5669 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 XXI 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 8:30 a.m., December 14 19, 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 5670 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 MICHAEL R. CASHMAN 7 Attorney at Law Zelle, Hofmann, Voelbel, 8 Mason & Gette, LLP 500 Washington Avenue South 9 Suite 4000 Minneapolis, MN 55415 10 (612) 339-2020 11 ROBERT J. GRALEWSKI, JR. Attorney at Law 12 Gergosian & Gralewski 550 West C Street 13 Suite 1600 San Diego, CA 92101 14 (619) 230-0104 15 16 17 18 19 20 21 22 23 24 25 5671 1 Defendant by: DAVID B. TULCHIN 2 SHARON L. NELLES JOSEPH E. NEUHAUS 3 Attorneys at Law Sullivan & Cromwell, LLP 4 125 Broad Street New York, NY 10004-2498 5 (212) 558-3749 6 STEPHEN A. TUGGY HEIDI B. BRADLEY 7 Attorneys at Law Heller Ehrman, LLP 8 333 South Hope Street Suite 3900 9 Los Angeles, CA 90071-3043 (213) 689-0200 10 DANIEL S. SILVERMAN 11 Attorney at Law Heller Ehrman, LLP 12 4350 La Jolla Village Drive Seventh Floor 13 San Diego, CA 92122-1246 (858) 450-8400 14 BRENT B. GREEN 15 Attorney at Law Duncan, Green, Brown & 16 Langeness, PC Suite 380 17 400 Locust Street Des Moines, IA 50309 18 (515) 288-6440 19 RICHARD J. WALLIS Attorney at Law 20 Microsoft Corporation One Microsoft Way 21 Redmond, CA 98052 (425) 882-8080 22 23 24 25 5672 1 (The following record was made in the 2 presence of the jury.) 3 THE COURT: Everyone else may be 4 seated. 5 Good morning. You may proceed. 6 MS. CONLIN: Thank you, Your Honor. 7 Continue with the deposition of Mr. Gates. 8 (Whereupon, the following video was 9 played to the jury.) 10 Question: Let me go back to Exhibit 11 368, which is the June 27, 1997 E-mail from 12 Mr. Waldman to you. 13 Do you recall -- and I know you've 14 said you don't recall receiving this E-mail, 15 but do you recall anyone describing the threat 16 to cancel Mac Office 97 as a bargaining point 17 that you had in dealing with Apple in or about 18 June of 1997? 19 Answer: I remember going to meetings 20 where Paul Maritz took the position that we 21 shouldn't do the update, the Mac Office 97 22 update. 23 And the main negotiation we had with 24 Apple at that point was a discussion about a 25 patent cross license. 5673 1 And so I said to Paul I wanted to 2 understand better where we were on the patent 3 cross license and understand the state of the 4 Mac Office development. 5 And then it appears that this is an 6 E-mail that is coming after that meeting. 7 I don't remember somebody using those 8 exact words. 9 Question: Whether you remember 10 somebody using the exact words that Mr. Waldman 11 uses in his June 27, 1997 E-mail to you, do you 12 remember people telling you in substance that 13 the threat to cancel Mac Office 97 was a strong 14 bargaining point that you had against Apple and 15 that canceling Mac Office 97 would do a great 16 deal of harm to Apple immediately? 17 Answer: I know there was the internal 18 debate about whether to do the update. And I 19 know there was the patent discussion going on. 20 And I said that maybe even if it didn't make 21 business sense to do the update, maybe as part 22 of an overall relationship with the patent 23 cross license, that we should go ahead and do 24 it. 25 And so a commitment to do the upgrade 5674 1 was one of the things that we told Apple we 2 might commit to as part of the patent cross 3 license relationship. 4 Question: And did you believe in 1997 5 that canceling Mac Office 97 would do a great 6 deal of harm to Apple, as Mr. Waldman writes it 7 would? 8 Answer: There was a question about 9 whether to do the upgrade and whether it made 10 business sense. I can't really say how much 11 impact it would have on Apple of us doing the 12 upgrade or not. 13 Certainly Ben, as the person in charge 14 of the upgrade, was very passionate about its 15 importance and its dramatic nature. 16 Question: My question to you now, 17 sir, is whether you believed that canceling Mac 18 Office 97 would do a great deal of harm to 19 Apple? 20 Answer: Well, I know that Apple would 21 prefer that we have a more updated version of 22 Mac Office, that that would be a positive thing 23 for them, and so that's why it was part of the 24 negotiation relative to the patent cross 25 license. 5675 1 Question: And did you believe that 2 canceling the Mac Office 97 would do a great 3 deal of harm to Apple? 4 Answer: I told you I think it would 5 be better for Apple to have everybody doing 6 major upgrades like this. I doubt -- I can't 7 characterize the level of benefit of the 8 upgrade to Apple, but certainly it's something 9 they wanted us to complete. 10 Question: The next sentence in 11 Mr. Waldman's June 27, 1997 E-mail to you 12 begins, I also believe that Apple is taking 13 this threat pretty seriously. 14 Did someone tell you in or about June 15 of 1997 that Apple was taking Microsoft's 16 threat to cancel Mac Office 97 seriously or 17 pretty seriously? 18 Answer: Well, Maritz had taken the 19 position that it didn't make business sense to 20 finish this upgrade. And it's very possible 21 Apple might have heard about Maritz's opinion 22 there and therefore been worried that we, 23 businesswise, didn't see a reason to complete 24 the upgrade and that they would have the older 25 Mac Office as opposed to this new work that we 5676 1 were part way along on. 2 Question: Mr. Gates, my question is 3 not what position Mr. Maritz did or did not 4 take. 5 My question is whether anyone told you 6 in or about June of 1997 that Apple was taking 7 pretty seriously Microsoft's threat to cancel 8 Mac Office 97? 9 Answer: Apple may have known that 10 senior executives at Microsoft, Maritz in 11 particular, thought that it didn't make 12 business sense to complete that upgrade. 13 Question: Mr. Gates, I'm not asking 14 you what Apple may have known or may not have 15 known. 16 What I'm asking you is whether anybody 17 told you in or about June of 1997 that Apple 18 was taking pretty seriously Microsoft's threat 19 to cancel Mac Office 97? 20 Answer: Those particular words? 21 Question: Told you that in words or 22 in substance. 23 Answer: I think I remember hearing 24 that Apple had heard about Maritz's view that 25 it didn't make sense to continue the upgrade, 5677 1 but -- and that, you know, they wanted us to 2 continue that upgrade. But I -- I don't 3 remember any of the -- it being phrased at all 4 the way you're phrasing it. 5 Question: Well, the way I'm phrasing 6 it is the way that Mr. Waldman phrased it to 7 you in his E-mail of June 27, 1997; correct, 8 sir? 9 Answer: Well, in reading it, I see 10 those words, yes. 11 Question: Yes. And you don't have 12 any doubt that you received this E-mail, do 13 you, sir? 14 Answer: I have no reason to doubt it. 15 I don't remember receiving it. I do remember 16 in general sending an E-mail like the one 17 that's at the top there. 18 Question: Do you recall anyone 19 telling you in words or in substance in or 20 about June of 1997 what Mr. Waldman is writing 21 here in this E-mail? 22 Answer: This is a very long piece of 23 E-mail. Have you read the whole E-mail 24 yourself? 25 Question: I think my question was 5678 1 imprecise. I was probably trying to avoid 2 quoting something for yet another time, but I 3 think -- I accept your counsel's view that the 4 question was probably defective. 5 I thought it was clear what portion of 6 the E-mail we were talking about, but I will 7 make it clear. 8 Mr. Gates, Mr. Waldman on June 27, 9 1997, sends you an E-mail that says, the threat 10 to cancel Mac Office 97 is certainly the 11 strongest bargaining point we have, as doing so 12 will do a great deal of harm to Apple 13 immediately. I also believe that Apple is 14 taking this threat pretty seriously, closed 15 quote. 16 Do you recall anyone -- 17 Answer: Do you want to finish the 18 sentence or not? 19 Question: You can if you think it is 20 necessary to answer the question. 21 Do you recall anyone telling you what 22 I have just quoted in words or in substance in 23 or about June, 1997? 24 Answer: No. 25 Question: In the period of 1996 5679 1 forward, after you concluded that Java, or as 2 you put it, Java runtime threat and Netscape 3 were competitive threats to Microsoft, what 4 were your goals in terms of dealing with Apple? 5 What were you trying to get Apple to agree to 6 do for Microsoft? 7 Answer: Well, the main reasons we 8 were having discussions with Apple in this '97 9 period was that they had asserted that various 10 patents that they had applied to various 11 Microsoft products, and so our primary focus in 12 discussing an agreement with them was to 13 conclude a patent cross license of some kind. 14 Question: I want to be sure that the 15 question and answer are meeting. I asked for a 16 period of 1996 to the present and you answered 17 about 1997. 18 Were your goals in 1996 or after 1997 19 any different than the goals that you've just 20 described in dealing with Apple? 21 Answer: There's only one agreement 22 with Apple, so I don't know what you're talking 23 about. 24 Question: Okay. Do you understand 25 the word goals or objectives? 5680 1 Answer: You talked about agreeing 2 with Apple -- there's only one agreement with 3 Apple that I know about that we're discussing 4 and that was the one that was concluded in I 5 think late July or early August, 1997, and 6 there's no other agreement that I know was even 7 discussed or considered. 8 Question: Okay. Let me ask you to 9 look at a document previously marked as 10 Government Exhibit 369. 11 The second item on the first page of 12 this exhibit purports to be an E-mail from you 13 dated June 23, 1996, to Paul Maritz and Brad 14 Silverberg with copies to Messrs. Higgins, 15 Bradford, Waldman, and Ludwig on the subject of 16 Apple meeting, closed quote. 17 Did you send this E-mail, Mr. Gates, 18 on or about June 23, 1996? 19 Answer: I don't remember it 20 specifically, but I don't have any reason to 21 doubt that I did. 22 Question: In the second paragraph you 23 say, quote, I have two key goals in investing 24 in the Apple relationship: 1) Maintain our 25 applications share on the platform and, 2) See 5681 1 if we can get them to embrace Internet Explorer 2 in some way, closed quote. 3 Do you see that? 4 Answer: Yeah. 5 Question: Does that refresh your 6 recollection as to what your two key goals were 7 in connection with Apple in June of 1996? 8 Answer: First of all, June of 1996 is 9 not in the time frame that your previous 10 question related to. 11 And certainly in the E-mail to this 12 group, I'm not talking about the patent thing, 13 but believe me, it was our top goal in thinking 14 about Apple for many, many years because of 15 their assertions. 16 Question: My time frame in my 17 question, sir, was a time frame beginning in 18 1996 when you began to view Netscape or the 19 Java runtime threat as a competitive threat to 20 Microsoft. 21 Answer: And that was after June of 22 1996. 23 Question: Is it your testimony that 24 in June of 1996 you did not consider Netscape 25 to be a competitive threat to Microsoft? 5682 1 Answer: Netscape was a competitor, 2 but in terms of Java and all the runtime 3 related issues, we didn't have a clear view of 4 that at all. 5 Question: So that -- I want to be 6 sure I've got your testimony accurately. 7 It is your testimony that in June of 8 1996, you considered Netscape to be a 9 competitive threat, but you did not consider 10 Java or Java runtime to be a competitive 11 threat; is that your testimony? 12 Answer: We considered Netscape to be 13 a competitor, and I told you earlier that until 14 late '96 we were unclear about our position on 15 various Java runtime things and what other 16 companies were doing and what that meant for us 17 competitively. 18 Question: Do you agree that in June 19 of 1996, the two key goals that you had in 20 terms of the Apple relation were, one, maintain 21 your applications share on the platform, and 22 two, see if you could get Apple to embrace 23 Internet Explorer in some way? 24 Answer: No. 25 Question: Do you have any explanation 5683 1 for why you would have written to Mr. Maritz 2 and Mr. Silverberg on June 23, 1996, that those 3 were your two key goals in the Apple 4 relationship? 5 Answer: They weren't involved in the 6 patent issue at all. 7 So when I write to them, I'm focused 8 on the issues that relate to them. I do 9 mention patents in here, but that certainly was 10 the primary goal at this time and in subsequent 11 times. 12 Question: Let me be clear. When you 13 write to Mr. Maritz and Mr. Silverberg, you 14 talk about patents, do you not, sir? 15 Answer: Where do you see that? 16 Question: Well, do you talk about -- 17 did you talk about patents? 18 Answer: Do you want me to read the 19 entire mail? 20 Question: Have you read it enough to 21 know whether you talk about patents? 22 Answer: I saw the word patent in one 23 place. 24 If I read the whole thing, I can find 25 out if it's in other places as well. 5684 1 Question: You do talk about patent 2 cross license, do you not, in this memo? 3 And if you want to look at the last 4 page, five lines from the bottom. 5 Answer: Yeah. They weren't involved 6 in the patent issues at all, so it looks like 7 in this mail I just mention that in a summary 8 part, but it was our top goal in our 9 discussions with Apple. 10 Question: When you write to 11 Mr. Maritz and Mr. Silverberg, you don't 12 describe that as your top goal. In fact, you 13 don't even describe it as one of your two or 14 three key goals; correct, sir? 15 Answer: This piece of E-mail doesn't 16 talk about the patent goal as the top goal. 17 It's most likely that's because the people 18 copied on the mail don't have a thing to do 19 with it and I wouldn't distract them with it. 20 Question: I want to be sure I have 21 your testimony correct. 22 In June of 1996, what was Paul 23 Maritz's title? 24 Answer: He was involved in product 25 development activities. 5685 1 Question: He was involved in product 2 development activities. 3 What was his title? 4 Answer: I don't know. Systems. 5 Question: Systems? 6 Answer: Uh-huh. 7 Question: Did he have a title that 8 went with that? 9 Answer: Senior vice president 10 systems. I don't know. 11 Question: Senior vice president 12 systems, I see. 13 Did Mr. Silverberg have a position in 14 June of 1996? 15 Answer: He worked for Mr. Maritz. 16 Question: Did he have a title? 17 Answer: I don't know what his title 18 was at the time. He would have been an officer 19 of some kind. 20 Question: An officer of some kind. 21 So you're writing a memo to Paul 22 Maritz, a senior vice president, and Brad 23 Silverberg, an officer of some kind, and you're 24 sending copies to four other people on the 25 subject of the Apple meeting. 