossible sale, close 25 quote. 6160 1 As you read this -- do you recall 2 receiving this? 3 Answer: No. 4 Question: Did you ever discuss it 5 with Mr. Silverberg? 6 Answer: I'm not sure. 7 Question: Did you ever discuss with 8 Mr. Silverberg or anyone else what he meant by 9 part of Chicago? 10 Answer: I'm not sure. It's clear -- 11 it's very clear that they're not referring to 12 what you asked about. 13 Question: All right, sir. 14 Let me ask you about the third message 15 down. That is a message from you dated October 16 3, 1994, at 5:18 p.m. 17 Do you see that? 18 Answer: Yes. 19 Question: You write in the first 20 line, it's time for a decision on ShellBrowser. 21 Do you see -- 22 Answer: IShellBrowser. 23 Question: IShellBrowser. 24 And in the third sentence you say, 25 it's hard to know how much actual market 6161 1 benefit iShellBrowser integration would bring. 2 Answer: Third paragraph? 3 Question: Third paragraph of your 4 message. 5 Answer: Not sentence. 6 Question: Third paragraph of your 7 message. 8 Answer: Right. 9 Question: First sentence. 10 Answer: Right. 11 Question: Quote, it's hard to know 12 how much actual market benefit iShellBrowser 13 integration would bring. 14 Do you see that? 15 Answer: I see it. 16 Question: Do you recall writing that 17 in or about October 1994? 18 Answer: I don't recall the specific 19 message. I recall the general issue about the 20 iShellBrowser APIs. 21 Question: The next paragraph, the 22 first line you talk about how Microsoft is in, 23 quote, a real struggle versus Notes. 24 Do you see that? 25 Answer: Yes. 6162 1 Question: What do you mean by Notes 2 when you say that Microsoft is in a real 3 struggle against Notes? 4 Answer: I mean Notes. 5 Question: Okay. Can you explain what 6 Notes is? 7 Answer: It's a product called Notes. 8 Question: Can you explain what Notes 9 is? 10 Answer: It's a product called Notes. 11 Question: Produced by whom, sir? 12 Answer: You can say Lotus or IBM or 13 there's actually the company who wrote it, I 14 forget their name. 15 Question: But, in any event, not 16 Microsoft; correct, sir? 17 Answer: That's right, not Microsoft. 18 Question: And is it true that 19 Microsoft in or about October of 1994 was in a 20 real struggle against Notes? 21 Answer: I think some people would say 22 yes and some people would say no. 23 Question: You said yes, though, 24 right? 25 Answer: Apparently in an e-mail in 6163 1 1994, I said we are in a real struggle versus 2 Notes. 3 Question: And in the next paragraph, 4 the fifth paragraph of your message, you say, 5 quote, I have decided that we should not 6 publish these extensions. We should wait until 7 we have a way to do a high level of integration 8 that will be harder for the likes of Notes, 9 WordPerfect to achieve, and which will give 10 Office a real advantage. 11 Do you see that? 12 Answer: Yes. 13 Question: Did that reflect your views 14 in October of 1994? 15 Answer: That sentence taken out of 16 context or the whole e-mail? 17 Question: That sentence in the 18 context of this e-mail. 19 Answer: I don't think you -- in the 20 context of the e-mail, I have no reason to 21 think that it didn't. 22 Question: What I'm asking again is, 23 fairly read in its entirety, does this message 24 from you reflect your views at the time that 25 you wrote it? 6164 1 Answer: If you're asking about the 2 whole message, I have no reason to think I 3 didn't write that message or that it didn't 4 reflect my thinking at the time. 5 I haven't actually read the whole 6 message, but I'll still say that. 7 Question: Okay. Let me ask you to 8 look at a document marked as Government Exhibit 9 399. 10 This purports to be a message from you 11 to Brad Silverberg with a copy to Paul Maritz 12 and others dated January 8, 1996. 13 Did you send this message, sir? 14 Answer: I don't remember it 15 specifically. 16 Do you want me to read it? 17 Question: If you need to to answer my 18 questions. 19 This is on a subject of Steve Case of 20 American Online; is that correct? 21 Answer: Yes. 22 Question: In the second paragraph, 23 you write that Mr. Case said that he viewed 24 Microsoft as technically behind Netscape, but 25 credible enough to do a very good job. 6165 1 Do you see that? 2 Answer: Uh-huh. 3 Question: Did Mr. Case tell you that? 4 Answer: With respect to IE 2, the 5 product we were shipping. But later they had a 6 chance to see the work we were doing and 7 changed that view. 8 Question: Is there a document that 9 you're aware of which reflects their changed 10 view? 11 Answer: Almost certainly. 12 Question: Have you seen that document 13 in the last six months? 14 Answer: No. 15 Question: Do you know who that 16 document was from? 17 Answer: Oh, I think -- I know there 18 were technical discussions subsequent to this 19 where AOL came away impressed with the 20 componentization work that we were doing and 21 how it was superior technically with what they 22 had seen anyplace else. 23 Question: My question right now is 24 not what AOL's view was. You told me that and 25 I asked you if there was a document that 6166 1 reflected that they changed their position? 2 Answer: Yes. So I should have gone 3 on to say that after they came out and saw that 4 technology, it's likely that somebody -- either 5 in e-mail -- recorded their impressions at that 6 time. 7 Question: Do you recall actually 8 seeing such a document, sir, ever? 9 Answer: I recall being told that they 10 were impressed that we had the best technology. 11 Question: Do you recall ever seeing a 12 document that reflected that? 13 Answer: I'm not sure if it was verbal 14 or e-mail, but I remember being told that after 15 they had come out and seen the componentization 16 technology as part of IE 3, they viewed it as 17 the best technology. 18 Question: When you say verbal there, 19 you mean oral, not written down in e-mail or 20 written memo form; is that correct? 21 Answer: Yes. 22 Question: Let me ask you to look at a 23 document previously marked as Government 24 Exhibit 400. 25 The second item here is a message from 6167 1 you to Steve Ballmer, Paul Maritz, Jim Allchin, 2 Christine Turner, on the subject of IBM dated 3 October 30, 1997; is that correct? 4 Answer: It appears to be. 5 Question: Did you send this message, 6 sir? 7 Answer: Let me look at it. 8 I don't remember specifically, but 9 this kind of topic was being discussed, so I 10 have no reason to doubt this is a piece of 11 e-mail I wrote. 12 Question: This relates to a 13 conversation you had with Gary Stimac; is that 14 correct? 15 Answer: Not strictly. 16 Question: Does it relate in part to 17 that? 18 Answer: Yes. 19 Question: And did Mr. Stimac tell you 20 that he was thinking about taking a job with 21 IBM? 22 Answer: I think he did. 23 Question: And did he tell you that 24 one of his concerns was whether IBM's 25 relationship with Microsoft would be a problem? 6168 1 Answer: I see that in the e-mail. I 2 don't remember it specifically. 3 Question: Do you remember people at 4 IBM being concerned about IBM's relationship 5 with Microsoft being a problem? 6 Answer: No. 7 Question: Do you remember Mr. Stimac 8 telling you that he was concerned about whether 9 IBM's relationship with Microsoft would be a 10 problem either here or -- or at any other time? 11 Answer: No, I don't remember that. 12 Question: In response to that you say 13 that you told him that the Java religion coming 14 out of the software group is a big problem. 15 Do you see that? 16 Answer: Uh-huh. 17 Question: Did you tell Mr. Stimac 18 that? 19 Answer: I don't remember telling him 20 that. 21 Question: Now, when you talk about 22 the Java religion coming out of the software 23 group, you're talking about IBM's software 24 group; correct, sir? 25 Answer: I'm not sure. 6169 1 Question: Well, this sentence 2 immediately follows Mr. Stimac purporting to be 3 concerned about whether IBM's relationship with 4 Microsoft would be a problem and immediately 5 precedes a sentence in which you say you told 6 him that IBM refused to big anything related to 7 Backoffice. 8 Answer: Yeah. That doesn't relate to 9 the IBM software group. 