Class-Action Trial Against Microsoft Reveals Anti-Linux Plans

In a 1999 e-mail, Bill Gates questioned whther Microsoft could change its APIs to work well with Windows but not other operating systems.
The jury trial in the class-action suit against Microsoft got underway in Minneapolis this week, as plaintiff attorney Rick Hagstrom argued that Microsoft abused its Windows "monopoly" to overcharge for software.

Microsoft's attorney, David Tulchin, countered: "Microsoft's high market share is the result of choices made by millions of people to buy Microsoft software. There have always been choices for consumers."

While the case repeats past charges made against Microsoft in other class action suits--several have been settled; this is the first to go to trial--the Minnesota case is marked by a new batch of internal documents that give insight into the inner workings of the software colossus.

This is how Warren Buffett, legendary investment guru, described Microsoft in an email to one of the firm's top vice presidents: "It's as if you were getting paid for every gallon of water starting in a small stream but with added amounts received as tributaries turned the stream into an Amazon. The toughest question is how to push prices, and I wrote a note to Bill [Gates] on that after our December meeting last year."

Buffett's e-mail is just one of hundreds of documents being introduced in the Minnesota court. Buffett, chief executive of Berkshire Hathaway Inc. and a close friend of Microsoft chairman Gates, wrote the e-mail in 1997.

As early as January, 1999, Gates was griping about Linux: "Maybe we could define the APIs so that they work well with [Windows] and not the others, even if they are open," Gates wrote in an e-mail presented to the Hennepin County District Court by the plaintiffs' attorneys.

Microsoft has called the documents "snippets" that have been taken out of context, noting that they refer to old events. One such event concerned Lotus Development Corp.--before it was acquired by IBM and when its Lotus 1-2-3 spreadsheet was challenging Microsoft's software. In a 1988 memo, Gates seeks price cuts to lead to "cutting Lotus profit in half." A "Santa Claus scenario" document calls for Microsoft to drive down Lotus's stock price and then taking a stock position in the company. The document speculates that Jim Manzi, then Lotus's chief, would be forced to buy back the Lotus stock. There is no evidence that the suggestions--serious or not--were ever acted on.

Hagstrom said the documents reveal a "war-like culture" that existed at Microsoft. Microsoft said the release of the documents was an attempt to obscure the real issues before the court.

Microsoft has said it plans to call Gates and the firm's current chief executive, Steve Ballmer. The case is scheduled to last for three or four months, unless a settlement is reached.

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