5686 1 And you say, I have two key goals in 2 investing in the Apple relationship. 3 Answer: That's quite distinct than 4 any goals I might have for a deal with Apple. 5 It says, I have two key goals in 6 investing in the Apple relationship, not I have 7 two key goals for a deal with Apple. 8 Question: Well, sir, at the bottom 9 you say what you propose in terms of a deal and 10 you talk about what Apple will get out of the 11 deal and what Microsoft will get out of the 12 deal; correct, sir? 13 Answer: Do you want me to read you 14 the E-mail? 15 I mean, I don't know anything more 16 than just what it says in the E-mail. I'm glad 17 to read it to you. 18 Question: Well, sir, does it say at 19 the bottom of the E-mail that you are proposing 20 something with Apple and you are identifying 21 what Apple would get under your proposed deal 22 and what Microsoft would get under your 23 proposed deal? 24 Answer: Yeah, that's at the bottom of 25 the E-mail. 5687 1 Question: In fact, the bottom of the 2 E-mail talking about a proposed Apple-Microsoft 3 deal, you say, quote, the deal would look like 4 this, and then you've got a column Apple gets, 5 and a column Microsoft gets, and a column both 6 get; right, sir? 7 Answer: I'm reading that. 8 Question: Okay. Now, in this E-mail 9 of a page or page and a half in which you are 10 proposing this deal, you describe your two key 11 goals as maintaining Microsoft's applications 12 share on the platform and getting Apple to 13 embrace Internet Explorer. 14 Answer: No, that's wrong. 15 Question: That's wrong, okay. 16 Answer: The word deal and the word 17 relationship are not the same word. 18 This says I have two key goals in 19 investing in the Apple relationship. This down 20 here is an agreement which I thought we could 21 reach with Apple. 22 Question: Is it your testimony here 23 today under oath that your two key goals in 24 investing in the Apple relationship, which you 25 mention in the second paragraph of this E-mail, 5688 1 is different than your two key goals in the 2 proposed deal that you describe five paragraphs 3 later? 4 Answer: I don't see anything in here 5 about the two key goals -- two key goals in the 6 deal. I've told you that I'm certain that my 7 primary goal in any deal was the patent cross 8 license. 9 Question: Mr. Gates, my question is 10 whether it is your testimony today here under 11 oath that when you talk about your two key 12 goals in investing in the Apple relationship in 13 the second paragraph of this E-mail, that that 14 is different than what your key goals were in 15 the deal that you proposed five paragraphs 16 later? 17 Answer: That's right. Investing in a 18 relationship is different than the deal. 19 Question: Now, you don't tell 20 Mr. Maritz or Mr. Silverberg that your goals 21 for investing in the Apple relationship are 22 different than your goals in the proposed deal, 23 do you, sir? 24 Answer: But the goals and the deal 25 are quite different, so obviously they would 5689 1 have known they were quite different. 2 Question: Well, sir, you say the 3 goals and the deal are quite different. One of 4 your two key goals that you talk about in your 5 first -- in your second paragraph is to get 6 Apple to embrace Internet Explorer in some way. 7 And the very first thing under what 8 Microsoft gets in your proposed deal is, quote, 9 Apple endorses Microsoft Internet Explorer 10 technology. Do you see that, sir? 11 Answer: Uh-huh. 12 Question: Now, does that refresh your 13 recollection that the deal that you were 14 proposing had some relationship to the two key 15 goals that you were identifying? 16 Answer: Some relationship, yes, but 17 they aren't the same thing at all. 18 Question: All right, sir. 19 Did you ever prepare any E-mail to 20 anyone, Mr. Maritz or Mr. Silverberg or anyone, 21 in which you said that your primary goal in an 22 Apple deal was obtaining a cross license? 23 Answer: I don't remember a specific 24 piece of E-mail, but I'm sure I did with at 25 least Mr. Maffei and Mr. Maritz. 5690 1 Question: You're sure that you sent 2 them E-mail saying that? 3 Answer: I'm sure I communicated it to 4 them in some way. 5 Question: Do you believe you sent 6 them anything in writing or an E-mail? 7 Answer: I think it's likely, but I 8 don't remember a specific document. 9 Question: You certainly haven't seen 10 any such document in being prepared for your 11 deposition; is that fair? 12 Answer: I didn't say anything about 13 what may or may not exist at this point. I 14 said I'm sure I communicated to Mr. Maritz and 15 Mr. Maffei that our primary goal in doing the 16 deal with Apple was the patent cross license. 17 Question: And I had thought, and 18 perhaps I misunderstood, I thought that you had 19 said that you believed that you actually 20 communicated that not merely orally but by 21 E-mail or in writing. 22 Answer: I think it's likely that I 23 communicated it in E-mail. 24 Question: And if you had communicated 25 it in E-mail, would that E-mail have been 5691 1 preserved? 2 Answer: Not necessarily. 3 Question: A lot of these E-mails were 4 preserved because we now have copies of them; 5 right? 6 Answer: That's right. 7 Question: How did Microsoft decide 8 what E-mails would be preserved and what 9 E-mails would not be preserved? 10 Answer: Individuals get E-mail into 11 their mailbox and they decide. 12 Question: Do you have any explanation 13 as to why people would have decided to keep the 14 E-mail that described your two key goals in the 15 Apple relationship as being what they are 16 stated to be here and not have preserved your 17 E-mail that you say you sent saying you had a 18 primary goal of a cross license? 19 Answer: You're missing -- 20 Question: I'll restate the question 21 to just be absolutely certain that it's a fair 22 question, Mr. Gates. 23 If it were the case that neither your 24 counsel nor myself, after diligent search, can 25 find an E-mail that says your primary goal in 5692 1 dealing with Apple was a patent cross license, 2 do you have any explanation as to why that 3 E-mail that you say you think exists would not 4 have been saved; whereas, the E-mail that 5 describes one of your two key goals as getting 6 Apple to embrace Internet Explorer was 7 preserved? 8 Answer: When you say dealing with 9 Apple, there were a lot of things we were 10 dealing with Apple on. I've told you in terms 11 of the deal, the deal that I was involved in 12 discussing in '96 and under another management 13 at Apple in '97, there's no doubt the primary 14 goal was the patent cross license. 15 Question: And by the primary goal, 16 what you mean is the primary goal that you, 17 Mr. Gates, had; is that correct? 18 Answer: I don't think I'm the only 19 one who had it, but certainly, yes, that was 20 the primary goal of myself and for the company. 21 Question: And when you said in your 22 June 23, 1996 E-mail, I have two key goals in 23 investing in the Apple relationship, closed 24 quote, you were talking about yourself 25 personally; is that correct? 5693 1 Answer: Yeah. When I say investing 2 in the Apple relationship, that means spending 3 time with Apple and growing the relationship. 4 Question: And when in describing the 5 deal five paragraphs later the very first thing 6 that Microsoft gets is, Apple endorses 7 Microsoft Internet Explorer technology, closed 8 quote, did that calculate to you that that was 9 an important part of what you were getting in 10 terms of the deal? 11 Answer: No such deal was ever struck, 12 so I'm not sure what you're saying. 13 Question: Was that an important part 14 of the deal that you were trying to get, sir? 15 Answer: We never got as far as trying 16 to get that deal, unfortunately. 17 Question: You never got as far as 18 trying to get that deal; is that what you're 19 saying? 20 Answer: No. Well, in this time 21 frame, Gil Amelio's total focus was on his new 22 OS strategy, and so what I outlined here, we 23 never got them to consider. 24 Question: Well, sir, your E-mail 25 begins, last Tuesday night, I went down to 5694 1 address the top Apple executives; correct, sir? 2 Answer: That's right. 3 Question: And down at the bottom when 4 you're introducing the deal, you say, quote, I 5 proposed. 6 Now, you're referring to what you 7 proposed to the Apple top executives, are you 8 not, sir? 9 Answer: Yes. 10 Question: Okay. And what you 11 proposed was, quote, the deal that you then 12 describe at the bottom of the first page and 13 the top of the second page; correct, sir? 14 Answer: That's right. 15 Question: And that was a deal that 16 you proposed the Tuesday night before June 23, 17 1996, to what you describe as the top Apple 18 executives; correct, sir? 19 Answer: I had put forward some of 20 those points. 21 Question: Well, you put them forward 22 and you describe them as proposing the deal; 23 correct, sir? 24 Answer: That's how I describe it 25 here, yes. 5695 1 Question: All right, sir. 2 Now, you'd said that the deal that you 3 were talking about never got done. 4 Did you ever get Apple to endorse 5 Microsoft Internet Explorer technology? 6 Answer: You're trying to just read 7 part of that? 8 Question: I'm actually -- what I'm 9 doing is asking a question right now, sir. 10 I'm asking whether in 1996 or 11 otherwise, at any time did you get Apple to 12 endorse Microsoft Internet Explorer technology? 13 Answer: Well, you can get a copy of 14 the agreement we reached with Apple and decide 15 if in reading that you think it meets the 16 criteria or not. 17 Question: Sir, I'm asking you, as the 18 chief executive officer of Microsoft, I'm 19 asking you whether you believe that you 20 achieved that objective? 21 Answer: We did not get some exclusive 22 endorsement. We did get some -- there's some 23 part of the deal that has to do with Internet 24 Explorer technology. 25 Question: Do you know what that part 5696 1 of the deal is? 2 Answer: Not really. It has something 3 to do with they will at least ship it along 4 with other browsers. 5 Question: Does the deal prohibit them 6 from shipping Netscape's browser without also 7 shipping Internet Explorer? 8 Answer: I'd have to look at the deal 9 to understand. 10 Question: It is your testimony 11 sitting here today under oath that you simply 12 don't know one way or the other whether Apple 13 is today free to ship Netscape's browser 14 without also shipping Internet Explorer? 15 Answer: That's right. 16 Question: When you identify things as 17 key goals, do you typically tend to follow up 18 and see to what extent those goals have been 19 achieved? 20 Answer: In a very general sense, yes. 21 Question: Did you ever follow up to 22 see whether one of the two key goals that you 23 identify in your 1996 E-mail to Mr. Maritz and 24 Mr. Silverberg and others of getting Apple to 25 embrace Internet Explorer technology in some 5697 1 way had been achieved? 2 Answer: Well, certainly what I said 3 here, I have two goals in investing in the 4 Apple relationship, that -- those weren't 5 achieved because the investments I made were 6 with Gil Amelio, who was fired from Apple very 7 soon thereafter. 8 Question: Was there something about 9 Mr. Amelio getting fired that changed what your 10 goals were for the Apple relationship? 11 Answer: I said, I have two key goals 12 in investing in the Apple relationship. The 13 form that investment took was spending time 14 with Gil Amelio. That turned out to be wasted 15 time because he was fired from Apple rather 16 abruptly within about, oh, eight months of 17 this. 18 Question: When he was fired, did that 19 change what goals you had for the Apple 20 relationship, Mr. Gates? 21 Answer: It was basically a complete 22 restart because we had to understand what the 23 new management, what they were going to do with 24 Apple and where they were going. 25 Question: Did your goals change? 5698 1 Answer: Goals for what? For 2 investing in the relationship? 3 Question: You say in this E-mail that 4 you have two key goals for investing in the 5 Apple relationship. One of -- 6 Answer: In investing in the Apple 7 relationship. 8 Question: One of them is to get Apple 9 to embrace Internet Explorer technology in some 10 way. What I'm asking you is whether that 11 changed after this person got fired? 12 Answer: We re-evaluated all of our 13 thoughts about working with Apple based on what 14 the new management was going to do, whether 15 they were going to target the machines, what 16 they were going to do with their machines. 17 Since they continued to say we were in 18 violation of their patents, it continued to be 19 our top goal to get some type of patent cross 20 license. 21 MR. BOIES: Better read the whole 22 question. And then again reincorporate it so 23 that it's clear for the record. 24 (Requested portion of the record was 25 read.) 5699 1 Answer: You keep, either 2 intentionally or unintentionally, trying to 3 confuse my goals for investing in the 4 relationship with the goals we had overall for 5 various dealings with Apple. 6 Certainly, the goals I had for 7 investing in the relationship, that I had to 8 start over and rethink because the investment 9 was to spend time with the CEO who had been 10 fired. 11 Question: Mr. Gates, neither in this 12 E-mail nor in any other document that either of 13 us is aware of do you make that distinction 14 that you're making now; correct? 15 Do you understand the question I'm 16 asking? 17 Answer: This document does not say 18 that my goals for dealing -- does not state my 19 goals for dealing with Apple up here. 20 It states my goals in investing in the 21 Apple relationship, so there's a clear 22 distinction right there in that document. 23 Question: Mr. Gates, this document 24 deals with a proposed deal that you made to top 25 Apple executives; correct? 5700 1 Answer: That's only one part of what 2 is in the document. There's a part where it 3 talks about -- you never mentioned it, but the 4 first goal is maintain our applications share 5 on the platform. That's something I'm doing in 6 investing in the Apple relationship and that's 7 not related to the deal that's given -- the 8 proposed deal that's discussed below in the 9 E-mail, so those are clearly two separate 10 things. 11 Related, but separate. 12 Question: What I think I've done is I 13 think I have mentioned the first goal a number 14 of times. 15 Answer: I don't think so. 16 Question: I think it's been read 17 about three times in the record and the record 18 will show it. 19 Answer: Okay. It's a point of 20 disagreement. 21 Question: My question, Mr. Gates, has 22 to do with what your goals were, what your 23 stated goals were. 24 Now, you say here, I have two key 25 goals in investing in the Apple relationship, 5701 1 one of which is to get Apple to embrace 2 Internet Explorer technology in some way. 3 Did that continue to be a goal that 4 you had after 1996? 