10 Question: But it relates to IBM; 11 correct, sir? 12 Answer: Yes. 13 Question: This whole paragraph 14 relates to IBM; correct, sir? 15 Answer: Primarily. 16 Question: So when you say that you 17 told Mr. Stimac that the Java religion coming 18 out of the software group is a big problem, do 19 you really have any doubt that you were talking 20 about IBM's software group? 21 Answer: Well, there was a lot of 22 joint work between IBM people and Sun's people 23 and other companies. 24 And so it's very hard to draw a line 25 between the IBM software groups and other 6170 1 people's software groups. 2 Question: Does that mean that it is 3 your testimony here under oath that when you 4 refer to the software group in this sentence, 5 you don't know whether you were talking about 6 the IBM software group? 7 Answer: I'm certainly talking about 8 software groups that IBM is at least a part of. 9 Question: You go on to say that they 10 continue to use their PCs to distribute things 11 against us. 12 Is the they that you are referring to 13 there IBM? 14 Answer: I think so. 15 Question: And is the us there 16 Microsoft? 17 Answer: I think so. 18 Question: And next sentence says you 19 told Mr. Stimac that they are dabbing in NCs in 20 a way we don't like. 21 Is the they there again IBM? 22 Answer: Apparently. I don't know 23 what dabbing is. 24 Question: I was going to ask you 25 that. 6171 1 The next paragraph you say, quote, 2 overall we will never have the same 3 relationship with IBM that we have with Compaq, 4 Dell, and even HP because of their software 5 ambitions. 6 I could deal with this just fine if 7 they weren't such rabid Java backers. 8 Now, when you refer in that sentence 9 to they as in I could deal with this just fine 10 if they weren't such rabid Java backers, you're 11 again talking about IBM; correct? 12 Answer: Parts of IBM. 13 It's important to distinguish 14 different groups in IBM. 15 Question: And the different groups in 16 IBM would include perhaps, among others, the 17 software group as one and the PC group as 18 another; correct? 19 Answer: That's right. 20 Question: At the end of that you say 21 that you are willing to take some risk in 22 improving the relationship and you think that 23 steps ought to be taken to approach them. 24 And you end by saying, quote, we 25 should position it as let's do some things that 6172 1 are good for both of us, but which require some 2 of the rhetoric to be lowered on both sides. 3 On their side, I mean, Java and NC. 4 And their side, you're talking about 5 IBM's side? 6 Answer: I think so. 7 Question: And what you're saying is 8 that you want a message conveyed to IBM that in 9 order to improve the relationship, you want 10 some of their rhetoric lowered on Java and NC? 11 Answer: No. 12 Question: No? 13 Did you want IBM to lower their 14 rhetoric on Java? 15 Answer: I actually explain in this 16 message that I thought the rhetoric was 17 actually hurting IBM itself, independent of 18 Microsoft. 19 Question: Did you think it was 20 hurting Microsoft? 21 Answer: I wasn't sure. In terms of 22 specifics, I wasn't sure. 23 Question: When you say that you could 24 deal with IBM's relationship just fine if IBM 25 wasn't such rabid Java backers, weren't you 6173 1 saying that you thought that IBM's rabid 2 backing of Java was bad for Microsoft? 3 Answer: I know at this time we 4 thought some of the claims around Java were 5 just plain false and weren't doing customers 6 any favors by leading them down a belief that 7 certain things were solved that were not 8 solved. 9 Question: My question, Mr. Gates, is 10 in October of 1997, did you believe that what 11 you refer to here as IBM's rabid backing of 12 Java was something that was hurting Microsoft? 13 Answer: I can't point to any 14 particular hurting that it was doing. We 15 didn't think it was accurate in terms of what 16 technically could be achieved with Java. 17 Question: Let me put the question 18 this way. 19 In or about October of 1997, did you 20 want to stop IBM from being what you refer to 21 here as a rabid Java backer? 22 Answer: We thought some of the 23 rabidness was hurting IBM as well as the 24 industry as a whole. 25 Question: Did you believe it was 6174 1 hurting Microsoft, or were you just doing this 2 as sort of a public spirited company to try to 3 help IBM from hurting itself? 4 Answer: I can't point to any 5 particular damage, but we certainly would have 6 preferred if the more extreme statements we 7 didn't think were true, if they weren't pushing 8 those forward. 9 Question: Mr. Gates, let me put it 10 this way. 11 In October of 1997, were you trying to 12 get IBM to reduce its public support for Java? 13 Answer: I say in here that under some 14 circumstance the rhetoric should be lowered on 15 both sides and that I think that's -- you know, 16 that makes sense in certain circumstances. 17 Question: I don't think you actually 18 say in certain circumstances, do you, sir? 19 You may have meant that, I'm not 20 saying you didn't mean it, I'm just saying 21 those words don't appear here, do they? 22 Answer: No. It's all about I am 23 willing to take some risk in improving the 24 relationship and think you should approach them 25 on steps for improvement. 6175 1 It's in that vein that I talk about 2 rhetoric being lowered on both sides. 3 Question: And then you go on to say 4 that you mean on IBM's side they lower the 5 rhetoric on Java and NC; correct? 6 Answer: The rhetoric. 7 Question: And by rhetoric, you were 8 talking about public rhetoric? 9 Answer: Definitely public rhetoric. 10 Question: And is it fair to say in 11 October of 1997 you were trying to get IBM to 12 reduce its public rhetoric in support of Java? 13 Answer: I don't know what you mean 14 trying. I talk about a circumstance in which 15 both sides would lower their rhetoric. 16 Question: You were offering to lower 17 your rhetoric if they would lower their 18 rhetoric; is that fair? 19 Isn't that what you say right here? 20 Answer: In the context -- this is 21 about improving the overall relationship, which 22 is not focused on the rhetoric. 23 It says in the context of that 24 improved relationship, I think both of us 25 should lower our rhetoric. 6176 1 Question: Indeed you say that the 2 improved relationship will, quote, require some 3 of the rhetoric to be lowered on both sides. 4 Answer: That's a statement about 5 human feelings that if our rhetoric is so high, 6 it will be hard for them to do their side of 7 improving the relationship and vice versa. 8 Question: You then go on to say on 9 their side, IBM's side, you mean Java and NC; 10 right, sir? 11 Answer: That's part of the rhetoric 12 I'm referring to. 13 Question: Part of their rhetoric? 14 Answer: Yes. 15 Question: That you wanted them to 16 lower; isn't that true? 17 Answer: No. 18 Question: Okay. Let me ask you to 19 look at Exhibit 401. 20 This is a message from you to 21 Mr. Ballmer and Mr. Chase with a copy to 22 Mr. Maritz and some other people also given 23 copies dated August 15, 1997, at 4:07 p.m. on 24 the subject of IBM and Netscape; correct? 25 Answer: Uh-huh. 6177 1 Question: And you type in here 2 importance, colon, high. 3 Answer: No. 4 Question: No? 5 Answer: No. I didn't type that. 6 Question: Who typed in high? 7 Answer: The computer. 8 Question: A computer. Why did the 9 computer type in high? 10 Answer: It's an attribute of the 11 e-mail. 12 Question: And who set the attribute 13 of the e-mail? 14 Answer: Usually the sender sets that 15 attribute. 16 Question: Who is the sender here, 17 Mr. Gates? 18 Answer: In this case, it appears I'm 19 the sender. 20 Question: Yes. And so you're the one 21 who set the high designation of importance; 22 right, sir? 23 Answer: It appears I did that. I 24 don't remember doing that specifically. 25 Question: Right. 6178 1 Now, did you send this message on or 2 about August 15, 1997? 3 Answer: I don't remember doing so. 4 Question: Now, you say that you had a 5 meeting with Jeff Papows; is that correct? 6 Answer: I did have a meeting with 7 Jeff Papows, yes. 8 Question: And the third paragraph 9 from the bottom you write, quote, he doesn't 10 want anything attributed to me or he will get 11 in trouble, but he says we can just refer to 12 all the rumors on the web about what kind of 13 deal is being done between Netscape and IBM, 14 close quote. 