Microsoft used threats not only to bully Apple Computer into promoting its browser, but also to try to pressure Apple into agreeing to “carve up” the market for multimedia software, an Apple executive alleges in testimony submitted in the government's antitrust lawsuit against the software company.
In written testimony released over the weekend, Avie Tevanian, senior vice president of software engineering at Apple, says Microsoft's approach to the multimedia market, in which Apple's QuickTime software is one of the top sellers, is similar to its strategy in the browser market.
In a series of meetings that began in April last year, Microsoft repeatedly tried to convince Apple to cede the playback ability of QuickTime, which Apple estimates is present on about 50 million desktops, to Microsoft, leaving Apple to focus on the smaller authoring area of multimedia, including development of software tools used to create multimedia content, according to Tevanian.
“Microsoft ‘gives away’ multimedia technologies such as DirectX and Windows Media Player by bundling them with the Windows operating systems,” Tevanian said. “As it did in the browser market, Microsoft intends to establish an installed base of its multimedia products that will predominate in the market.”
Tevanian said Apple has consistently refused Microsoft's proposals, including the most recent one in June 1998, one month after the US Department of Justice and 20 state attorneys general filed the antitrust lawsuit.
Eric Engstrom, manager of Microsoft’s multimedia technology and Christopher Phillips, business development manager for its multimedia APIs in DirectX, represented Microsoft at the meeting, Tevanian said. Apple interim CEO Steve Jobs, Tevanian and other Apple officials represented Apple.
“Microsoft's basic proposal was that Microsoft would take over the playback market for Windows, while allowing Apple to control the much smaller playback business for Macintosh,” Tevanian said. In addition Microsoft offered to endorse QuickTime as the solution for the authoring portion if Apple would abandon the playback segment of the business.
“Microsoft's proposal amounted to a forced abandonment of one of Apple's most successful and innovative products,” Tevanian said.
When Jobs told Microsoft Apple had no interest in giving up QuickTime, the response from Microsoft was that it “would drive Apple out of the multimedia business.”
Tevanian alleges that Microsoft has tried to sabotage QuickTime by creating misleading error messages in Windows and introducing technical bypasses that deprive QuickTime the opportunity to process certain types of multimedia files.
“In some instances users were left with the false impression that QuickTime was not functioning properly when, in reality, Microsoft never allowed QuickTime the chance,” Tevanian said.
By comparison Tevanian said Apple's compatibility history with Netscape has been much smoother.
Tevanian, who joined Apple in 1997, is expected to take the stand for cross examination by Microsoft lawyers when the trial resumes Monday.
A statement issued by Microsoft yesterday denies the allegations and says the meetings between the two companies were routine.
“Those kinds of discussions go on in the software industry every day, and in this case the companies decided to continue offering their own separate multimedia formats and media players and take their respective technologies in different directions,” the statement said.
Tevanian also accuses Microsoft of leveraging its operating system monopoly power in the market for office productivity suites and using that power to protect and extend its operating system monopoly.
The Apple executive details allegations already outlined by government lawyers regarding Microsoft's support for Office for Macintosh, the office productivity suite comprising a word processor, spreadsheet and other applications.
Tevanian said Microsoft Chairman and Chief Executive Officer Bill Gates became very upset when he learned that Netscape Navigator would be the default browser in Mac OS 8.0, released in August last year.
Microsoft’s reaction was to threaten to withdraw support for Office for Macintosh unless Apple agreed to make Microsoft's Internet Explorer the default browser.
Tevanian said Microsoft was aware that withdrawal of Microsoft's support for the Office for Macintosh would have been devastating to the Macintosh operating system.
Microsoft also knew of strong demand for the new version of Microsoft Office 98 for Macintosh, but was willing to sacrifice the investment it had made in developing that product to force Apple to favor its browser in its operating system, according to Tevanian.
“The pressures exerted by Microsoft compelled Apple to resolve the dispute on terms that gave significant advantages to Microsoft’s Internet Explorer,” he said.
In June 1997, Apple reluctantly agreed to bundle Internet Explorer on all Macintosh computers and Macintosh operating systems for five years and to make it the default browser. The agreement also prohibited Apple from promoting any browser other than Internet Explorer.
In return Microsoft agreed to continue developing Microsoft Office for Macintosh for five years subject to Macintosh meeting certain sales minimums.
In addition to Tevanian's testimony next week, the government's lead attorney, David Boies, has said he plans to play several hours of the videotape of Gates’ deposition in the trial.