5 Answer: It wasn't a goal in investing 6 in the Apple relationship in terms -- in the 7 sense I meant it here. 8 It was a goal for our overall dealing 9 with Apple. One of many. 10 Question: Okay. Was it a key goal? 11 Answer: I'm not sure what you mean by 12 key goal. It was a goal. 13 Question: What I mean by key goal is 14 what you meant by key goal in your June 23, 15 1996 E-mail, Mr. Gates. 16 Answer: That's about investing in the 17 Apple relationship, which meant spending time 18 with Gil Amelio, so I don't know why you can 19 take the word out of there and apply it to a 20 completely different context. 21 Question: Well, sir, when you say a 22 completely different context, let's be clear 23 about what we're talking about. 24 The completely different context that 25 you're talking about is the difference between 5702 1 investing in the Apple relationship and doing a 2 deal with Apple. Is that what you're saying? 3 Answer: No. We have goals for our 4 general dealings with Apple, which came to a 5 deal -- we actually reached a deal in either 6 late July '97 or early August. 7 But there's a separate thing of what 8 was that deal, what we were able to achieve, 9 what we were trying to achieve when we were 10 dealing with the previous management and what 11 I'm trying to do in terms of spending my time 12 investing in the Apple relationship. 13 Question: And what you're saying is, 14 it is your testimony under oath, that although 15 you can't recall actually having sent this 16 E-mail, you're confident that when you wrote 17 this and referred to investing in the Apple 18 relationship, you meant only what you expected 19 to get out of spending time with the Apple 20 executives; is that your testimony? 21 Answer: Yeah. I was explaining why I 22 was spending time with Gil Amelio. 23 Question: And that's all you meant to 24 be saying here is your testimony? 25 Answer: That's what -- in reading 5703 1 this, that's what I believe I was trying to 2 communicate to the recipients of the E-mail. 3 Question: All right, sir. 4 Let me ask you to look at a document 5 previously marked as Government Exhibit 370. 6 This purports to be an E-mail, and the 7 second item on the E-mail is an E-mail from 8 John Ludwig to Don Bradford dated August 21, 9 1997. 10 And the subject is conversations with 11 BillG last night. 12 And the BillG referred to there is 13 you; correct, sir? 14 Answer: Yes. 15 Question: And it begins, I was at the 16 exec staff meeting last night. 17 Can you explain for the record what 18 the exec staff meeting was? 19 Answer: He is referring to a regular 20 get-together four times a year of the Microsoft 21 executive staff. 22 Question: And he goes on to say that, 23 there were three interesting exchanges with 24 Bill and the whole group about Apple. 25 Do you see that? 5704 1 Answer: I see it. 2 Question: And number one is, quote, 3 Bill's top priority is for us to get the 4 browser in the October OS release from Apple. 5 We should do whatever it takes to make this 6 happen. If we are getting shut out, we should 7 escalate to Bill. You should make sure that we 8 are engaging deeply with Apple on this one and 9 resolving any and all issues, closed quote. 10 Do you recall conveying to your 11 executive staff in or about August of 1997 that 12 your top priority was to get Microsoft's 13 browser in the October OS release from Apple? 14 Answer: No, I don't recall that. 15 Question: The top E-mail, which is 16 from Don Bradford to a number of people dated 17 August 21, 1997, and is also on the subject of 18 quote, conversations with BillG last night, 19 closed quote, says that Mr. Bradford and 20 someone else, Mohan Thomas, quote, will take 21 the lead on working out the Apple bundle deal, 22 closed quote. Do you see that? 23 Answer: Yes. 24 Question: Did you instruct your 25 executive staff in or about August of 1997 to 5705 1 work out a, quote, Apple bundle deal, closed 2 quote? 3 Answer: Well, I think this is post 4 the August agreement, late July or early August 5 agreement we reached with Apple. 6 And I think there were some 7 circumstances under which they would include or 8 bundle IE with some of their shipments. I 9 think that's what that's referring to. 10 Question: And is that what your 11 present recollection is that you told your 12 executive staff in August of 1997? 13 Answer: Well, I don't recall 14 specifically what I said to the executive staff 15 about Apple, but it appears Ludwig took out of 16 that that he was supposed to make sure that 17 whatever outs that Apple had under the previous 18 agreement for not shipping our technology, that 19 we avoided those being a problem that prevented 20 them from shipping our technology. 21 Question: Well, Apple wasn't 22 prohibited from shipping your technology in 23 August of 1997, was it, sir? 24 Answer: No. I actually think if we 25 -- I don't know the Apple agreement, I haven't 5706 1 read it, but I think there is something in 2 there that if we got certain things done and if 3 there were no problems and it passed tests and 4 we were ready in time, that they would actually 5 affirmatively include some of our technology in 6 various OS releases. 7 And this appears to be a discussion 8 about whether or not we're going to be able to 9 meet the requirements on us related to that. 10 Question: It is clear that getting 11 the browser in the October OS release from 12 Apple was something that you, Bill Gates, and 13 Microsoft wanted; correct, sir? 14 Answer: Yes, that's something that we 15 wanted. 16 Question: Okay. The last sentence of 17 the second paragraph says, Bill was clear that 18 his whole goal here is to keep Apple and Sun 19 split. He doesn't care that much about being 20 aligned with Apple. He just wants them split 21 from other potential allies. 22 And that relates to Java, does it not, 23 sir? 24 Answer: I don't have a direct 25 recollection, but if you read the sentence in 5707 1 front of it, that paragraph seems to relate to 2 Java runtime. 3 Question: Now, do you have a 4 recollection of telling your executive staff in 5 or about August 21 that your whole goal with 6 respect to Apple related to Java runtime was to 7 keep Apple and Sun split? 8 Answer: No. 9 Question: Who was at this executive 10 staff meeting? 11 Answer: Probably members of the 12 executive staff. 13 Question: And who were they? 14 Answer: It's about 40 to 50 people. 15 I doubt you want to take the time for me to 16 guess. 17 We generally get about 70 percent 18 attendance. Looking at this document, I think 19 it's very likely that I was there and John 20 Ludwig was there, but as to the rest of the 21 executive staff, I'd just be guessing. 22 It's very rare for us to have 23 nonexecutive staff members at those meetings, 24 although sometimes it happens. 25 Question: Is Mr. Ludwig somebody who 5708 1 you believe is an honest and competent person? 2 Answer: In general, yes. 3 Question: Do you have any reason to 4 believe that he would make up anything about 5 what your statements were? 6 Answer: No. 7 Question: Let me ask you to look at a 8 document that has been previously marked as 9 Government Exhibit 371. The portion I'm 10 particularly interested in is in the second 11 E-mail that is in this exhibit, which is on the 12 first page. 13 And it is an E-mail from you to Paul 14 Maritz and others dated January 22, 1998. 15 Did you send this E-mail on or about 16 January 22, 1998? 17 Answer: I don't remember doing so, 18 but I have no reason to doubt that I did. 19 Question: The next to last sentence 20 says, quote, I think we can gain a lot of share 21 with IE on Mac if we do some modest things, 22 closed quote. 23 Why were you interested in January, 24 1998, in increasing IE's share on Mac, as you 25 describe it? 5709 1 Answer: I'm not sure what I was 2 thinking in particular when I wrote this mail, 3 but I can -- sitting here now, I can give you 4 some reasons that I think I would have had for 5 saying that. 6 Question: Okay. Would you do so, 7 please? 8 Answer: Well, the use of IE on 9 Macintosh was beneficial to us in terms of the 10 APIs we had there and the content HTML 11 extensions that we had there. 12 And when you go to people who do 13 content, being able to say to them that those 14 extensions are popular not only with PC users, 15 but Mac users, it makes it easier to convince 16 the content person to take unique advantage of 17 the innovations that we had made in HTML as 18 well as some of the innovations we had made in 19 how the browser was structured. 20 Question: I want to be sure I 21 understand your answer. You mentioned APIs and 22 you mentioned the HTML extensions. 23 Are those two different things? 24 Answer: Yes, sir. 25 Question: Okay. And am I correct 5710 1 that the broader distribution of the APIs is 2 something that makes writing to those APIs more 3 attractive to independent software writers? 4 Answer: If users are choosing to use 5 the software that those APIs are present in, it 6 makes it easier to convince software vendors to 7 write to those APIs. 8 Question: Let me ask the question 9 this way. Why were you interested in having 10 Apple distribute your APIs? 11 Answer: Well the key issue wasn't 12 about distribution at all. The key issue was 13 usage share by Mac users of the various 14 browsers that were available on the Macintosh. 15 Question: Why were you interested in 16 having the usage share of Mac users of your 17 APIs increase? 18 Answer: You -- that question is 19 nonsensical. 20 Question: Okay. You were asked 21 earlier why you wanted to increase your shares 22 of IE on Mac, do you recall that? 23 Answer: Yes. 24 Question: And am I correct that you 25 said that there were two reasons, one dealt 5711 1 with APIs and one dealt with HTML extensions? 2 Answer: Yeah. I've thought of a 3 third reason since then, but that's right. 4 Now there might be three or four. 5 Question: Why don't you tell me the 6 one that you're thinking of and we'll see if 7 it's the same one Mr. Heiner is thinking of. 8 Answer: Well, I talked earlier about 9 having traffic out of IE is always of value. 10 Question: So those are the three 11 reasons that you can think of now; is that 12 correct? 13 Answer: Those are the three reasons 14 that are among the good reasons that raising 15 usage share of IE on Macintosh was a positive 16 thing for Microsoft. 17 Question: I'd like to know the other 18 reasons that you can think of now, if there are 19 other reasons. 20 Answer: That's all I can think of 21 right now. 22 Question: Okay. Why does increasing 23 IE share on Mac help you with respect to APIs? 24 Answer: Because the Mac IE had APIs. 25 Question: And how does having that 5712 1 help Microsoft? 2 Answer: Because those APIs are in 3 common with some Windows APIs. 4 Question: And why does that help 5 Microsoft? 6 Answer: If we do things that make our 7 APIs in Windows more attractive, it helps us in 8 increasing the volume of Windows that we 9 license. 10 Question: Are you saying that 11 increasing IE share on Mac will help increase 12 the number of Windows that you license? 13 Answer: Yeah. I went through the 14 chain of logic that explains that to you. I 15 don't know if you misunderstood some part of 16 it. 17 Question: Well, all I'm trying to do 18 is get your answers on the record because if I 19 begin to tell you what I think about your 20 answers, we'll be here all day. 21 So am I correct that it is your 22 testimony here that increasing your share of IE 23 on Mac will increase the distribution of 24 Windows? 25 Answer: I don't know what you mean by 5713 1 distribution of Windows. 2 Question: The usage of Windows. 3 Answer: No. The number of copies 4 that we license. 5 Question: Will that be increased? 6 Answer: Through the indirect factors 7 that I explained to you, yes, there is a 8 positive effect there. 9 Question: So that by increasing your 10 share of IE on Mac, you would expect to 11 increase the number of copies of Windows that 12 you would license? 13 Answer: Yes, increasing our usage 14 share over time we think will help us to 15 increase the number of copies Windows will 16 license. 17 Question: Does increasing IE's share 18 on Mac make it more likely that content 19 providers will want to use IE? 20 Answer: I don't know what you mean by 21 content providers using IE. Content providers 22 use servers. They don't use clients. 23 Question: Do you know what content 24 providers are? 25 Answer: Yes. 5714 1 Question: Give me an example of a 2 content provider. 3 Disney? 4 Answer: Disney. 5 Question: Disney would be a content 6 provider. 7 Disney is an important content 8 provider; correct, sir? 9 Answer: Now you're going to have to 10 give me some context. 11 Question: Without me giving you some 12 context, you can't answer the question as to 13 whether Disney is an important content 14 provider; is that your testimony under oath? 15 Answer: Important in what sense? 16 Question: Important in the everyday, 17 common usage sense of what important means. 18 Actually, I think probably the word 19 content providers was not used, but the word 20 content was used by the witness and I think it 21 was used in the context of answering the 22 question. 23 Answer: If you're actually 24 interested, it's the use IE where you seem to 25 be confused about what content providers do. 5715 1 There is no question about what 2 content provider means. When you say use IE, 3 it's people who view content who use IE. 4 Question: Right. And in order for 5 somebody to view content through IE, that 6 content has to be put someplace to begin with; 7 right? 8 Answer: Yes. 9 Question: And one of the things that 10 Microsoft has tried to do is it has tried to 11 convince content providers to put content 12 places and in a way so that it was more 13 attractive to view that content using IE than 14 with Netscape's browser; correct, sir? 15 Answer: It's not the places that make 16 it attractive. It's the way they use the HTML. 17 Question: What you've tried to do, 18 what Microsoft has tried to do, is get content 19 providers to display information in a way that 20 would make it more attractive to a user to view 21 that content using IE than using Netscape 22 Navigator; correct, sir? 23 Answer: No. We tried to get them to 24 author it in a way that they exploit our HTML 25 extensions, author. 5716 1 Question: And is the effect of that 2 to make it more attractive for users to view 3 the content using IE than Netscape Navigator? 4 Answer: It totally depends on what 5 they do -- what Netscape Navigator does with 6 HTML extensions and what that content provider 7 does with those HTML extensions. 8 Question: Let me ask what I think is 9 a simple question. 