15 Do you see that? 16 Answer: I do. 17 Question: At this point, that is, in 18 or about August of 1997, were you aware prior 19 to your conversation with Mr. Papows, that 20 there was a prospect of a deal between Netscape 21 and IBM? 22 Answer: There had been rumors of 23 that, so, yes. 24 In fact, there had been deals. There 25 was rumors of a new deal. 6179 1 Question: Let me ask you to look next 2 at a document marked as Exhibit 402. 3 The second message on this exhibit is 4 a message from you to Mr. Ballmer and 5 Mr. Maritz dated August 4, 1997, at 5:17 p.m.; 6 correct? 7 Answer: It appears to be, yes. 8 Question: Did you send this, 9 Mr. Gates? 10 Answer: I don't remember sending it, 11 but I have no reason to think that I didn't. 12 Question: Okay. Let me ask you to 13 look at Exhibit 403. 14 This is a message dated February 16, 15 1998, from Laura Jennings to you and a number 16 of other people, including Mr. Allchin, 17 Mr. Ballmer, and Mr. Maritz. 18 Do you see that? 19 Answer: Yes. 20 Question: Did you receive this e-mail 21 in or about February of 1998, sir? 22 Answer: I don't remember receiving 23 it, but I have no reason to think that I 24 didn't. 25 Question: Let me take you down to the 6180 1 next to last paragraph on the first page. 2 The first sentence says, quote, one 3 potential concern, colon, Brad mentioned to me 4 late Friday that there may be new concerns 5 about our plan to make start a requirement for 6 being in the IE referral server, or at least 7 there may be timing issues related to your 8 appearance at Senator Hatch's hearings, close 9 quote. 10 Do you see that? 11 Answer: Yes. 12 Question: Do you recall a discussion 13 of this in or about February of 1998? 14 Answer: Not with Laura. But on the 15 general subject, yes. 16 Question: Did Microsoft, in fact, 17 make start, quote, a requirement for being in 18 the IE referral server, close quote? 19 Answer: No, I don't think we did. 20 Question: Why not? 21 Answer: I think the PR group thought 22 it would be controversial and we didn't see the 23 benefit as being worth having that controversy. 24 Question: Let me ask you to look at a 25 document that has been marked as Exhibit 404. 6181 1 The first message here is a message to 2 you and Mr. Ballmer with copies to other people 3 dated March 23, 1994, at 9:13 a.m. on the 4 subject of IBM helps Lotus. 5 Did you receive this message in or 6 about March of 1994, sir? 7 Answer: I don't know. 8 Question: The message begins by 9 describing how IBM is helping in the selling of 10 Notes. 11 Do you see that? 12 Answer: Yes. 13 Question: And at the end Mr. Kempin, 14 who is the author of this, says, quote, I am 15 unsure if we need to see this as an 16 organizational issue or an OEM issue. 17 Do you know what he means by that? 18 Answer: What's he talking about? 19 Question: Do you know what he is 20 talking about? 21 Answer: No. 22 Question: He then says, quote, I am 23 willing to do whatever it takes to kick them 24 out, but strongly believe we need a WW hit team 25 to attack IBM as a large account, whereby the 6182 1 OEM relationship should be used to apply some 2 pressure, close quote. 3 Do you see that? 4 Answer: Uh-huh. 5 Question: You have to say yes for the 6 record. 7 Answer: I see it. 8 Question: Do you know what Mr. Kempin 9 means when he writes to you about a WW hit 10 team? 11 Answer: He means a salesperson. 12 Question: If he means a salesperson, 13 why doesn't he say salesperson, sir? 14 Answer: It clearly means salesperson. 15 Question: Are salespeople within 16 Microsoft commonly referred to as WW hit teams? 17 Answer: If they're worldwide and if 18 they're trying to sell to somebody who is a 19 large account, you bet. 20 Question: And when your salespeople 21 go out to sell large accounts, are they 22 commonly referred to as needing a, quote, WW 23 hit team to attack IBM as a large account, 24 whereby the OEM relationship should be used to 25 apply some pressure, close quote? 6183 1 Answer: No. 2 Question: Did you say no? 3 Answer: I said no. 4 Question: Do you remember Mr. Kempin 5 telling you in March of 1994 that he was 6 proposing that the OEM relationship with IBM 7 should be used to apply some pressure to stop 8 IBM from promoting the sale of Notes? 9 Answer: No. 10 Question: Do you recall anyone ever 11 telling you that, sir? 12 Answer: No. 13 Question: Did you ever respond to 14 Mr. Kempin and tell him that, no, you didn't 15 think that Microsoft ought to apply OEM 16 pressure to IBM? 17 Answer: I don't understand your 18 question. 19 Question: Do you understand that 20 Mr. Kempin is here proposing to you that 21 Microsoft apply OEM pressure to IBM? 22 Answer: It doesn't say OEM pressure. 23 Question: I didn't say it said it, 24 sir. 25 It says he is proposing that the OEM 6184 1 relationship should be used to apply some 2 pressure on IBM; correct, sir? 3 Answer: You're asking me to read it? 4 Question: I'm asking you if that's 5 what you understand him to be saying. 6 Answer: What? 7 Question: That he is proposing that 8 the OEM relationship should be used by 9 Microsoft to apply some pressure on IBM. 10 Answer: No. I don't think he is 11 proposing anything. 12 Question: You don't think he is 13 proposing anything. 14 When he says that he strongly believes 15 that there needs to be, quote, a WW hit team to 16 attack IBM as a large account, whereby the OEM 17 relationship should be used to apply some 18 pressure, you don't think that he is suggesting 19 that Microsoft apply pressure on IBM? 20 Answer: I don't think he is making a 21 proposal. It is one of the things he mentions, 22 but it's not a proposal. 23 Question: Now, Mr. Kempin's message 24 was a response to a message from you to 25 Mr. Kempin and Mr. Ballmer dated March 20, 6185 1 1994, at 11:29 p.m.; correct? 2 Answer: It appears to be, yes. 3 Question: And you write him in the 4 first paragraph, quote, this is one topic I 5 really want to try to get to the bottom of. 6 Why does IBM help Lotus so much? Is there 7 anything we can do about this? Should it 8 become an issue in our global relationship with 9 IBM, close quote? 10 Did you send this message to 11 Mr. Kempin and Mr. Ballmer in March, 1994? 12 Answer: It appears I did. I mean, 13 that's part of the message I sent, it appears. 14 Question: Now, when Mr. Kempin 15 replied saying we need a WW hit team to attack 16 IBM as a large account, whereby the OEM 17 relationship should be used to apply some 18 pressure, did you understand him to be 19 responding to your questions? 20 Answer: I don't remember receiving 21 his mail. 22 Question: All right. I have no more 23 questions at this time. 24 (Whereupon playing of video 25 concluded.) 6186 1 MS. CONLIN: Your Honor, at this time, 2 Plaintiffs offer into evidence the exhibits. 3 May I approach, Your Honor? 4 THE COURT: Yes. 5 MS. CONLIN: The exhibits in 6 connection with Mr. Gates' deposition that 7 appear on this list, and I'm giving the Court 8 also the hard copies. 9 Those are the exhibits that Mr. Gates 10 discussed in his deposition. 11 THE COURT: Any objections? 12 MS. NELLES: Subject to the Court's 13 December 7, 2006 ruling and subject to 14 Microsoft receiving a copy, Microsoft has no 15 objection. 16 THE COURT: Very well. Plaintiffs' 17 Exhibits 2058, 2118, 2229, 2272, 2273, 2278, 18 2281, 2448, 2455, 2468, 2494, 2586, 2658, 2669, 19 2676, 2689, 2700, 2701, 2710, 2722, 2727, 2754, 20 2759, 2761, 2767, 2829, 2844, 2846, 2849, 2905, 21 3792, 3876, 4482, 4524, 4601, 5673, 5702, 5704, 22 5705, 5715, 5716, 5734, 5766, 5780, 5825, 5852, 23 5879, 5911, 6060, 6092, 6109, 6114, and 6195 24 are hereby admitted. 25 The objections -- there were no 6187 1 objections. 2 MS. NELLES: Subject to the Court's 3 December 7, 2006 ruling. 4 THE COURT: Very well. 5 Overruled. Admitted. 6 MS. NELLES: And receiving a set. 7 THE COURT: They are admitted. 8 Did you get a set? 9 MS. NELLES: I haven't received one in 10 the courtroom today, Your Honor. 11 THE COURT: Do you have an extra for 12 her? 13 MS. CONLIN: Not in the courtroom, 14 Your Honor. 