Exec Admits That Microsoft Bargained With Two of Its Rivals
A top Microsoft Corp. executive admitted Wednesday that the company tried to persuade two key technology firms not to compete against it in critical software markets.
The admission, which could bolster the government’s case that Microsoft has used its monopoly power to suppress competition, was made by Paul Maritz, the highest-ranking Microsoft executive to appear live at the landmark antitrust trial and the subject of intense questioning by lead Justice Department lawyer David Boies.
Maritz, group vice president for platforms and applications, testified that software developer RealNetworks Inc. and longtime Microsoft ally Intel Corp. both discussed dropping key software ventures to appease Microsoft’s concerns that the products might jeopardize its Windows operating system, which runs more than 90% of all modern personal computers.
Maritz’s testimony, coming a day after he testified that Microsoft elected to give away its Web browser to win market share from archrival Netscape Communications, contradicted Microsoft’s earlier contentions in the trial that such bargaining discussions with rivals never took place.
Maritz’s most surprising admission concerned a proposal that RealNetworks stop competing with Microsoft in exchange for Microsoft’s investing in the company. Boies hammered away at what was discussed during meetings between Microsoft and RealNetworks in 1997 that were held to explore strategies in the market for so-called streaming media software, which enables Web surfers to view video and hear audio much like they would watch television or listen to a radio broadcast.
“Did [RealNetworks] tell you they would get out of the base media streaming platform?” Boies asked.
After initially responding that RealNetworks indicated that was only a “possibility,” Maritz answered yes to Boies’ question.
RealNetworks, Maritz explained, “had the potential--over time--to grow into a real software platform” threat. However, the executive later noted that RealNetworks continues to compete with Microsoft.
In the case of Intel, Maritz said Microsoft asked the chip maker not to distribute multimedia software known as native signal processing that Intel had been developing.
Microsoft officials have claimed the product was incompatible with Windows 95. But Intel executive Steven McGeady testified earlier in the trial that Microsoft saw the software as a threat to Windows and vowed not to support a new family of Intel microchips if Intel pursued NSP’s development.
Maritz also said Microsoft persuaded Intel not to adopt Netscape’s Web browser as its internal corporate standard in order to boost market acceptance of Microsoft’s own browser, Internet Explorer.
“Intel is a major customer, and I’m sure we were trying to get them to use our browser as opposed to another browser,” Maritz said.
The Justice Department, 19 states and the District of Columbia have cited the meetings with Intel, RealNetworks and other industry competitors as evidence of a pattern of anti-competitive practices that violates federal antitrust laws.
Microsoft says its actions are no different from those of companies who occasionally meet with rivals to ensure that their products are compatible and useful for consumers.