10 Has Microsoft made an effort to get 11 content providers to agree to display 12 information in a way that makes that 13 information more attractive when viewed by the 14 then existing Internet Explorer than if viewed 15 by the then existing Netscape browser? 16 Answer: Our efforts have been focused 17 in getting them to author so that it looks good 18 in Internet Explorer. These people are 19 authors. They don't do display, they do 20 authoring. 21 Question: Let me try to use your 22 words and maybe that will move it along. 23 Have you tried -- has Microsoft tried 24 to get content providers to agree to, in your 25 words, author information and data in a way so 5717 1 that that information and data is more 2 attractive to users when viewed through the 3 then current version of Internet Explorer than 4 when viewed through the then current version of 5 Netscape's browser? 6 Answer: Our attempts to convince 7 people to author using our extensions is not 8 relative to Netscape. It's just a question of 9 can we convince them to use our extensions. 10 And yes, we have endeavored to 11 convince them to use our extensions, but that 12 doesn't say anything about what they're doing 13 or how that stuff looks in Netscape. 14 Question: Are you saying that your 15 effort to convince content providers to use 16 your extensions was unrelated to what the 17 effect would be on Netscape? 18 Answer: The effect on Netscape would 19 be indirect. 20 Our intent in doing that was to 21 increase the popularity of our products. 22 Question: Was part of your objective 23 also to decrease the popularity of Netscape 24 products? 25 Answer: Our intent was to increase 5718 1 the popularity of our products. 2 Question: I'm asking now a different 3 question and the answer may be simply no, but 4 I'd like to have an answer to my question, 5 which is that in addition to trying, as you say 6 you were trying to do, to increase the 7 popularity of your products, were you also 8 trying to decrease the popularity of Netscape 9 products? 10 Answer: All of our effort was aimed 11 at making our product more popular. 12 There may have been an indirect effort 13 in terms of their people choosing our product 14 over other people's products, but the focus is 15 on making our product more attractive. 16 Question: Did you enter into 17 agreements with content providers that limited 18 the ability of those content providers to make 19 their content more attractive when viewed 20 through Netscape's then current browser? 21 Answer: I'm not familiar with 22 agreements that we had with content providers. 23 Question: You're not familiar with 24 them at all, is that what you're saying? 25 Answer: I know that we had some, so 5719 1 I'm familiar with their existence. I've never 2 read one. I've never seen one. I've never 3 negotiated one. 4 Question: Have you ever discussed 5 with anyone the substance of what's in them? 6 Answer: What I know about them is 7 that they -- they're related to the efforts to 8 convince people to take advantage of extensions 9 we've done that make those extensions 10 worthwhile to end users. 11 Question: My question now is whether 12 you've ever discussed the substance of what's 13 in those agreements with anyone. And if you 14 have -- 15 Answer: To the degree I just 16 described them, yes. Beyond that, no. 17 Question: With whom did you have 18 those discussions? 19 Answer: Oh, I would have been in 20 meetings with various people. You know, Brad 21 Chase, Paul Maritz, Brad Silverberg in a 22 certain period of time. 23 Question: And did they ever tell you 24 that these agreements with content providers 25 limited what the content providers could do 5720 1 with Netscape? 2 Answer: I don't think so. 3 Question: Do you know, as you sit 4 here now, whether any of the agreements that 5 you entered into, Microsoft entered into with 6 content providers over the last three years 7 limited what those content providers could do 8 with Netscape? 9 Answer: I know that when I was going 10 to testify in Washington, D.C., in the senate, 11 that Netscape or someone was raising these 12 content provider agreements in an effort to 13 create some controversy around them. 14 And so I was given like a paragraph or 15 two summary. And there were about 40 issues in 16 general there, but one of the issues was 17 related to those agreements. 18 And so there may have been something 19 in those paragraphs about the agreements beyond 20 what I knew about them earlier. 21 Question: But you don't recall the 22 substance of that now, is that what you're 23 saying? 24 Answer: Well, I can tell you there 25 was something about in a period of time a 5721 1 certain class who is on our channel bar, they 2 could appear on competitive channel bars, but 3 if they -- they could only pay us. There was 4 something like that. 5 Question: That's an interesting one 6 for you to focus on. 7 Can you think of any reason why you 8 would want content providers to agree that they 9 would not pay Netscape any money? 10 Answer: I know that we had hopes that 11 the channel bar would get some usage and we 12 wanted to work with some content providers to 13 show off the channel bar. 14 And I can't give you the reasoning 15 behind any part of the ICP agreement because I 16 wasn't involved in those. 17 MS. CONLIN: Your Honor, this would be 18 a good time. 19 THE COURT: Very well. We'll take a 20 recess for 15 minutes. 21 Remember the admonition given earlier. 22 You can leave your notebooks here. 23 (A recess was taken from 9:44 a.m. 24 to 10:05 a.m.) 25 THE COURT: Everyone else may be 5722 1 seated. 2 You may commence. Thank you. 3 (Whereupon, the following video 4 resumed playing to the jury.) 5 Question: But what I'm asking you now 6 is whether you, as you sit here now, can think 7 of any legitimate reason why Microsoft would be 8 getting content providers to agree not to pay 9 Netscape? 10 I'm not talking about getting them to 11 try to use your channel bar. I'm talking about 12 getting them to agree not to pay Netscape. 13 Answer: You'd have to ask somebody 14 else why they put that in the agreement, unless 15 you're asking me to speculate wildly. 16 Question: Well, I don't know whether 17 it would be wild speculation or not, but what 18 I'm asking you whether you, as you sit here 19 now, as the chief executive of Microsoft, can 20 think of any legitimate reason for Microsoft 21 getting content providers to agree not to pay 22 Netscape? 23 Answer: I'm not aware of any broad 24 prohibition against paying Netscape for 25 anything. 5723 1 I think there was something about 2 relative to the channel bar, we want some of 3 the premier partners, which was a very small 4 number, to talk about their work with us. 5 And it would have been embarrassing if 6 all those same people were in the same 7 relationship with Netscape in that time period. 8 Question: In your answer in which you 9 said that you thought you recalled some of the 10 things that you were told in preparation for 11 your hearing testimony, you were the one, were 12 you not, just a few minutes ago who said that 13 you recalled that there was some provision that 14 even if the content provider was on another 15 channel bar, they couldn't pay for it? Do you 16 recall saying that just a few minutes ago? 17 Answer: Uh-huh. 18 Question: You've got to say yes so 19 the reporter -- 20 Answer: Yes. 21 Question: Now, that's what I'm asking 22 about. 23 What I'm asking is whether you can 24 think of any legitimate reason why Microsoft 25 would get a content provider to agree not to 5724 1 pay Netscape? 2 Answer: I can guess about that if you 3 want. 4 Question: What I'm asking is not 5 whether you can guess why you did it because we 6 could all guess maybe why you did it. 7 What I'm asking is whether you can 8 think of any legitimate reason that would 9 justify doing that? 10 Answer: Sure. 11 Question: What? 12 Answer: Well, someone might have 13 said, gee, it would be embarrassing if all 14 these same people appeared in Netscape's 15 equivalent in that time period. Let's have 16 them agree not to appear at all. 17 And then someone else might have said, 18 no, let's not be that restrictive. Let's just 19 make it less likely they will appear by saying 20 that they won't pay Netscape to appear. 21 Question: But if you're going to let 22 them appear, why would you try to stop them 23 from paying to appear? 24 Answer: It lowers the probability 25 that they will appear. 5725 1 Question: And why does it do that, 2 sir? 3 Answer: Because there's lots and lots 4 of content providers. And so in the channel 5 bar, these gold or premier or platinum -- I 6 forget the terminology -- slots, there's only 7 visually, at least in the way we did it, room 8 for about five or six of those. 9 And so if you have a contract that 10 says that they won't take money from Netscape 11 to appear on their channel bar, given the broad 12 universe of content providers that are out 13 there, it's very likely that Netscape will 14 choose to pick people who do pay them to be in 15 their channel bar and therefore, you've lowered 16 the probability that all of the people who 17 appear in yours also appear in Netscape's. 18 Question: So that precluding people 19 from paying was an indirect way of trying to 20 make sure that they didn't appear on Netscape's 21 channel bar; is that right? 22 Answer: No. Now you've changed 23 things. I've told you I don't know why the 24 provision was put in there. 25 You asked me if I could think of any 5726 1 set of reasoning behind it, and which I did, 2 and then you changed and asked me a question 3 about the history, which again I can't talk to 4 you about the history. 5 Question: And I don't mean to be 6 asking just about the history. What I mean to 7 be asking is whether you, as the chief 8 executive officer at Microsoft -- and you 9 testified yesterday about some practices that 10 you thought were consistent and some practices 11 that you thought were inconsistent with company 12 policy. 13 And is it consistent with company 14 policy, let me approach it this way, to get 15 companies like content providers to agree not 16 to pay competitors, is that consistent with 17 company policy if that was done? 18 Answer: Well, our company policy is 19 that when we're doing agreements, we rely on 20 the expertise of our law and corporate affairs 21 department to look at those and make sure that 22 they're appropriate. 23 That's one of the things that's done 24 in agreements like that. 25 Question: Well, other than whatever 5727 1 your lawyers tell you that you can do, which I 2 don't want to ask about because I think they 3 will probably object that it's privileged, do 4 you have a company policy that addresses the 5 issue of whether it is appropriate for 6 Microsoft people to enter into agreements that 7 limit companies from doing business with 8 Microsoft's competitors? 9 Answer: There is no general policy 10 that covers that area. 11 As I said, the very competent staff we 12 have is involved in reviewing agreements we 13 reach. 14 Question: Did you ever have any 15 conversations with anyone about whether or not 16 they could deal with a competitor of Microsoft? 17 Answer: That's open ended enough that 18 I'm not sure what you mean at all. 19 Question: I mean to keep it open 20 ended as an initial question and then if you 21 say no, then I don't have to go through it, but 22 if you say yes, then I go through who you met 23 with and what you said. 24 (Requested portion of the record was 25 read.) 5728 1 Answer: I'd say the answer is 2 probably yes because, for example -- 3 Question: If the answer is yes, 4 then -- 5 Answer: No. I want to make -- I 6 think I should give an example so you 7 understand how I've interpreted your question. 8 Question: Could you give me a 9 specific example? 10 Answer: Yes. IBM is a competitor of 11 ours and people have said to me, should we fly 12 out and meet with IBM on this topic. And I've 13 said in some cases yes, we should and in some 14 cases no, we shouldn't. 15 So that's a case where I was giving 16 people advice on whether they should deal with 17 a competitor of Microsoft. 18 Question: Were these people within 19 Microsoft? 20 Answer: People -- yes. 21 Question: Okay. Now, have you ever 22 had any personal conversations with anyone 23 other than a Microsoft employee as to whether 24 that person's company could or should deal with 25 a competitor of Microsoft? 5729 1 Answer: Well, in terms of should, I 2 might have said to somebody that -- 3 Question: No, no. I'm not asking 4 what you might have said. What I'm asking is 5 what you remember doing. 6 I'm trying to move this along. I'm 7 trying to stay as concrete as I can and I'm not 8 asking you to speculate about what you might 9 have done. 10 Answer: Okay. I know -- 11 Question: I'm asking what you 12 remember doing. 13 Answer: I know concrete cases where 14 I've told customers that I think picking our 15 product as opposed to a competitor's product is 16 in their best interests and so they should pick 17 our product. And in that sense, yes. 18 Question: Have you told people that 19 if they pick your product, they can't use a 20 competitor's product? 21 Answer: If there's a technical issue 22 about how things won't work together, possibly. 23 But, otherwise, no. 24 Question: Do you know a Mr. Poole who 25 works at Intuit? 5730 1 Answer: No. 2 Question: You do not? 3 Answer: No. I think you're confused. 4 Question: You may be right, but all I 5 need to do is get your testimony down and then 6 people can judge for themselves. 7 So it is your testimony that you do 8 not know anyone who works at Intuit who is 9 named Mr. Poole. 10 Do you know somebody at Microsoft who 11 deals with Intuit who is named Mr. Poole? 12 Answer: Yes. It's quite distinct. 13 Question: Yes. The distinction 14 actually is at the heart of what I'm going at, 15 sir. 16 What is Mr. Poole's first name? 17 Answer: Will. That's at least what 18 he goes by. 19 Question: And what has Mr. -- what is 20 Mr. Will Poole's title? 21 Answer: I have no idea. 22 Question: You have dealt directly and 23 personally with Mr. Poole, have you not, sir? 24 Answer: Not until very recently. 25 Question: When was the first time 5731 1 that you dealt directly and personally with 2 Mr. Poole? 3 Answer: Well, if you mean was he ever 4 on an E-mail that I went back and forth on, 5 that probably goes back -- that could be any 6 time in the last few years. 7 In terms of actually being in a 8 meeting that Will was in, I think that's quite 9 recent. 10 Question: When? 11 Answer: Which? 12 Question: Both. 13 Answer: I said in terms of E-mail, 14 that would be the last couple years. How can I 15 be more concrete than that? I answered the 16 question. 17 Question: I don't know. Can you be 18 more concrete than the last couple years? 