15 THE COURT: Okay. We'll get one for 16 them. 17 Is this my copy or the court -- or the 18 official copy? 19 MS. CONLIN: Yes, Your Honor. 20 THE COURT: Okay. I will give it to 21 the court reporter. 22 Call your next. 23 MS. CONLIN: Your Honor, at this time, 24 the Plaintiffs would read into the record 25 certain of the conclusions of law and findings 6188 1 of fact, which are in the Jury's notebook, 2 jurors' notebooks beginning -- oh, yes, lights. 3 Let there be light -- beginning on page 0, the 4 second set of pagination under conclusions of 5 law. 6 Number 1, Microsoft illegally 7 monopolized the market for Intel-compatible PC 8 operating systems in violation of state and 9 federal antitrust laws including the Iowa 10 Competition Law. 11 Number 4. Microsoft maintained the 12 monopoly power in the operating systems 13 marketed by the following anticompetitive 14 conduct, i.e., conduct which caused harm to the 15 competitive process and thereby harm to 16 consumers. 17 Specifically Number 9. By agreeing to 18 release new versions of Office for the Apple 19 Macintosh in return for Apple's agreement to 20 preinstall Internet Explorer and make it the 21 default web browser on Apple's Macintosh 22 operating system. 23 Number 11. Deceiving Java developers 24 about the Windows specific nature of 25 Microsoft's Java developer tools. 6189 1 12. Coercing Intel to stop aiding Sun 2 in improving the Java technologies. 3 Finding of Fact 154 on page 29. 4 In conclusion, the preferences of 5 consumers and responsive behavior of software 6 -- 7 THE COURT: Sorry. 8 MS. CONLIN: In conclusion, the 9 preferences of consumers and the responsive 10 behavior of software firms demonstrate that web 11 browsers and operating systems are separate 12 products. 13 Also, on page 29, Finding of Fact 156. 14 Before it decided to blunt the threat 15 that Navigator posed to the applications 16 barrier to entry, Microsoft did not plan to 17 make it difficult or impossible for OEMs or 18 consumers to obtain Windows without obtaining 19 Internet Explorer. 20 In fact, the company's internal 21 correspondence and external communications 22 indicate that as late as the fall of 1994, 23 Microsoft was planning to include low-level 24 Internet plumbing such as TCP/IP stack, but not 25 a browser with Windows 95. 6190 1 Finding of Fact 157. 2 Microsoft subsequently decided to 3 develop a browser to run on Windows 95. As 4 late as June 1995, however, Microsoft had not 5 decided to bundle that browser with the 6 operating system. 7 The plan at that point, rather, was to 8 ship the browser in a separate frosting package 9 for which Microsoft intended to charge. 10 By April or May of that year, however, 11 Microsoft's top executives had identified 12 Netscape's browser as a potential threat to the 13 applications barrier to entry. 14 Throughout the spring, more and more 15 key executives came to the conclusion that 16 Microsoft's best prospect of quashing that 17 threat lay in maximizing the usage share of 18 Microsoft's browser at Navigator's expense. 19 The executives believed that the most 20 effective way of carrying out this strategy was 21 to ensure that every copy of Windows 95 carried 22 with it a copy of Microsoft's browser, then 23 code named O'Hare. 24 For example, two days after the June 25 21st, 1995 meeting between Microsoft and 6191 1 Netscape executives, Microsoft's John Ludwig 2 sent an e-mail to Paul Maritz and the other 3 senior executives involved in Microsoft's 4 browser effort. 5 Quote, obviously, Netscape does see us 6 as a client competitor, end quote, Ludwig 7 wrote. 8 Quote, we have to work extra hard to 9 get O'Hare on the OEM disks. 10 Finding of Fact 160 on page 31. 11 Microsoft's executives believed that 12 the incentives that its contractual 13 restrictions placed on OEMs would not be 14 sufficient in themselves to reverse the 15 direction of Navigator's usage share. 16 Consequently, in late 1995 or early 17 1996, Microsoft set out to bind Internet 18 Explorer more tightly to Windows 95 as a 19 technical matter. 20 The intent was to make it more 21 difficult for anyone, including systems 22 administrators and users, to remove Internet 23 Explorer from Windows 95 and to simultaneously 24 complicate the experience of using Navigator 25 with Windows 95. 6192 1 As Brad Chase wrote to his superiors 2 near the end of 1995, quote, we will bind the 3 shell to the Internet Explorer so that running 4 any other browser is a jolting experience. 5 Turning to page 15, Finding of Fact 6 90. 7 Microsoft knew that Netscape needed 8 certain critical and technical information and 9 assistance in order to complete its Windows 95 10 version of Navigator in time for the retail 11 release of Windows 95. 12 Indeed, Netscape executives had made a 13 point of requesting this information, 14 especially the so-called remote network access, 15 RNA, API at the June 21 meeting. 16 As was discussed above, the Microsoft 17 representatives at the meeting had responded 18 that the haste with which Netscape received the 19 desired technical information would depend on 20 whether Netscape entered the so-called, quote, 21 special relationship, end quote, with 22 Microsoft. 23 Specifically, Microsoft representative 24 Jay Allard had told Barksdale that the way in 25 which the two companies concluded the meeting 6193 1 would determine whether Netscape received the 2 RNA API immediately or in three months. 3 Finding of Fact 91. 4 Although Netscape declined the special 5 relationship with Microsoft, its executives 6 continued over the weeks following the June 7 21st meeting to plead for the RNA API. 8 Despite Netscape's persistence, 9 Microsoft did not release the API to Netscape 10 until late October, i.e., as Allard had warned 11 more than three months later. 12 The delay, in turn, forced Netscape to 13 postpone the release of its Windows 95 browser 14 until substantially after the release of 15 Windows 95 and Internet Explorer in August 16 1995. 17 As a result, Netscape was excluded for 18 most of the holiday selling season. 19 Finding of Fact 92. 20 Microsoft similarly withheld a 21 scripting tool that Netscape needed to make its 22 browser compatible with certain dial-up ISPs. 23 Microsoft had licensed the tool freely 24 to ISPs that wanted it and, in fact, had 25 cooperated with Netscape in drafting a license 6194 1 agreement that by mid-July 1996 needed only to 2 be signed by an authorized executive to go into 3 effect. 4 There the process halted, however. In 5 mid-August, a Microsoft representative informed 6 Netscape that senior executives at Microsoft 7 had decided to link the grant of the license to 8 the resolution of all open issues between the 9 companies. 10 Netscape never received a license to 11 the scripting tool, and, as a result, was 12 unable to do business with certain ISPs for a 13 time. 14 Finding of Fact 93. 15 Other firms in the computer industry 16 have had encounters with Microsoft similar to 17 the experiences of Netscape described above. 18 These interactions demonstrate that it 19 is Microsoft's corporate practice to pressure 20 other firms to halt software development that 21 either shows the potential to weaken the 22 applications barrier to entry or competes 23 directly with Microsoft's most cherished 24 products. 25 Finding of Fact 94. 6195 1 At the time that Intel -- I'm sorry. 2 At the time that Microsoft was trying 3 to convince Netscape to stop developing 4 cross-platform APIs, it was trying to convince 5 Intel to halt the development of software that 6 presented developers with a set of operating 7 system independent interfaces. 8 95. Although Intel is engaged 9 principally in the design and manufacture of 10 microprocessors, it also develops some 11 software. 12 Intel's software development efforts 13 which take place at the Intel architecture 14 labs, IAL, are directed primarily at finding 15 useful ways to consume more microprocessors 16 cycles thereby stimulating demand for advanced 17 Intel microprocessors. 18 By early 1995, IAL was in the advanced 19 stages of developing software that would enable 20 Intel 80x86 microprocessors to carry out tasks 21 usually performed by separate ships known as 22 digital signal processors. 