Intel Execs Quizzed on Microsoft, Source Says

The Justice Department has questioned Intel Corp. executives to determine if Microsoft Corp. tried to intimidate the semiconductor company, an industry source said Wednesday.

The department is investigating whether Microsoft flexed its muscles at a 1995 meeting between its chairman, Bill Gates, and Andrew Grove, then Intel’s chief executive officer and now its chairman, the source said.

Gates is said to have told Grove that Microsoft did not want Intel to go forward with the use of software known as “native signal processing,” which facilitated the use of multimedia--such as streaming audio and the Internet--without the addition of extra chips.

Eventually the capabilities were added to Intel software, an industry source said. But that did not happen until much later.

The Justice Department and 20 states have brought a major antitrust suit against Microsoft, set to go to trial Sept. 23. That suit charges that Microsoft violated the Sherman Antitrust Act by unfairly using monopoly power to extend its control over software.

In 1996, Fortune Magazine published a dialogue between Grove and Gates in which Grove said that his company “caved in” to Microsoft’s demand.

Gates rejected that characterization and said that Intel “deserves a lot of credit.” But Grove was adamant that his company had bowed to Microsoft.

The Justice Department declined to comment on the investigation.

The New York Times, in a story Tuesday on the new probe, said Intel’s Grove had given a deposition to the Justice Department, but the industry source disputed that. “Grove has not been deposed,” the source said.

An Intel spokesman said it was “not unusual for a company of Intel’s position or stature to be asked for information in connection with the type of investigation that’s going on.”

The spokesman confirmed that Intel had received civil subpoenas from the Justice Department, adding, “Our position has been to cooperate fully with authorities.”

A Microsoft spokesman, Mark Murray, said it was “unfortunate that anyone would try to make groundless accusations on Microsoft and Intel’s business relationships. Microsoft and Intel work closely to make sure that our technologies work well together for the benefit of the continued growth of the software industry and the benefit of consumers.”