19 Answer: No. 20 Question: Okay. Now, when with 21 respect to the meeting? 22 Answer: I don't think I was in a 23 meeting that he was in until maybe two or three 24 months ago. 25 Question: Did you ever have a 5732 1 discussion with Mr. Poole, either orally or 2 through an E-mail, in which you told Mr. Poole 3 what the conditions were pursuant to which 4 Microsoft would give Intuit access to a 5 position on the active desktop? 6 Answer: There may have been mail on 7 that general topic, but I don't remember any 8 specific mail. 9 Question: Did you have any 10 discussions with Mr. Poole, apart from E-mail? 11 Answer: No. 12 Question: Did you tell Mr. Poole in 13 words or in substance that Intuit could get 14 access to a position on the active desktop only 15 if it would agree not to deal with Netscape? 16 Answer: There may have been some 17 discussion about whose browser technology 18 Intuit chooses to integrate its products with. 19 There certainly wasn't anything 20 broadly about dealing with Netscape. 21 Question: Let me try to be as precise 22 as I can. 23 Did you tell Mr. Poole in words or in 24 substance that if Intuit wanted to have access 25 to a position on the active desktop, Intuit 5733 1 would have to agree to use Microsoft's browser 2 technology and not use Netscape's browser 3 technology? 4 Answer: I don't remember that 5 specifically, but I do know that we were, in 6 various time periods, endeavoring to get Intuit 7 to choose the component ties to IE technology 8 as the way that Quicken -- the default way that 9 Quicken would bring up a browser. 10 In fact, they've always supported both 11 browsers at all times. 12 Question: My question to you is 13 whether you told Mr. Poole, either orally or 14 through E-mail, that in order for Intuit to get 15 access to a position on the active desktop, 16 Intuit would have to agree not to use the 17 Netscape browser technology? Did you tell 18 Mr. Poole that orally or through E-mail? 19 Answer: I know we were talking with 20 Intuit about using IE as the default browser 21 because of our technology. 22 So, in that sense of being a default, 23 we were trying to get them to favor IE, but I 24 don't remember any specific thing beyond that. 25 Question: So is it your testimony 5734 1 that you do not remember telling Mr. Poole in 2 words or in substance that if Intuit was to 3 have access to a position on the active 4 desktop, Intuit would have to agree not to use 5 the Netscape browser technology? 6 Answer: Intuit has supported the 7 Netscape browser technology at all times and I 8 never thought there was any chance of avoiding 9 them supporting the Netscape browser 10 technology. 11 I did think there was a chance that we 12 would become the default and I was hoping we 13 could convince them that it made sense for them 14 to make us the default. 15 Question: The default browser? 16 Answer: That's right. 17 Question: I understand that that's 18 what you said and I do want to explore that, 19 but I want to first be clear that it is your 20 testimony that you never told -- or at least 21 you don't recall ever telling Mr. Poole in 22 words or in substance that in order to get 23 access to a position on the active desktop, 24 Intuit would have to agree not to deal with 25 Netscape or not to use the Netscape browser 5735 1 technology? 2 Answer: I don't remember using those 3 exact words. 4 Question: How about substance? 5 Answer: In terms of substance, my 6 desire to get us to be the default did imply a 7 favorable position for us relative to other 8 browsers. 9 Question: Is it fair to say that your 10 position with respect to wanting to become the 11 default browser for Intuit meant that the 12 Microsoft browser would have a more favorable 13 position, but it would not preclude Intuit from 14 dealing with Netscape; is that correct? 15 Answer: That's right. 16 Question: Okay. Now, I want to 17 follow up on that issue, but before I do, I 18 want to be absolutely certain that I have your 19 testimony now clear. 20 And that is, leaving aside the issue 21 of becoming the default browser, did you ever 22 tell Mr. Poole in words or in substance that in 23 order for Intuit to have access to a position 24 on the active desktop, Intuit would have to 25 agree not to deal with the Netscape or not to 5736 1 use the Netscape browser technology? 2 Did you ever communicate that to 3 Mr. Poole in words or in substance? 4 Answer: You can't leave out the idea 5 of the default browser. It's nonsensical to 6 say did you do that, but leaving out the notion 7 of the default browser. 8 The substance of us being the default 9 browser is that that's a favorable position for 10 our browser. 11 So what you've just asked me is 12 nonsensical. 13 Question: Does making Internet 14 Explorer the default browser preclude Intuit 15 from dealing with Netscape? 16 Answer: In a specific way, yes. 17 Question: In what way? 18 Answer: Any deal that relates to them 19 being the default browser. 20 Question: Other than a deal that 21 involves them becoming the default browser, 22 does it preclude Intuit from dealing with 23 Netscape? 24 Answer: Not necessarily. 25 Question: So that Intuit could make 5737 1 Internet Explorer its default browser but still 2 deal with Netscape with respect to Netscape's 3 browser; correct? 4 Answer: Intuit at all times has 5 supported the Netscape browser. 6 Question: Now, I think it has to be 7 clear from what you've just said that it is 8 your view that becoming the Netscape -- 9 becoming the default browser does not preclude 10 Intuit from dealing with Netscape completely in 11 terms of browsers. Is that fair? 12 Answer: Well, it was the issue that 13 would have been of the most interest to us. 14 Question: I'm not asking what the 15 interest was that you had or what the issue was 16 that was of most interest to you. 17 What I'm asking is whether, aside from 18 the issue of the default browser, have you ever 19 told Mr. Poole in words or in substance that in 20 order for Intuit to get access to a position on 21 the active desktop, Intuit would have to agree 22 not to deal with Netscape or not to use the 23 Netscape browser technology at all? 24 Answer: That question doesn't make 25 sense to me. 5738 1 If you say that somebody is not the 2 default, you're certainly affecting how they 3 deal with you on the browser. 4 Question: Would you explain what you 5 mean by that? 6 Answer: We wanted to convince Intuit 7 to make us the default browser. 8 Question: And making you the default 9 browser, does that preclude them from dealing 10 with Netscape at all in terms of browsers? 11 Answer: Not in every respect, no. 12 Question: Okay. Not in every 13 respect. 14 Did you ever tell Mr. Poole in words 15 or in substance that if Intuit was going to 16 obtain access to a position on the active 17 desktop, Intuit would have to stop supporting 18 the Netscape browser? 19 Answer: Well, supporting can mean a 20 lot of different things. I know that -- 21 Question: I know when you mean when 22 you said it. 23 Answer: I never expected at any time 24 that they would not support the Netscape 25 browser in terms of running with it, working 5739 1 with it, supporting it, and all those things. 2 In terms of did I use that specific 3 word, no, I don't -- I don't have a 4 recollection. But, you know, support can mean 5 quite a few things. 6 Question: What I'm not doing right 7 now is asking what you meant by support. What 8 I'm asking you is whether you told Mr. Poole 9 that. 10 Do you understand the distinction? 11 Answer: Did I use those words? 12 Question: That you told Mr. Poole -- 13 Answer: See, if you're going to ask 14 me did I use the exact words, you can ask me 15 that question. Or if you're going to ask me if 16 I said something like that, that's okay, but I 17 have to actually understand what the words -- 18 what you mean by the words. 19 Question: Let's take it one step at a 20 time. 21 Did you tell Mr. Poole that if Intuit 22 was to have access to a position on the active 23 desktop, Intuit would have to stop, quote, 24 supporting, closed quote, or could no longer, 25 quote, support, closed quote, the Netscape 5740 1 browser? 2 Answer: What does it mean when you 3 keep going in and out of quotes like that? 4 Question: It means you used the word 5 supporting or you used the word support. 6 Answer: Whether I said what? 7 Question: Well, whether you told 8 Mr. Poole that if Intuit was to have a position 9 on the active desktop, that Intuit would have 10 to agree to stop supporting or could no longer 11 support, that is, you used the word support, 12 the Netscape browser? 13 Did you do that, sir, in E-mail 14 communications or orally or in any other form 15 of communications to Mr. Poole? 16 Answer: I don't remember using those 17 words, if that's the question. 18 Question: Do you remember whether or 19 not you used those words? 20 Answer: No. 21 Question: What, if anything, did you 22 tell Mr. Poole -- 23 Answer: I'm not sure if I told 24 Mr. Poole or Mr. Chase or Todd Nielson or who, 25 but I'm sure I communicated that the kind of 5741 1 support Intuit had been giving where Netscape 2 was the default browser, that I didn't see that 3 as consistent with agreeing with them -- for 4 them to be featured on the active channel bar. 5 Question: I think that goes to what 6 you were saying before, which is that you 7 wanted Microsoft's browser to become the 8 default browser? 9 Answer: That's right. 10 Question: Now, what I'm trying to do 11 is ask whether you went beyond that in talking 12 to Mr. Poole. 13 Did you say to Mr. Poole that if 14 Intuit is going to get access to a position on 15 the active desktop, Intuit had to do something 16 more than simply make IE the default browser? 17 Answer: That was my goal there, which 18 of course would imply a change in how they'd 19 been supporting Netscape as the default 20 browser. 21 Question: Right. I understand that 22 you said you wanted IE to be the default 23 browser and that inevitably means that Netscape 24 can't be the default browser because you can 25 only have one default browser; right? 5742 1 Answer: Right. 2 Question: Now, what I'm now asking 3 is, did you go beyond that and say to Mr. Poole 4 that if Intuit was going to get access to a 5 position on the active desktop, Intuit would 6 have to do something more than simply make IE 7 the default browser? 8 Answer: I don't think so. 9 Question: Did you ever say that to 10 Mr. Chase or to anyone else? 11 Answer: I don't think so. 12 Question: Or communicate it in E-mail 13 or some other communication? 14 Answer: I included that. So, no, I 15 don't think so. 16 Question: I thought you might have 17 included it, but I wasn't sure, so I wanted to 18 be clear. 19 MS. CONLIN: This is the afternoon 20 session of August 28, 1998. 21 THE COURT: Very well. 22 Question: In connection with Intuit, 23 Mr. Gates, insofar as you were aware, was there 24 any effort to get Intuit to agree that Intuit 25 would not promote Netscape's browser? 5743 1 Answer: I'm not aware of any -- 2 anything specifically related to promotion. 3 As I said, I didn't deal with them 4 directly. You could say that -- ask them not 5 to support Netscape as their standard supported 6 browser. It's a change in their promotion of 7 Netscape. 8 Question: Yes, I take that point. 9 Let me make the question a little more 10 precise. 11 Other than an attempt to get Intuit to 12 make Internet Explorer into its default 13 browser, did Microsoft make any effort, that 14 you're aware of, to get Intuit not to support 15 or advertise Netscape's browser? 16 Answer: It's kind of a strange 17 question because Intuit never would have 18 specifically advertised someone's browser. 19 So I don't know what -- what do you 20 mean by promotion when you give that example? 21 Question: Well, I'm really just 22 asking you for what Microsoft did. 23 And if you don't understand the 24 question, Mr. Gates, you can tell me and I will 25 rephrase the question. 5744 1 Answer: Isn't that what I just did? 2 Question: Saying that you didn't 3 understand the question? 4 Answer: Uh-huh. 5 Question: Okay. Let me put another 6 question to you. 7 Did Microsoft, insofar as you were 8 aware, try to get Intuit to agree not to enter 9 into any kind of marketing or promotion 10 agreements with Netscape? 11 Answer: I don't know. 12 Question: Did you have discussions 13 with anyone concerning what Microsoft was 14 trying to get from Intuit? 15 Answer: I might have sent E-mail 16 about it at some point. 17 Question: Do you remember the content 18 of that E-mail? 19 Answer: No. 20 Question: Do you remember anything at 21 all about the content of that E-mail? 22 Answer: Well, I don't know that it's 23 an E-mail either. I said I might have sent 24 E-mail. It may have been many E-mails. So no, 25 I don't remember anything beyond the fact that 5745 1 there may have been E-mail about this, and I 2 may have made my views about the subject known. 3 Question: Let me ask you to look at a 4 document that has been previously marked as 5 Government Exhibit 376. 6 This purports to be an E-mail dated 7 April 17, 1997 from Brad Chase to you and some 8 other people, which is forwarding on an E-mail 9 of earlier in the day on April 17 from Mr. Will 10 Poole to Brad Chase. The subject of both 11 E-mails is Intuit terms agreed. 12 Do you see that? 13 Answer: Well, it's just a forward, 14 yeah. 15 Question: Do you recall receiving 16 this E-mail? 17 Answer: No. 18 Question: Do you have any doubt that 19 you received a copy of this E-mail? 20 Answer: No. 21 Question: There are -- 22 Answer: I don't have any reason to 23 doubt. I don't know that I received the 24 E-mail. I don't have any reason to doubt it. 25 But since I don't remember it -- 5746 1 Question: Did you ever see this 2 E-mail before? 3 Answer: I don't remember ever seeing 4 it. 5 Question: Under the heading Intuit 6 obligations, it says, bundle IE3, Quicken in 7 parenthesis, and IE4, in parenthesis other 8 products. 9 Do you see that? 10 Answer: Uh-huh. 11 Question: Were you told in April 1997 12 that Intuit had agreed to bundle IE3 and IE4 13 with its products? 14 Answer: I don't remember that 15 specifically. 16 Question: Farther down on -- under 17 Intuit obligations, there is an obligation that 18 reads, quote, not enter into marketing or 19 promotion agreements with other browser 20 manufacturers for distribution or promotion of 21 Intuit content. 22 Do you see that? 23 Answer: Uh-huh. 24 Question: Were you told in words or 25 in substance in or about April of 1997 that 5747 1 Intuit had agreed not to enter into marketing 2 or promotion agreements with other browser 3 manufacturers for distribution or promotion of 4 Intuit content? 