23 By enabling this migration, the 24 software called native signal processing 25 software, NSP, would endow Intel 6196 1 microprocessors with substantially enhanced 2 video and graphic performance. 3 Finding of Fact Number 100. 4 Microsoft began complaining to Intel 5 about its NSP software in intercompany 6 communications sent in the spring of 1995. 7 In May, Microsoft raised the profile 8 of its complaints by sending some of its senior 9 executives to Intel to discuss the latter's 10 incursion into Microsoft platform territory. 11 Returning from the May meeting, one 12 Microsoft employee urged his superiors to 13 refuse to allow Intel to offer platform level 14 software even if it meant that Intel could not 15 innovate as quickly as it would like. 16 If Intel wished to enable a new 17 function, the employee wrote, it's only, quote, 18 winning path, end quote, would be to convince 19 Microsoft to support the effort in its platform 20 software. 21 At any rate, quote, sometimes Intel 22 would have to accept the outcome that the time 23 isn't right for Microsoft, end quote. 24 In the first week of July Gates 25 himself met with Intel CEO Andrew Grove to 6197 1 discuss, among other things, NSP. 2 In a subsequent memorandum to senior 3 Microsoft executives, Gates reported that he 4 had tried to convince Grove to, quote -- 5 convince Grove, quote, to basically not ship 6 NSP, end quote. And, more generally, to reduce 7 the number of people working on software at 8 Intel. 9 Finding of Fact 101. 10 The development of an alternative 11 platform to challenge Windows was not the 12 primary objective of Intel's NSP efforts. 13 In fact, Intel was interested in 14 providing APIs and DDIs only to the extent the 15 effort was necessary to ensure the development 16 of applications and devices that would spark 17 demand for Intel's most advanced 18 microprocessors. 19 Understanding Intel's limited 20 ambitions, Microsoft hastened to assure Intel 21 that if it would stop promoting NSP interfaces, 22 Microsoft would accelerate its own work to 23 incorporate the functions of the NSP software 24 into Windows, thereby stimulating the 25 development of applications and devices that 6198 1 relied on the new capabilities of Intel's 2 microprocessors. 3 At the same time, Microsoft pressured 4 the major OEMs to not install NSP software on 5 their PCs until the software ceased to expose 6 APIs. 7 NSP software could not find its way 8 onto PCs without the cooperation of the OEMs. 9 So Intel realized that it had no choice but to 10 surrender the pace of software innovation to 11 Microsoft. 12 By the end of July 1995, Intel had 13 agreed to stop promoting its NSP software. 14 Microsoft subsequently incorporated 15 some of NSP's components into its operating 16 system products. 17 Even as late as the end of 1998, 18 though, Microsoft still had not implemented key 19 capabilities that Intel had been poised to 20 offer consumers in 1995. 21 Finding of Fact 102. 22 Microsoft was not content to merely 23 quash Intel's NSP software. At a second 24 meeting at Intel's headquarters on August 2nd, 25 1995, Gates told Grove that he had a 6199 1 fundamental problem with Intel using revenues 2 from its microprocessors business to fund the 3 development and distribution of free platform 4 developed software. 5 In fact, Gates said, Intel could not 6 count on Microsoft to support Intel's next 7 generation of microprocessors as long as Intel 8 was developing platform level software that 9 competed with Windows. 10 Intel's senior executives knew full 11 well that Intel would have difficulty selling 12 PC microprocessors if Microsoft stopped 13 cooperating in making them compatible with 14 Windows and if Microsoft stated to OEMs that it 15 did not support Intel's chips. 16 Faced with Gates' threat, Intel agreed 17 to stop developing platform level interfaces 18 that might draw support away from interfaces 19 exposed by Windows. 20 Finding of Fact 103. 21 OEMs represent the primary customer 22 for Intel's microprocessors. Since OEMs are 23 dependent on Microsoft for Windows, Microsoft 24 enjoys continuing leverage over Intel. 25 To illustrate, Gates was able to 6200 1 report to other senior Microsoft executives in 2 October 1995 that, quote, Intel feels we have 3 all the OEMs on hold with our NSP chill, end 4 quote. 5 He added, quote, this is good news 6 because it means OEMs are listening to us. 7 Andy Grove believes Intel is living up 8 to its part of the NSP bargain and that we 9 should let OEMs know that some of the new 10 software work Intel is doing is okay. 11 If Intel is not sticking totally to 12 its part of the deal, let me know. 13 This would be a good time, Your Honor. 14 THE COURT: Take a 10 -- 15 MR. TULCHIN: Is that the end of the 16 reading that Ms. Conlin intends to do, Your 17 Honor? 18 MS. CONLIN: It is not. 19 THE COURT: How many more do you have? 20 MS. CONLIN: 13, Your Honor. 21 THE COURT: Okay. We'll take a 22 10-minute recess. 23 Remember the admonition previously 24 given. We will see you in 10 minutes. You can 25 leave your notebooks here. 6201 1 (The following record was made out of 2 the presence of the jury at 9:44 a.m.) 3 THE COURT: Let the record reflect we 4 are outside the presence of the jury. 5 MR. TULCHIN: Thank you, Your Honor. 6 I will be brief, but I wanted to make 7 these points because I think they are 8 important. 9 First, of course, as the Court knows, 10 Microsoft objected when the Plaintiffs sought 11 collateral estoppel earlier this year after 12 remand from the Iowa Supreme Court. 13 Microsoft believed then, believes now, 14 that it was error for the Court to adopt the 15 146 findings which are in the Jury notebooks 16 and have been read to them. 17 Secondly, Your Honor, we believe that 18 the deposition of Mr. Gates has been used 19 improperly. 20 It's been used in violation of the 21 Court's December 7th order to bolster the 22 findings of fact and that the reading of the 23 findings that Ms. Conlin is now doing is also 24 being used improperly. 25 In effect, to bolster the claim that 6202 1 Mr. Gates' testimony was not accurate. 2 Thirdly, Your Honor, we believe it was 3 error to play Mr. Gates' videotape deposition 4 from the DOJ deposition at all. 5 The deposition should have been barred 6 because once collateral estoppel was granted, 7 Mr. Gates' testimony on the same issues that 8 are covered by the findings ought not to have 9 been permitted. 10 And, lastly, Your Honor, we think that 11 the reading of these findings -- and I know 12 that Preliminary Instruction Number 12 permits 13 lawyers to read the findings, but I think that 14 the instruction was in error in that regard. 15 But perhaps more relevantly here, that 16 the Plaintiffs ought not to be permitted at a 17 time of their choosing, without notice to 18 Microsoft, to read whatever findings they want 19 for the purpose of contradicting testimony that 20 was given. 21 And I just want to say this, Your 22 Honor, and I'm sorry for the repetition, but I 23 think it's important that we be on record on 24 this subject so that no one ever says there's 25 been any waiver. 6203 1 Mr. Gates was asked about a number of 2 subject matters during this long deposition 3 that was played for the Jury over the last, I 4 think, three days on issues that were contested 5 in the government case. 6 The Court in the government case, of 7 course, made very substantial and lengthy 8 findings, in some cases quite contrary to what 9 Mr. Gates had said in his deposition. 10 And what's really going on here is not 11 that the deposition is being played by the 12 Plaintiffs in order somehow to cover some other 13 issue outside the findings, the deposition was 14 played precisely so that Plaintiffs could now 15 read findings that contradict Mr. Gates' 16 statements at his deposition as if to try to 17 demonstrate to the Jury that Mr. Gates' 18 testimony was not honest or accurate. 19 And I think that's an error. It's a 20 misuse of collateral estoppel. The Plaintiffs 21 are not only bolstering the findings with the 22 deposition, but, in effect, they're using the 23 findings to injure the credibility of a witness 24 who will be here. 25 And, lastly, Your Honor, the 6204 1 deposition was hearsay in any event. 