5 Answer: I don't remember being told 6 that. 7 Question: Do you have any reason to 8 doubt that you were told that? 9 Answer: In the sense that one of the 10 E-mails that may have come into my mailbox 11 might have related to that, I don't -- I don't 12 doubt it. 13 Certainly wasn't something that could 14 have been very significant to me because I 15 don't have a recollection of it. 16 Question: The last Intuit obligation 17 that is listed here is, quote, create 18 differentiated content area for Intuit channel 19 that is available only for IE users, closed 20 quote. 21 Do you see that? 22 Answer: Uh-huh. 23 Question: Were you told in words or 24 in substance in or about April of 1997 that 25 Intuit had agreed with Microsoft that Intuit 5748 1 would create a differentiated content area for 2 Intuit's channel that would be available only 3 to IE users? 4 Answer: I don't remember being told 5 that nor do I understand what it means. 6 Question: Have you ever had any 7 discussions with anyone within Microsoft about 8 the possibility of content providers creating 9 content area that would only be available to IE 10 users? 11 Answer: I don't -- no. I don't 12 understand that. I mean, it -- if the URL was 13 there, you can get to it. 14 Question: So what you're saying is 15 that this obligation that Intuit said to have 16 taken on is an obligation that you don't 17 understand at all what it means. Is that what 18 you're telling me? 19 Answer: No. I'm saying these words 20 that are on this piece of paper, I don't 21 understand what they mean. 22 Question: Do you understand the 23 concept? 24 Answer: I don't know what it means. 25 Question: Okay. 5749 1 Did you ever ask Mr. Poole what it 2 meant? 3 Answer: Nope. 4 Question: Did you ever ask Mr. Chase 5 what it meant? 6 Answer: No. 7 Question: Did you ever ask anybody 8 what it meant? 9 Answer: Those words, no. 10 Question: Or the concept that is 11 described by those words? 12 Answer: I don't understand those 13 words. So it's hard for me to relate to the 14 concept. I don't understand the words. 15 Question: Let me be sure that I 16 understand what you don't understand. 17 Are you telling me that you don't 18 understand what it would mean for Intuit to 19 create a differentiated content area -- 20 Answer: That's in quotes. 21 Question: Yes. -- for the Intuit 22 channel that would be available only to IE 23 users? 24 Answer: I'm not sure what they mean 25 by that. 5750 1 Question: Do you have any idea what 2 they mean by that? 3 Answer: No, it's confusing to me. 4 Question: Let me ask you to look at a 5 document that has been previously marked as 6 Government Exhibit 372. 7 This is an E-mail to you from Ben 8 Slivka dated April 14, 1997. 9 And the subject is, quote, Java review 10 with you, closed quote. 11 Did you receive this E-mail in or 12 about April of 1997, Mr. Gates? 13 Answer: I don't remember. 14 Question: The E-mail begins that the 15 author is working with Paul Maritz to set up a 16 two- to three-hour review for you on your Java 17 efforts. 18 Do you see that? 19 Answer: On our Java efforts. 20 Question: On Microsoft's Java 21 efforts. 22 Answer: No. I think it's Ben 23 Slivka's group. 24 Question: And he is a Microsoft 25 group; right? 5751 1 Answer: Yes. He's part of Microsoft 2 but not all of Microsoft. 3 Question: So you would interpret this 4 is that he is working with Paul Maritz to set 5 up a two- to three-hour review for you of part 6 of Microsoft's Java efforts, but not all of 7 Microsoft's Java efforts; is that what you're 8 saying? 9 Answer: Yeah. The work his group is 10 doing. 11 Question: The work his group is doing 12 on Java; right? 13 Answer: Right. 14 Question: Okay. 15 And he lists what he describes as some 16 pretty pointed questions that you, Mr. Gates, 17 had about Java. 18 Do you see that? 19 Answer: Well, I'm not sure those are 20 the pointed questions. It says, I want to make 21 sure I understand your issues/concerns. 22 Question: Well, that's actually the 23 last part of a sentence that begins, quote, 24 when I met with you last, you had a lot of 25 pretty pointed questions about Java, so I want 5752 1 to make sure I understand your issues/concerns. 2 That's what the sentence says; 3 correct, sir? 4 Answer: Right. 5 Question: And when Mr. Slivka says I 6 met with you last, he's talking about you, 7 Mr. Gates; correct, sir? 8 Answer: Yes. 9 Question: And when he says, you had a 10 lot of pretty pointed questions about Java, 11 he's again talking about you, Mr. Gates; 12 correct? 13 Answer: Right. 14 Question: And then he lists what he 15 refers to as a start. 16 1. What is our business model for 17 Java? 18 2. How do we wrest control of Java 19 away from Sun? 20 Do you see that? 21 Answer: Uh-huh. 22 Question: Sometime prior to April 14, 23 1997, had you conveyed to Mr. Slivka that one 24 of your pointed questions about Java was, 25 quote, how do we wrest control of Java away 5753 1 from Sun? 2 Answer: I don't think I would have 3 put it that way. 4 Certainly was an issue about the 5 popularity of Sun's runtime APIs versus our 6 runtime APIs. 7 Question: Is it your testimony that 8 you didn't raise the question of how do we 9 wrest control of Java away from Sun with 10 Mr. Slivka? 11 Answer: I'll say again, I doubt I 12 used words like that, but there certainly was 13 an issue of the popularity of our runtime APIs 14 versus their runtime APIs. 15 Question: Just so that the record's 16 clear, I'm not asking you about whether there 17 was a question about the popularity of your 18 runtime APIs or their runtime APIs. 19 What I'm asking is whether you told 20 him in words or in substance that you wanted to 21 know how Microsoft could wrest control or get 22 control of Java away from Sun? 23 Answer: I don't remember anything 24 about control as a word or in substance, but 25 there was an issue about the popularity of our 5754 1 runtime APIs versus Sun's runtime APIs. 2 Question: I take it you know 3 Mr. Slivka? 4 Answer: Uh-huh. 5 Question: You've got to answer yes or 6 no audibly so the reporter can take it down. 7 Answer: Yes. 8 Question: And you believe him to be a 9 person of competence and integrity? 10 Answer: Yes. 11 Question: Do you have any reason to 12 believe that he would have misstated what you 13 told him when you met with him last before 14 April 14, 1997? 15 Answer: In no way does this purport 16 to be a restatement of things I said to Ben 17 Slivka. 18 Question: Well, Mr. Gates, what this 19 memorandum says is, quote, when I met with you 20 last, you had a lot of pretty pointed questions 21 about Java, so I want to be sure I understand 22 your issues and concerns. 23 Here's a start, can you please add any 24 that I'm missing? 25 And then he lists six, the second of 5755 1 which is, how do we wrest control of Java away 2 from Sun? 3 You see that in the exhibit, do you 4 not, sir? 5 Answer: Uh-huh, yes. 6 Question: Let me ask you to look at a 7 document that has been previously marked as 8 Government Exhibit 373. 9 It's a one-page exhibit and the second 10 item on the page is a message from you to Paul 11 Maritz dated June 16, 1997, on the subject of 12 quote, Java schism, closed quote. 13 Did you send this message, Mr. Gates? 14 Answer: I don't remember it, but I 15 don't have any reason to doubt that I did. 16 Question: What did you mean by quote, 17 Java schism, closed quote? 18 Answer: Well, I think the E-mail 19 speaks for itself. 20 Question: The E-mail may very well 21 speak to itself or for itself, but what I want 22 to know is -- 23 Answer: I could have written a mail 24 that says, a point that is important to me is 25 to have pure Java applications that do a lot 5756 1 have to ship a full runtime instead of being 2 able to count on the runtime being shipped with 3 the operating system, and so on. 4 Question: Maybe my question wasn't 5 clear. 6 What I'm trying to get you to do is to 7 tell me what you meant by the term Java schism. 8 Answer: It's a heading for this piece 9 of E-mail. 10 The E-mail is the communication, not 11 the heading. 12 Question: I understand that, sir. 13 But what I'm asking is, you chose the heading, 14 did you not, sir? 15 Answer: It appears I typed that. 16 Question: Right. And why did you 17 choose this heading for this memo? What were 18 you meaning to convey by the term Java schism? 19 Answer: Exactly what I put into the 20 message. 21 Question: Well, sir, what did you 22 mean by schism? 23 Answer: It explains that in the 24 message. 25 Question: I'm asking you to explain 5757 1 it in your words what you mean by the word 2 schism. 3 Answer: I'm drawing a distinction 4 between pure Java apps and where they get their 5 runtime bits. 6 Question: And is that the schism that 7 you're referring to? 8 Answer: That's what this E-mail is 9 about, and that's -- I titled it Java schism 10 when I wrote that E-mail. And the question is, 11 how do pure Java applications get their runtime 12 bits? 13 Question: What is on the two sides of 14 the schism, Mr. -- 15 Answer: The bits you get from the 16 browser, the bits you get elsewhere. 17 And the mail couldn't be clearer. 18 It's asking about two sources of the bits. You 19 can get bits from the browser. You can get 20 bits somewhere else. 21 Question: Okay. 22 Now, where else can you get the bits? 23 Answer: They can ship with the 24 application. 25 Question: And why was it important to 5758 1 you to have pure Java applications that have 2 the characteristics that you described in here? 3 Answer: I didn't want to have to have 4 the browser get so large that it would have all 5 the runtime bits for all the applications. 6 Question: And so where would the bits 7 be? 8 Answer: With the application. 9 Question: And what you're saying is 10 that it's important to you that Microsoft 11 develop pure Java applications that have a lot 12 of bits in them so that these bits don't have 13 to be in the browser. Is that the case? 14 Answer: No. It doesn't say anything 15 about Microsoft developing pure Java 16 applications. 17 Question: You're right, it doesn't. 18 Answer: And it's clearly not about 19 that. 20 Question: What is it about, then, 21 sir? 22 Answer: It's about pure Java 23 applications in general. 24 Question: Did you believe that it was 25 desirable to have as many pure Java 5759 1 applications as possible? 2 Answer: It has nothing to do with 3 this E-mail. The answer is no. But if you 4 think it has something to do with this E-mail, 5 you're -- that's incorrect. 6 Question: Okay. I think that it may 7 or may not be productive for you to speculate 8 as to what I think. 9 What I am trying to do is I'm trying 10 to get your testimony about this E-mail and 11 about your view of Java more generally. 12 Answer: I thought so. 13 Question: And first let me ask a 14 general question, and that is, did you believe 15 that from Microsoft's standpoint, it was 16 desirable to have as many pure Java 17 applications as possible? 18 Answer: We weren't focused on that as 19 a goal, no. 20 Question: In fact, is it fair to say 21 that you preferred fewer pure Java applications 22 to more pure Java applications? 23 Answer: We preferred more 24 applications that took advantage of our APIs, 25 and so we worked with ISVs to maximize the 5760 1 number that took advantage of our APIs. 2 Question: And your APIs were not pure 3 Java APIs, correct? 4 Answer: No. Some were and some 5 weren't. 6 Question: Yes, sir, some were and 7 some weren't, but the APIs that you wanted 8 people to use were APIs that were not pure Java 9 APIs; correct, sir? 10 Answer: No. We were glad to have 11 people use both. 12 Question: Were you indifferent as to 13 whether they used your pure Java APIs or your 14 proprietary APIs? 15 Answer: You've introduced the word 16 proprietary, and that completely changes the 17 question. 18 So help me out, what do you want to 19 know? 20 Question: Is the term proprietary API 21 a term that you're familiar with, sir? 22 Answer: I don't know what you mean by 23 it. 24 Question: Is it a term that you're 25 familiar with in your business? 5761 1 Answer: I really don't know what you 2 mean. You mean an API that you have a patent 3 on? 4 Question: Mr. Gates, is the term 5 proprietary API a term that is commonly used in 6 your business? 7 Answer: Let me give you -- 8 Question: All I'm trying to do -- 9 Answer: -- the common meanings that 10 those words could have and then you can pick 11 one of them and ask me a question about it. 12 Question: No. All I need -- 13 Answer: Just -- you want me to define 14 proprietary API or not? 15 Question: No, I don't want you to 16 define proprietary API. I didn't ask you to 17 define proprietary API. I asked you a simple 18 question whether the term proprietary API was 19 commonly used in your business. 20 Now I'm prepared to sit here as long 21 as you want to to answer questions that I 22 haven't asked. 23 But I have a certain number of 24 questions that I'm going to ask at the end of 25 these other answers. 5762 1 Now, this is a simple question. You 2 can say yes, no, or it is used in lots of 3 different ways, but then I can choose what to 4 follow up on or you can simply make whatever 5 statements you want and I'll go back to my 6 question afterwards. 7 Is the term proprietary API a term 8 that is commonly used in your business? 9 Answer: I don't know how common it 10 is. It has many different meanings. 11 Question: It is a term that you have 12 used in your business? 13 Answer: Sometimes. 14 Question: Okay. Now, is it fair to 15 say that when you use the term proprietary 16 APIs, sometimes you mean one thing and 17 sometimes you mean something else? 18 Answer: That's right. 19 Question: Would you give me the 20 different meanings that you sometimes ascribe 21 to the term proprietary APIs when you use that 22 term? 23 Answer: It can mean an API that only 24 happens to be available from one company. It 25 can mean an API that for some reason related to 5763 1 intellectual property can only be available 2 from one company, and, of course, that's never 3 a black and white thing. 4 It can mean an API that somebody's 5 chosen not to take to a standards body. Those 6 are the three different things you might mean 7 by it. 8 Question: I just want to be sure that 9 the answer is clear. 10 I'm not asking what I might mean by it 11 or what a person might mean by it. 12 What I'm trying to do is get you to 13 tell me meanings that you ascribe to that term 14 when you use it. 15 Answer: I've used all three of those. 16 Question: Okay. Are there other 17 meanings that you have ascribed to the term 18 proprietary API in your use of that term? 19 Answer: Not that I can think of right 20 now. 21 MS. CONLIN: Your Honor, this would be 22 a good time to stop. 23 THE COURT: Very well. 24 Ladies and Gentlemen of the jury, 25 we'll take our lunch recess until 12. 5764 1 Remember the admonition previously 2 given. You can leave your notebooks here. 3 They'll be quite safe. 4 See you at noon. Thank you. 5 All rise. 6 (A recess was taken from 11 a.m. 7 to 12:03 p.m.) 8 THE CLERK: All rise. 9 Everyone else may be seated. 10 (Whereupon, the following video 11 resumed playing to the jury.) 12 Question: Okay. Now, with respect to 13 the API in Windows, there are both Java APIs 14 and non-Java APIs. Is that fair? 15 Answer: I hate to tell you this, but 16 what you mean by Java there is subject to 17 massive ambiguity. 18 Question: Let me try to put the 19 question this way: In Windows, there are pure 20 Java APIs, there are impure Java APIs, and 21 there are APIs that have nothing to do with 22 Java. Is that fair? 23 Answer: I don't see anything about 24 APIs. 25 Question: Mr. Gates, let me ask you a 5765 1 question. If you can't answer the question, 2 you can't answer the question. 3 Does Windows include pure Java APIs? 4 Answer: There's a -- in some versions 5 of Windows there are some Java runtime APIs 6 which at one time Sun labeled as pure Java 7 APIs. 8 Subsequently, they changed in a way 9 that was not upwards compatible, so it's 10 actually kind of confusing. 11 Question: Does Windows have any APIs 12 that you would consider to be pure Java APIs? 13 Answer: Today? 14 Question: Yes. 15 Answer: Yeah. I guess the AWT 1.1 16 stuff you might think of that way. 17 Question: Anything else? 18 Answer: I don't know what you mean 19 anything else. 20 Are we enumerating? 21 Question: Any other APIs in Windows 22 that you would consider to be pure Java APIs, 23 Mr. Gates? 24 Answer: I know there's more. I don't 25 know the technical names for them. 5766 1 Question: Okay. And does Microsoft 2 have a version of Java that is not what you 3 refer to in your memo as pure Java? 4 Answer: I have no idea what you mean 5 by that question. 6 Question: Okay. 7 Does Windows include APIs that are 8 written in what is described as a form or 9 version of Java, but not pure Java? 10 Answer: Are you talking about the 11 language? 12 Question: If you don't understand the 13 question, Mr. Gates, you can simply say you 14 don't understand the question. 15 Answer: Okay. I'm sorry. I don't 16 understand the question. 17 Question: Good. Okay. That's what 18 I'm trying to do. 19 What I'm trying to do is get on the 20 record what you say you understand and what you 21 say you don't understand. 22 MR. BOIES: Would you read the answer 23 back, please, or the statement? 24 (Requested portion of the record was 25 read.) 5767 1 Question: No. I'm not talking about 2 the language if by the language, you mean all 3 the things that you said about the Java 4 language when we were talking about Java 5 yesterday. 6 Now, let me go back to me asking the 7 questions, if I can. 8 As part of an effort to take control 9 of Java away from Sun in the terms used by 10 Mr. Slivka in his memo with Mr. Gates -- to you 11 dated April 14, 1997, did Microsoft make an 12 effort to get people to use a version of Java 13 APIs that was not pure Java APIs? 14 Answer: I don't understand the 15 question. 16 Question: Okay. 17 In an attempt to, in Mr. Slivka's 18 words, wrest control of Java away from Sun, did 19 Microsoft make an effort to get programmers to 20 write to APIs that could be used to run 21 applications on Windows, but not on all other 22 operating systems to which a pure Java written 23 program could be run? 24 Answer: I wouldn't say that was part 25 of anything to do with controlling Java, but we 5768 1 do promote the use of the unique Windows APIs. 2 Question: And with respect to the 3 unique Windows APIs, are some of those APIs, 4 APIs that Microsoft describes as Java APIs or 5 has in the past? 6 Answer: There's a lawsuit with Sun. 7 Question: Well, there's a lawsuit 8 with Sun, and it's a lawsuit with Sun relating 9 to the use of Java; right? 10 Answer: It relates to a very specific 11 contract that we have with Sun. 12 Question: And does that very specific 13 contract with Sun relate to Java? 14 Answer: It's a license to various Sun 15 technologies related to Java. 16 Question: Now, you're familiar with 17 that lawsuit, are you not, sir? 18 Answer: Not very. 19 Question: Not very? 20 Do you know what the contentions in 21 that lawsuit are? 22 Answer: No. 23 Question: Never tried to find out? 24 Is that your testimony? 25 Answer: I haven't read the complaint, 5769 1 if that's your question. 2 Question: That's not my question. 3 My question is whether you've ever 4 tried to find out the substance of the 5 allegations about Java that Sun is making in 6 its lawsuit against Microsoft. 7 Answer: My understanding of their 8 allegations is very limited. 9 Question: What is your understanding 10 of their allegations? 11 Answer: I haven't read the contract 12 between Microsoft and Sun. 13 Question: I'm asking you about the 14 allegations in the complaint, not whether 15 you've read the contract. 16 I'm asking for your understanding, 17 which I know you've already said is very 18 limited, but I'm asking for your understanding 19 of what allegations Sun makes in its claim 20 against Microsoft. 21 Answer: I think there's some dispute 22 about -- they were supposed to make the test 23 cases public and upwards compatible, and they 24 didn't make them public, and they weren't 25 upwards compatible. 5770 1 And that relates to the contract that 2 I haven't read. 3 Question: And that's what you think 4 they allege in the complaint? 5 Answer: Well, that -- those are 6 certain things that they were required to do, I 7 believe. 8 Question: My question is not about 9 what you believe they were required to do, 10 Mr. Gates. 11 My question is, what is your 12 understanding about the complaint that they 13 make about what you did, about what Microsoft 14 did? 15 Do you understand the question? 16 Answer: You're asking me to summarize 17 their lawsuit? 18 Question: I'm asking you to tell me 19 what you know about the claims they make in 20 that lawsuit. 21 You said you know something about it, 22 but it's very limited. All I'm trying to do is 23 get you to tell me what it is you know about 24 the claims they make in their lawsuit. 25 Answer: I think they want us to ship 5771 1 JNI. 2 Question: Is that all you know about 3 their claims? 4 Answer: I think there was something 5 about a trademark. 6 Question: What about the trademark? 7 Answer: Whether we could use the 8 trademark. I'm not sure. 9 Question: Don't you know, Mr. Gates, 10 one of the allegations that they make is that 11 you're taking their trademark and applying it 12 to things that it shouldn't be applied to? 13 Answer: Yeah. I think there's a 14 trademark issue. I'm not sure what they're 15 saying about the trademark. 16 Question: Do you know anything that 17 they're saying about the trademark according to 18 your present testimony? 19 Answer: I know there's a dispute 20 about the trademark. 21 Question: Well, don't you know that 22 one of the things they're alleging is that 23 Microsoft is taking their trademark and 24 applying it to things that shouldn't be applied 25 to according to them? 5772 1 Answer: I'm not sure that's right 2 because -- 3 Question: You're not sure? 4 Answer: Because I don't think we used 5 their trademark. I'm not sure. I'm kind of 6 confused about that. I've never seen us using 7 their trademark, so I'm a little confused about 8 how that relates to any dispute with Sun. 9 Question: Did you ever try to find 10 that out? 11 Answer: What? 12 Question: What the claims were more 13 than your present knowledge. 14 Answer: I read something that was on 15 our website about four days ago. 16 Question: About the Sun lawsuit? 17 Answer: Yeah. Bob Muglia had some 18 statements. 19 Question: Other than that, did you 20 ever try to find out what Microsoft is being 21 charged with, what they're alleged to have done 22 wrong? 23 Answer: I've had discussions with 24 Maritz saying, do I need to learn about this 25 lawsuit? Do I need to spend a lot of time on 5773 1 it? 2 Question: What did he say? 3 Answer: He said no, he's focused on 4 that and I can focus on other things. 5 Question: Is one of the things that 6 you're focused on trying, in Mr. Slivka's 7 words, to wrest control or get control, if 8 wrest is a word that you don't like, of Java 9 away from Sun? 10 Answer: No. 11 Question: How did you think Microsoft 12 could get control of Java away from Sun? 13 Answer: I honestly don't know what 14 you mean by control of Java. I know those 15 words are in that E-mail from Mr. Slivka, but 16 when you're asking me the question, I don't 17 know what you mean by control of Java. 18 Question: Is it your testimony, 19 Mr. Gates, that as you sit here today under 20 oath, you have no idea what Mr. Slivka meant 21 when he said that one of the pointed questions 22 that you had raised with him was how to get 23 control of Java away from Sun? 24 Answer: I've told you, I think it 25 related to our attempt to make our runtime APIs 5774 1 the most popular runtime APIs. 2 Question: And not the Java APIs from 3 Sun. Is that what you're saying? 4 Answer: Well, let's not label the 5 APIs, not the unique ones that Sun was 6 promoting. 7 Question: When you say the unique 8 ones that Sun was promoting, what were the 9 unique ones that Sun was promoting called? 10 Answer: I'm not sure what they're 11 called. I think AWT 1.2 maybe or JDK 1.2. 12 Question: And is it your best 13 testimony that that's what you think this would 14 have meant back in April of 1997, sir? 15 Answer: That what meant? 16 Question: Getting control of Java 17 away from Sun. 18 The thing we've been talking about 19 here. 20 Answer: Is that the same as wrest 21 control? You keep reading me these words from 22 the E-mail. 23 Question: Well, I'm trying to get 24 away from the word wrest because you say you 25 don't remember that exact word. So I'm trying 5775 1 to use a word that's more neutral like get or 2 obtain control. 3 Answer: And I've told you, I can't 4 understand what's meant by control there. I 5 know that we're trying to make our APIs popular 6 with developers. 7 Question: How does making your APIs 8 popular with developers relate to obtaining 9 control of Java, if at all? 10 Answer: I don't know what it means to 11 control Java. How can somebody control Java? 12 What does that mean? 13 Question: Is it your testimony that 14 you have no idea what that means? 15 Answer: To control Java? I don't 16 think anyone can control Java. It's like 17 saying controlling Basic or COBOL. 18 Question: Do you really mean that, 19 sir? 20 Answer: Yes. 21 Question: And I'm going to press this 22 just another 30 seconds and then I will stop. 23 But I really do want to be sure that I 24 have given you a full and fair opportunity. 25 Is it your testimony that as you sit 5776 1 here today under oath that you have no idea 2 what is meant by control of Java as used in 3 this E-mail to you by Mr. Slivka? 4 Answer: I've said several times I 5 think he must be referring to our effort to 6 make our APIs the most popular APIs. 7 But that wouldn't give us control of 8 Java. So I'm having a hard time relating it to 9 these specific words. 10 Question: Well, without relating it 11 to the specific words, how would getting people 12 to use your APIs get control of Java? Why do 13 you relate those two in your mind? 14 Answer: Because he probably means the 15 Java runtime, not Java. 16 Question: Let's say he means the Java 17 runtime. 18 Answer: Then he's talking about the 19 competition of APIs. 20 Question: Is it fair to say, 21 Mr. Gates, that you interpret this as how does 22 Microsoft get, obtain control of Java runtime? 23 Is that what you're saying? 24 Answer: I think that's the most 25 likely explanation of what he meant. I still 5777 1 don't understand the word control there because 2 it's not the word I'd use. 3 Question: Well, according to 4 Mr. Slivka, it is the word you used, is it not, 5 sir? 6 Answer: We've already been through 7 that. 8 Question: But looking at this doesn't 9 refresh your recollection about having used 10 that word? 11 Answer: It does not. 12 Question: Have you ever said in words 13 or in substance to anyone that you wanted to 14 obtain control over Java or under -- over Java 15 runtimes? 16 Answer: I don't remember using those 17 words. 18 Question: Do you remember conveying 19 that concept or conveying that substance? 20 Answer: If by that concept, you mean 21 conveying the idea that we wanted our runtime 22 APIs to be the most popular, then the answer is 23 yes. 24 Question: Why did you want your 25 runtime APIs to be the most popular? 5778 1 Answer: By having our runtime APIs be 2 the most popular, it means that people are more 3 likely to license Windows because there's 4 applications that take advantage of the unique 5 innovations that are in the Windows product. 6 Question: Why does the fact that 7 their applications that take advantage of the 8 unique APIs that are in the Windows product 9 make people more likely to license Windows? 10 Answer: Because it shows off the 11 unique innovations of Windows. 12 Question: How does it show off the 13 unique innovations of Windows? 14 Answer: Well, let's say, for example, 15 they call our tasking APIs, then it shows off 16 the unique way that we've done tasking. 17 Let's say they call our clipboard 18 APIs, then it shows off the advances we've made 19 in data exchange, which are very advanced. 20 Question: Is it your testimony that 21 trying to get applications writers to write to 22 Windows' own APIs was something that you were 23 trying to do only for the reason that you've 24 identified? 25 Answer: Well, I think there's 5779 1 additional reasons as well. 2 Question: Isn't it a fact, Mr. Gates, 3 that one of the reasons that you were trying -- 4 that Microsoft was trying to get control over 5 the Java runtimes or Java, as it's described in 6 Mr. Slivka's memorandum, was to prevent Java or 7 Java runtimes from supporting competition with 8 Windows? 9 Answer: I don't know what you mean by 10 control. That means I don't understand the 11 question. 12 Question: Okay. 13 Did you ever participate in any 14 discussions within Microsoft as to the extent 15 of which Java or Java runtimes posed a threat 16 to Microsoft's position with respect to the 17 Windows platform? 18 Answer: Yeah. I've already told you 19 that there came a point where we viewed Sun's 20 unique Java runtime APIs as a -- as a part of 21 the competitive environment, a competitor. 22 Question: Okay. 23 Now, why were the Java APIs from Sun a 24 competitor? 25 Answer: Well, if people just used the 5780 1 least common denominator APIs, then they don't 2 show off the innovations that we're doing in 3 Windows, and it makes it less attractive to 4 people to license Windows or update Windows. 