2 THE COURT: Thank you. 3 Any response? 4 MS. CONLIN: Yes. Well, Your Honor, 5 very briefly. 6 Certainly, this has been litigated and 7 litigated and litigated. 8 I am not sure that the Defendants even 9 made an objection to Instruction Number 12, 10 though I don't recall for sure. 11 And we believe that -- you know, the 12 Court's well aware of the reason we are 13 offering the testimony and the findings of fact 14 with respect that I'm reading at this point in 15 time are perfectly permissible under the 16 Court's instruction. 17 THE COURT: Anything else? 18 MR. TULCHIN: No, Your Honor. 19 THE COURT: I want to know each time 20 you intend to do that so we can make a record 21 on that. Okay? 22 MS. CONLIN: All right, Your Honor. 23 And I wonder if at the lunch hour we 24 have some further record we wish to make on the 25 issue of the exhibits and some suggestions that 6205 1 might make the process a little quicker, but I 2 don't want to take the time to do it. 3 THE COURT: Which exhibits, the ones I 4 admitted? 5 MS. CONLIN: Yeah, the 3,760. 6 THE COURT: Well, we'll do it at some 7 later time then. 8 MS. CONLIN: Okay. Well, I'd like to 9 do it at lunch if we could, Your Honor. 10 THE COURT: How long will it take? 11 MS. CONLIN: Well, not too long from 12 my standpoint. 13 MS. NELLES: Is it really necessary to 14 do this today, Your Honor? I have a lot of 15 people trying to make planes. 16 THE COURT: What's the nature of the 17 objection for the record? 18 MS. CONLIN: Well, Your Honor, I'll do 19 it now. 20 THE COURT: Okay. 21 MS. CONLIN: What we are concerned 22 about is Mr. Tuggy just called Mr. Gralewski 23 and said that work on prior testimony must stop 24 to address the exhibits. 25 This is precisely why the parties 6206 1 previously submitted all objections, so this 2 would not occur. 3 We suggest that Microsoft's submit -- 4 that, first of all, Your Honor, that you order 5 Microsoft to assert any objections by December 6 29th so that we have time to review, engage in 7 a meet and confer, yet again, and prepare our 8 responses for the hearing. 9 Your Honor, we now have witnesses 10 coming, and having spent over a year and 11 hundreds of thousands of dollars and hundreds 12 of thousands of hours on the Special Master 13 process, it almost appears to be starting over. 14 Microsoft made relevance and undue 15 prejudice objections to the exhibits, to many 16 exhibits. They're familiar with the exhibits 17 and should do at least the first half by 18 December 29th, but we think they can do all of 19 them and state the reasons for the objections 20 so that we can, in fact, engage in some meet 21 and confer. 22 We would also request that the Court 23 set a standard for making the objections as 24 follows. 25 First, Microsoft has the burden to 6207 1 establish and must state in writing why the 2 particular exhibit was not irrelevant or unduly 3 prejudicial before but it is now. 4 And, Your Honor, because we are so 5 concerned about maximizing trial time and 6 ending the case, you know, sometime in the year 7 2007, we are willing, if the Court is, to argue 8 the exhibits on Saturdays instead of Fridays, 9 or to have a late night or even two late nights 10 per week in order to get this task 11 accomplished. 12 It's a task, frankly, Your Honor, that 13 we did not anticipate, for which we have not 14 planned, and which will now interfere 15 substantially with our ability to get these 16 depositions in shape to play to the Jury in a 17 timely fashion. 18 So those are our suggestions, Your 19 Honor. 20 Your Honor, just so the record is 21 clear, none -- I'm sure that the Court is aware 22 of this, but, for the record, none of the 3,760 23 exhibits that are on the list provided to the 24 Court on December 15th had any relevancy 25 objections at the time, nor did they have any 6208 1 undue prejudice objections at the time, nor did 2 they have any objections of any kind on 3 December 15th. 4 THE COURT: Okay. Anything? 5 MS. NELLES: Briefly, Your Honor. 6 Microsoft is fully prepared to comply 7 with the Court's order as it was handed down 8 this morning. We are also fully prepared and 9 intend to work on the deposition testimony in 10 compliance with any orders and any agreements. 11 I think that should be sufficient. 12 And, of course, if the Court is inclined to 13 order us to work over the Christmas break and 14 have this done for Plaintiffs on the 29th, we 15 will do whatever the Court instructs. 16 But, as of today, we stand fully 17 prepared to comply with all the obligations in 18 conformance with the Court's current orders. 19 THE COURT: Anything else? 20 MS. CONLIN: Well, Your Honor, last 21 year at this time, roughly at this time, I did 22 2,500 exhibits all by myself from start to 23 finish in one week. 24 So it doesn't seem to me -- and that, 25 of course, was a first glance through. It 6209 1 wasn't easy, but in this case, of course, 2 Microsoft is already familiar with the 3 exhibits. 4 And I am reliably informed that 5 Mr. Tuggy has called Mr. Gralewski and said 6 that the depositions must stop. And it is 7 Mr. Tuggy and his team who have done both the 8 depositions and the exhibits in this case. 9 So all I can say to the Court is 10 that's what is reported to us. 11 THE COURT: What do you mean 12 depositions must stop? 13 MS. CONLIN: Your Honor, we have a 14 plan, also pursuant to an agreement, which 15 makes me, of course -- 16 THE COURT: Mr. Tuggy called 17 Mr. Gralewski and said -- 18 MS. CONLIN: Yes, Your Honor. Here's 19 what we have been doing. 20 THE COURT: He's objecting to you 21 playing any more depositions? 22 MS. CONLIN: No. Believe it or not, 23 Your Honor, before we ever get to you, the 24 depositions are worked through between the 25 parties. We submit them to Microsoft. 6210 1 THE COURT: I understand. 2 MS. CONLIN: They make their 3 objections. We have a little schedule going. 4 THE COURT: Okay. 5 MS. CONLIN: And according to 6 Mr. Gralewski, Mr. Tuggy says that schedule 7 must stop now while we do these exhibits. 8 Well, that just puts -- I mean, that's 9 very bad. That will make it impossible for us 10 to proceed with the trial in an orderly 11 fashion. 12 We were doing well. We were moving 13 along. And now -- that's why we want to get 14 this process, the exhibit process -- 15 THE COURT: And if that happens, 16 you'll start playing the deposition. If they 17 have objections, they better make them during 18 the trial. And I'll rule on them as you do it. 19 MS. CONLIN: All right, Your Honor. 20 THE COURT: I don't know how else to 21 do it. 22 MS. CONLIN: Well, we made a 23 suggestion here about deadlines and meet and 24 confers and some process that -- 25 THE COURT: I can't make them meet and 6211 1 confer with you if they don't want to. 2 MS. CONLIN: Well, I don't think 3 that's the issue, Your Honor. 4 What we seek principally is the 5 opportunity to know in advance of January 12th 6 what objections there will be to these 3,760 7 exhibits. 8 THE COURT: There's only three 9 possible. 10 MS. CONLIN: Yes, I know, Your Honor, 11 but certainly they cannot possibly be urging 12 all those three objections to each of these 13 3,760 exhibits. 14 THE COURT: I have no idea. 15 MS. CONLIN: That's why we suggest 16 they make them in advance, Your Honor, by 17 December 29th. 18 THE COURT: What I propose is on 19 January 12th is to go through them maybe on the 20 screen here and start with the first one and 21 ask what their objection is, if any, and go to 22 the next. 23 MS. CONLIN: Well, Your Honor -- 24 THE COURT: And I'll rule immediately. 25 MS. CONLIN: Having looked at these 6212 1 exhibits, every single one of these exhibits 2 myself, I can tell the Court without fear of 3 contradiction, that that process will take 4 weeks. 5 And that's why I think that we can do 6 it more efficiently by, you know, having some, 7 you know, some way of knowing what they're 8 going to object to and having any kind of a 9 meet and confer that they would participate in 10 and bringing to the Court only those exhibits 11 to which they do urge objections. 12 So that we will not have to go through 13 every single one of them. So we can just 14 devote our time to those for which objections 15 exist. 16 THE COURT: Well, I anticipate that it 17 will be like an exhibit comes up, Defendant 18 will say no objection for relevancy, and I'll 19 rule immediately. 20 MS. CONLIN: Well, what I'm saying to 21 the Court is I don't think that's going to be 22 necessary. I think we can save substantial 23 time if they'll let us know in advance which 24 ones they object to. 25 There's no need, Your Honor, to go 6213 1 through every single one of these 3,760 2 exhibits. It will literally take many, many 3 weeks to do that, I think. 4 And if there are -- let's just taking 5 a hypothetical. Let's say they only can think 6 up objections, because they couldn't before. 7 Remember, Your Honor, these are already clear. 8 But let's say they only have 100 9 exhibits to which they object. Then certainly 10 there's no reason to look at any but those 100. 11 That's why I just don't think that there's any 12 necessity for going through every one of these, 13 Your Honor. 14 But we do need to know in advance, and 15 that's why we suggest that by December 29th 16 they let us know what their objections are. 17 And then part of the process has been, 18 as I understand it, though I'm not a 19 participant, you know, some give and take 20 about, you know, why we think it might be 21 relevant or why it's not unduly prejudicial or 22 whatever, and sometimes there's agreement 23 reached and sometimes there is not. 24 But at least we could do that in 25 advance of coming to the Court in order to 6214 1 speed this process up. 2 We really have spent hundreds and 3 hundreds and hundreds of hours on this process 4 already, Your Honor. 5 THE COURT: Ms. Nelles? 6 MS. NELLES: Your Honor, I believe the 7 procedure that you have set up is a wise one. 8 I do not believe it will take weeks and weeks 9 and weeks. 10 And as we go through these objections 11 and determine -- or, excuse me, as we go 12 through these exhibits and determine that we 13 are not asserting any objections, we will 14 certainly let Plaintiffs know before the 12th, 15 so that -- to speed through this process. 16 THE COURT: All right. And any 17 exhibits that the Defendant knows before 18 January 12th that they're not going to object 19 to, please let them know before that date. 20 MS. NELLES: Absolutely, Your Honor. 21 MS. CONLIN: All right, Your Honor. 22 So do I understand that in advance of the 12th 23 the Defendant is going to let us know what 24 objections they are going to be lodging and 25 we'll just deal with those exhibits? 6215 1 All right. And also, Your Honor, can 2 you at least think about the Saturday or the 3 late nights rather than taking a trial day? 4 THE COURT: I'll see how it goes on 5 the 12th. If it goes slow, then I'll make some 6 adjustment. 7 MS. CONLIN: All right. Thank you, 8 Your Honor. 9 Wait a minute. 10 Is there a date certain by which the 11 Defendant will provide us with the objections? 12 MS. NELLES: Your Honor, as we 13 determine that we are not going to assert an 14 objection to any exhibit on their list, we will 15 let them know as we determine it and we will do 16 that all the way through to the 12th. 17 THE COURT: Okay. So you'll do it in 18 batches or something? 19 MS. NELLES: If we have them in 20 batches, I will certainly not hold them. 21 THE COURT: Okay. I want them 22 completed by the 10th at the latest. 23 MS. NELLES: Excuse me? 24 THE COURT: I want them completed by 25 the 10th at the latest. 6216 1 MS. NELLES: We'll do our best, Your 2 Honor. Absolutely. 3 MS. CONLIN: Thank you, Your Honor. 4 THE COURT: Oh, for the record, your 5 objection is overruled, Mr. Tulchin's 6 objection. 7 MS. CONLIN: Okay. 8 THE COURT: I think he wanted a 9 ruling. 10 Okay. Take five minutes. 11 (A recess was taken from 10:02 a.m. 12 to 10:11 a.m.) 13 (The following record was made in the 14 presence of the jury.) 15 THE CLERK: All rise. 16 THE COURT: Members of the jury, the 17 break was longer than expected because we took 18 up a matter that only I could decide so we were 19 working. 20 Please continue, ma'am. 21 MS. CONLIN: Thank you, Your Honor. 22 Turning to page 70 and Finding of Fact 23 Number 394. 24 In a further effort intended to 25 increase the incompatibility between Java 6217 1 applications written for its Windows JVM and 2 other Windows JVMs and to increase the 3 difficulty, according Java applications from 4 the Windows environment to other platforms, 5 Microsoft designed its Java developer tools to 6 encourage developers to write their Java 7 applications using certain key words and 8 compiler directives that could only be executed 9 properly by Microsoft's version of the Java 10 runtime environment for Windows. 11 Microsoft encouraged developers to use 12 these extensions by shipping its developer 13 tools with the extensions enabled by default 14 and by failing to warn developers that their 15 use would result in applications that might not 16 run properly with any runtime environment other 17 than Microsoft's. And that would be difficult 18 and perhaps impossible to port to JVMs running 19 on other platforms. 20 This action comported with the 21 suggestion that Microsoft's Thomas Reardon made 22 to his colleagues in November 1996. Quote, we 23 should just quietly grow J plus plus, bracket, 24 Microsoft developer's tools, end bracket, share 25 and assume that people will take more advantage 6218 1 of our classes without ever realizing they are 2 building Win 32 only Java X, end quote. 3 Microsoft refused to alter its 4 developer tools until November 1998 when a 5 court ordered it to disable its key words and 6 compiler directives by default and to warn 7 developers that using Microsoft's Java 8 extensions would likely cause incompatibilities 9 with non-Microsoft runtime environments. 10 Finding of Fact 396. 11 Determined to induce developers to 12 write Java applications that relied on its 13 version of the runtime environment for Windows 14 rather than on Sun-compliant ones, Microsoft 15 made a large investment of engineering 16 resources to develop a high performance Windows 17 JVM. 18 This made Microsoft's version of the 19 runtime environment attractive on its technical 20 merits. To hinder Sun and Netscape from 21 improving the quality of the Windows JVM 22 shipped with Navigator, Microsoft pressured 23 Intel, which was developing a high-performance 24 Windows compatible JVM, to not share its work 25 with either Sun or Netscape, much less allow 6219 1 Netscape to bundle the Intel JVM with 2 Navigator. 3 Gates was himself involved in this 4 effort. 5 During the August 2nd, 1995 meeting at 6 which he urged Intel to halt IAL's development 7 of platform level software Gates also announced 8 that Intel's cooperation with Sun and Netscape 9 to develop a Java runtime environment for 10 systems running on Intel's microprocessors was 11 one of the issues threatening to undermine 12 cooperation between Intel and Microsoft. 13 By the spring of 1996, Intel had 14 developed a JVM designed to run while on 15 Intel-based systems while complying with Sun's 16 cross-platform standards. 17 Microsoft executives approached Intel 18 in April of that year and urged that Intel not 19 take any steps toward allowing Netscape to ship 20 this JVM with Navigator. 21 Finding of Fact 397. 22 By bundling its version of the Windows 23 JVM with every copy of Internet Explorer and 24 expending some of its surplus monopoly power to 25 maximize the usage of Internet Explorer at 6220 1 Navigator's expense, Microsoft endowed its Java 2 runtime environment with the unique attribute 3 of guaranteed enduring ubiquity across the 4 enormous Windows installed base. 5 As one internal Microsoft presentation 6 from January 1997 put it, the company's 7 response to cross-platform Java entailed, 8 quote, increased IE share, dash, integration 9 with Windows, end quote. 10 Partly as a result of the damage that 11 Microsoft's efforts against Navigator inflicted 12 on Netscape's business, Netscape decided in 13 1998 that it could no longer afford to do the 14 engineering work necessary to continue bundling 15 up-to-date JVMs with Navigator. 16 Consequently, it announced that 17 starting with version 5.0, Navigator would 18 cease to be a distribution vehicle for JVM's 19 compliant with Sun's standards. 20 Finding of Fact 400. 21 Recognizing ISVs as a channel through 22 which Java runtime environments that complied 23 with Sun's standards could find their way on to 24 Windows PC systems, Microsoft induced ISVs to 25 distribute Microsoft's version instead of a 6221 1 Sun-compliant one. 2 First, Microsoft made its JVM 3 available to ISVs separately from Internet 4 Explorer so that those uninterested in bundling 5 browsing software could nevertheless bundle 6 Microsoft's JVM. 7 Microsoft's David Cole revealed the 8 motivation for this step in a message he wrote 9 to Jim Allchin in July 1997. Quote, we agree 10 that we must allow ISVs to redistribute the 11 Java VM stand-alone without IE. 12 ISVs that do this are bound into 13 Windows because that's the only place that VM 14 works, and it keeps them away from Sun's APIs. 15 Finding of Fact 404. 16 As discussed above, Microsoft's effort 17 to lock developers into its Windows specific 18 Java implementation included actions designed 19 to discourage developers from taking advantage 20 of Java class libraries such as RMI. 21 Microsoft went further than that, 22 however. In pursuit of its goal of minimizing 23 the portability of Java applications, Microsoft 24 took steps to thwart the very creation of 25 cross-platform Java interfaces. 6222 1 The incorporation of greater 2 functionality into the Java class libraries 3 would have increased the portability of the 4 applications that relied on them while 5 simultaneously encouraging developers to use 6 Sun-compliant implementations of Java. 7 In one instance of this effort to 8 stunt the growth of the Java class libraries, 9 Microsoft used threats to withhold Windows' 10 operating system support from Intel's 11 microprocessors and offers to include Intel 12 technology in Windows in order to induce Intel 13 to stop aiding Sun in the development of Java 14 classes that would support innovative 15 multimedia functionality. 16 Finding of Fact 405. 17 In November 1995, Microsoft's Paul 18 Maritz told a senior Intel executive that 19 Intel's optimization of its multimedia software 20 for Sun's Java standards was as inimical to 21 Microsoft as Microsoft support for non-Intel 22 processors would be to Intel. 23 It was not until 1997, though, that 24 Microsoft prevailed upon Intel to not support 25 Sun's development of Java classes that would 6223 1 have allowed developers to include certain 2 multi media features in their Java applications 3 without sacrificing portability. 4 Finding of Fact 406. 5 In February 1997, one of Intel's 6 competitors called AMD solicited support from 7 Microsoft for its 3DX technology which provided 8 sophisticated multimedia support for games. 9 Microsoft's Allchin asked Gates 10 whether Microsoft should support 3DX despite 11 the fact that Intel would oppose it. 12 Gates responded, quote, if Intel has a 13 real problem with us supporting this, then they 14 will have to stop supporting Java multimedia 15 the way they are. I would gladly give up 16 supporting this if they would back off from 17 their work on Java which is terrible for Intel, 18 end quote. 19 Near the end of March, Allchin sent 20 another message to Gates and Maritz. And in it 21 he wrote, quote, I am positive that we must do 22 a direct attack on Sun and probably Oracle. 23 Between ourselves and our partners, we 24 can certainly hurt their, certainly Sun's 25 revenue base. We need to get Intel to help us. 6224 1 Today they are not. 2 Two months later, Eric Engstrom, a 3 Microsoft executive with responsibility for 4 multimedia development wrote to his superiors 5 that one of Microsoft's goal was getting, 6 quote, Intel to stop helping Sun create Java 7 multimedia APIs, especially ones that run well, 8 i.e., native implementations on Windows, end 9 quote. 10 Engstrom proposed achieving this goal 11 by offering Intel the following deal. 12 Microsoft would incorporate into the Windows 13 API set any multimedia interfaces that Intel 14 agreed to not help Sun incorporate into the 15 Java class libraries. 16 Engstrom's efforts apparently bore 17 fruit for he testified at trial that Intel's 18 IAL subsequently stopped helping Sun to develop 19 class libraries that offered cutting edge 20 multimedia support. 21 Turning to finding of fact 105. 22 MR. TULCHIN: Object to going out of 23 order, Your Honor. 24 THE COURT: Overruled. Continue. 25 MS. CONLIN: Thank you, Your Honor. 6225 1 105. 2 Page 20. 3 Beginning in the spring of 1997 and 4 continuing into the summer of 1998, Microsoft 5 tried to persuade Apple to stop producing a 6 Windows 95 version of its multimedia playback 7 software which presented developers of 8 multimedia content with alternatives to 9 Microsoft's multimedia APIs. 10 If Apple acceded to the proposal, 11 Microsoft executives said Microsoft would not 12 enter the authoring business and would instead 13 assist Apple in developing and selling tools 14 for developers writing multimedia content. 15 Just as Netscape would have been free 16 had it accepted Microsoft's proposal to market 17 a browser shell that would run on top of 18 Microsoft's Internet technologies, Apple would 19 have been permitted, without hindrance, to 20 market a media player that would run on top of 21 DirectX, but like the browser shell that 22 Microsoft contemplated as acceptable for 23 Netscape to develop, Apple's QuickTime shell 24 would not have exposed platform level APIs to 25 developers. 6226 1 Microsoft executives acknowledged to 2 Apple their doubts that a firm could make a 3 successful business out of marketing such a 4 shell. 5 Apple might find it profitable, 6 though, to continue developing multimedia 7 software for the Mac OS and that, the 8 executives from Microsoft assured Apple, would 9 not be objectionable. 10 As was the case with the Internet 11 technologies it was prepared to tolerate from 12 Netscape, Microsoft felt secure in the 13 conviction that developers would not be drawn 14 in large numbers to write for non-Microsoft 15 APIs exposed by platforms whose installed bases 16 were inconsequential in comparison with that of 17 Windows. 18 Turning to 343 on page 62. 19 By the summer of 1996, Apple was 20 already shipping Internet Explorer with the Mac 21 OS, but it was preinstalling Navigator as the 22 default browsing software. 23 After a meeting with Apple in June 24 1996, Gates wrote to some of his top 25 executives, quote, I have two key goals 6227 1 investing in the Apple relationship. 2 One, maintain our applications share 3 on the platform, and two, see if we can get 4 them to embrace Internet Explorer in some way, 5 end quote. 6 Later in the same message, Gates 7 expressed his desire that Apple, quote, agree 8 to immediately ship IE on all their systems as 9 the standard browser. 10 Finding of Fact 345. 11 Recognizing the importance of Mac 12 Office to Apple's survival, Microsoft 13 threatened to cancel the product unless Apple 14 compromised on a number of outstanding issues 15 between the companies. 16 One of these issues was the extent to 17 which Apple distributed and promoted Internet 18 Explorer as opposed to Navigator with the Mac 19 OS. 20 Finding of Fact 349. 21 A few days after the exchange with 22 Waldman, Gates informed those Microsoft 23 executives most closely involved in the 24 negotiations with Apple that the discussions, 25 quote, have not been going well at all, end 6228 1 quote. 2 One of the several reasons for this, 3 Gates wrote, was that, quote, Apple let us down 4 on the browser by making Netscape the standard 5 install, end quote. 6 Gates then reported that he had 7 already called Apple CEO who at the time was 8 Gil Amelio, to ask, quote, how we should 9 announce the cancellation of Mac Office. 10 Finding of Fact 355 on page 66. 11 Apple increased its distribution and 12 promotion of Internet Explorer not because of a 13 conviction that the quality of Microsoft's 14 product was superior to Navigator's, or that 15 consumer demand for it was greater, but rather 16 because of the in terrorem effect of the 17 prospect of the loss of Mac Office. 18 To be blunt, Microsoft threatened to 19 refuse to sell a profitable product to Apple, a 2