5 Question: Now, what I'm trying to do 6 -- and you may think you've answered this 7 question, but I don't think the record makes it 8 clear in any event. 9 What I'm trying to do is distinguish 10 between that reason which you've given me a 11 couple times and any other reason that may 12 exist. 13 Do you understand what I'm asking? 14 Answer: No. 15 Question: Okay. Let me try it again. 16 Isn't it true, Mr. Gates, that in 17 addition to whatever desire you may have had to 18 show off your Windows capabilities that you say 19 you had, that one of the things that was going 20 on here was you're trying, Microsoft's trying, 21 to prevent Java from getting wide enough 22 distribution so that it could support 23 applications programming for platforms other 24 than Windows? 25 Answer: No. 5781 1 Question: Not at all, sir? 2 Answer: There's no limitation of 3 distribution. 4 Question: Didn't ask whether there 5 was any limitation of distribution. 6 I asked you whether in any way the 7 desire to prevent Java from developing 8 applications that could be used on platforms 9 other than Windows motivated what Microsoft was 10 doing in connection with Java. 11 Answer: What does it mean Java 12 developing applications? 13 Question: I actually didn't recall 14 that I used that phrase. 15 Answer: Can you read me the question? 16 (Requested portion of the record was 17 read.) 18 Question: Can you answer that 19 question, Mr. Gates? If you can't, I'll 20 rephrase it, but if you can answer it, I'd like 21 an answer. 22 Answer: I don't know what you mean 23 Java developing applications. 24 Question: Isn't it a fact, Mr. Gates, 25 that in addition to whatever other reasons you 5782 1 say you had for what you did with Java and 2 Windows APIs, part of what you were trying to 3 do was to prevent Java from having a wide 4 enough distribution so that it could support 5 programs that could be used on platforms other 6 than Windows? 7 Answer: We had no way of preventing 8 Java from being used on other platforms. It is 9 used on other platforms. 10 Question: That wasn't my question, 11 sir. 12 My question is whether or not part of 13 what you and Microsoft was trying to do was to 14 limit the distribution of Java sufficiently so 15 that you could thereby limit or reduce the 16 extent to which applications were written that 17 could be used on platforms other than Windows? 18 Answer: No. In fact, we sell the 19 most popular Java tools in the market. 20 Question: It is your testimony, then, 21 sitting here, that Microsoft was not at all 22 motivated by a desire to limit the extent to 23 which Java could be used to develop 24 applications programming that could be used on 25 platforms other than Microsoft's Windows? Is 5783 1 that your testimony? 2 Answer: Yes. 3 Question: Did Microsoft believe that 4 Netscape's browser was a means of distributing 5 Java APIs? 6 Answer: Well, Netscape had some APIs 7 in its browser. I'm not sure if you'd refer to 8 them as Java APIs or not. 9 Question: It's not a question 10 whether I would refer to them that way or not, 11 Mr. Gates. What I'm asking you is what you and 12 Microsoft believe. 13 And my question is, did you and others 14 at Microsoft believe that Netscape's browser 15 was a method for distributing Java APIs? 16 Answer: There were APIs in the 17 Netscape browser. I don't think they were 18 strictly Java APIs or even in a direct sense 19 specifically. 20 Question: Have you completed your 21 answer, sir? 22 Answer: Uh-huh. 23 MR. BOIES: Can I have the question 24 read back again? 25 (Requested portion of the record was 5784 1 read.) 2 Question: Can you tell me that, sir? 3 Answer: There were APIs in the 4 Netscape browser some of which under some 5 definition of Java APIs you'd call Java APIs. 6 Question: And was there concern 7 within Microsoft that the distribution of these 8 things that you say could be called Java APIs 9 would adversely affect Microsoft? 10 Answer: Our concern is always to get 11 people to develop Windows applications. And to 12 the degree that there's other APIs people to 13 develop to, there's some competition for the 14 attention of the developers and focusing on 15 those APIs. But that doesn't relate to 16 distribution. 17 MR. BOIES: Can I have my question 18 read back again, please? 19 (Requested portion of the record was 20 read.) 21 Question: Could I have an answer to 22 that question, please, sir? 23 Answer: No, not the distribution. 24 Question: Let me ask you to look at a 25 document that has been previously marked as 5785 1 Government Exhibit 349. The first message in 2 this exhibit is an E-mail from Paul Maritz to 3 you and a number of other people dated July 14, 4 1997; correct, sir? 5 Answer: That's what it appears to be, 6 yes. 7 Question: Did you receive this 8 E-mail, sir? 9 Answer: I don't remember it, but I 10 don't have any reason to doubt that I did. 11 Question: Mr. Maritz writes to you in 12 the third sentence, quote, if we look further 13 at Java/JFC being our major threat, then 14 Netscape is the major distribution vehicle. 15 Do you see that, sir? 16 Answer: Uh-huh. 17 Question: Do you recall Mr. Maritz 18 telling you in words or in substance that 19 Netscape was the major distribution vehicle for 20 the Java/JFC threat to Microsoft? 21 Answer: No. 22 Question: Did you believe in July of 23 1997 that Java/JFC was a major threat to 24 Microsoft as Mr. Maritz writes here? 25 Answer: It was a significant issue 5786 1 for his group in terms of how ISVs would choose 2 to focus their development in the future. 3 Question: Did you believe in July of 4 1997 that Java/JFC was a major threat to 5 Microsoft? 6 Answer: In the form that it existed 7 as of that day, maybe not. But if we looked at 8 how it might be evolved in the future, we did 9 think of it as something that competed with us 10 for the attention of ISVs in terms of whether 11 or not they would take advantage of the 12 advanced features of Windows. 13 Question: Do you have any 14 understanding as to what Mr. Maritz meant when 15 he wrote to you about Java/JFC being a major 16 threat to Microsoft? 17 Answer: Yeah. I just answered that. 18 Question: What did you understand 19 Mr. Maritz to mean when he says Java/JFC was 20 Microsoft's major threat? 21 Answer: I just answered that. 22 Question: You'll have to give me an 23 answer, Mr. Gates, because if you did answer 24 it, it's not an answer that I can understand 25 how it applies to the particular question I'm 5787 1 asking. 2 Answer: I said we looked at how the 3 various runtime APIs, which was always 4 confusing, you know, where they were going or 5 what they were doing. And JFC is just a term 6 for some of those, how they might evolve in a 7 way that would take away the focus of 8 developers in terms of writing applications 9 that would take unique advantage of Windows 10 features. 11 Question: I understand that you say 12 that that was an issue for you. 13 Why was that a major threat to 14 Microsoft, if you have any understanding? 15 Answer: Well, if people stopped 16 writing applications that took advantage of 17 Windows runtime APIs, that would mean that 18 users wouldn't have access to the innovative 19 features that we were putting into Windows. 20 Question: Why was that a major threat 21 to Microsoft? 22 Answer: If ISVs weren't writing 23 applications to take unique advantage of 24 Windows, then it wouldn't show off the Windows 25 innovation and so users wouldn't have much 5788 1 reason to update Windows or to license any new 2 versions of Windows. 3 Question: You referred to JFC in a 4 couple answers ago and, of course, that's here 5 in the memo. 6 What does JFC stand for as you 7 understand it? 8 Answer: I was always a little 9 confused about that, and it changed over time. 10 It stands for Java Foundation Classes. 11 Question: Mr. Maritz writes here that 12 Netscape is the major distribution vehicle for 13 Java and Java Foundation Classes. 14 Do you see that? 15 Answer: That's at the end of that 16 sentence? 17 Question: Yes. 18 Answer: Uh-huh. 19 Question: Do you see that? 20 Answer: Yes. 21 Question: Now, in a prior answer, you 22 said you didn't understand how the browser was 23 a distribution vehicle. 24 Does this refresh your recollection 25 that at least within Microsoft in July of 1997, 5789 1 Netscape was viewed as the major distribution 2 vehicle for Java? 3 Answer: Not for Java. And, in my 4 view, the browser wasn't a key distribution 5 channel. Maritz may or may not have agreed 6 with that, but you can always ship the runtime 7 with the applications. 8 Question: Mr. Maritz here says, 9 Netscape is the major distribution vehicle. 10 Now, it's clear to you, is it not, 11 sir, that he means the major distribution 12 vehicle for Java and Java Foundation Classes? 13 Answer: He doesn't mean for Java. 14 Question: Well, sir, he says -- 15 Answer: I told you many times about 16 the use of the word Java. And I'm not sure you 17 heard me. 18 When people use the word Java, they 19 don't mean just Java. 20 Question: So when Mr. Maritz here 21 used the word Java in this E-mail that you say 22 you don't recall receiving, you're telling me 23 that he meant something other than just Java? 24 Answer: He -- I bet he meant some 25 runtime APIs, not Java. 5790 1 Question: Okay. 2 Let's assume that you're right. Let's 3 assume that when he talks about Java, he means 4 Java runtime APIs. 5 Would you then agree that what he is 6 saying here is that Netscape is the major 7 distribution vehicle for Java runtime APIs and 8 Java Foundation Classes? 9 Answer: That appears to be what he's 10 saying in this E-mail. 11 Question: Mr. Gates, what was 12 Mr. Maritz's title on July 14, 1997? 13 Answer: I think group vice president. 14 Question: What was he group vice 15 president of? 16 Answer: I don't know what the title 17 would have said after that. But he managed the 18 group that contained all of our Windows 19 activities. 20 Question: Was he group vice president 21 for platforms? 22 Answer: I'm not sure. I'm sure if it 23 contained the word platforms, it didn't just 24 say platforms because he's got Office and some 25 other things also. 5791 1 Question: But within his 2 responsibilities would have been Windows? 3 Answer: That's right. 4 Question: Let me ask you to look at a 5 document that has been marked as Government 6 Exhibit 374. This is an E-mail to you from 7 Todd Nielson dated August 25, 1997 with copies 8 to Brad Chase. 9 Did you receive this E-mail, sir? 10 Answer: I don't remember receiving 11 it, but I don't have any reason to doubt that I 12 did. 13 Question: Let me ask you to look at 14 the seventh paragraph down. That's the third 15 paragraph from the bottom, the last sentence. 16 That says, quote, so we are just proactively 17 trying to put obstacles in Sun's path and get 18 anyone that wants to write in Java to use 19 J/Direct and target Windows directly, closed 20 quote. 21 Do you see that, sir? 22 Answer: Uh-huh. 23 Question: Do you recall being told in 24 or about August of 1997 that Microsoft was 25 trying to put obstacles in Sun's path and get 5792 1 anyone that wants to write in Java to use 2 J/Direct and target Windows directly? 3 Answer: No. 4 Question: Do you know why Microsoft 5 was trying to put, quote, obstacles in Sun's 6 path, closed quote? 7 Answer: I don't know what that means. 8 Question: Do you know why Microsoft 9 was trying to get anyone that wants to write in 10 Java to use J/Direct? 11 Answer: Yes. 12 Question: Why was that? 13 Answer: Because J/Direct allows you 14 to make calls that show off unique innovations 15 in Windows and make -- therefore, make Windows 16 more attractive. 17 Question: Was there any reason other 18 than that that Microsoft wanted to get anyone 19 that wants to write in Java to use J/Direct? 20 Answer: Yes. 21 Question: What? 22 Answer: Well, there's a benefit to us 23 if people are showing off Windows, and it 24 increases Windows popularity. That helps us 25 with the other applications we write for 5793 1 Windows as well including Microsoft Office. 2 Question: How is that so? 3 Answer: Because Microsoft Office is 4 targeted to Windows, we get a benefit that goes 5 even beyond increased sales of Windows if we 6 manage to popularize Windows. 7 Question: Why is that? 8 Answer: Because they can buy Office. 9 Question: They can buy Office and use 10 it on the Mac, too, can't they, since you 11 didn't cancel Mac Office? 12 Answer: We have a much wider set of 13 applications available for the Windows platform 14 than any other platform. And we have more 15 frequent updates of products like Office on the 16 Windows platform. 17 It's a more powerful version, the 18 Windows version, and it -- therefore, our 19 revenue per unit is somewhat higher. 20 Question: You mean the version of 21 Office for Windows is more powerful than the 22 version for Office for Mac? Is that what 23 you're saying? 24 Answer: Yes. We have Office Pro. 25 Question: What is J/Direct? 5794 1 Answer: J/Direct is a way of allowing 2 Java language code to call native OS 3 functionality. It's a fairly clever thing that 4 we have done. And others now use that term to 5 refer to it when they let their OS 6 functionality show through as well. 7 Question: You have referred to Java 8 runtimes. 9 Are there J/Direct runtimes? 10 Answer: There's a thunk, but I don't 11 know if you call it a runtime or not. It's a 12 thunk. 13 Question: Would you define for me 14 what the difference is in your mind between a 15 thunk and a runtime? 16 Answer: A thunk is a small piece of 17 runtime that remaps parameters and calling 18 conventions in such a way to be able to pass 19 along an API call to another piece of runtime. 20 Question: Does -- or I should say, 21 when was J/Direct developed by Microsoft? 22 Answer: I'm not sure. 23 Question: Approximately? 24 Answer: I don't -- I don't know. I 25 mean -- 5795 1 Question: Why was J/Direct developed 2 by Microsoft? 3 Answer: To make it easy for people 4 who choose the Java language to call the unique 5 runtime features in various operating systems, 6 including Windows. 7 Question: Why do you want people to 8 write in J/Direct as opposed to Java? 9 Answer: They are writing in Java. 10 You only use J/Direct if you write in Java. 11 Question: Well, what Mr. Nielson says 12 is that Microsoft is trying to get anyone that 13 wants to write in Java to use J/Direct. 14 Do you see that? 15 Answer: That's right. And that means 16 writing in Java. 17 Question: And why do you want to get 18 anyone who wants to write in Java to use 19 J/Direct? 20 Answer: Because that gives them a way 21 of calling unique Windows APIs that allow us to 22 show off the innovative features in Windows. 23 Question: Couldn't you do that by 24 having them simply write in Java and you 25 providing the thunk separately? 5796 1 Answer: The name of the thunk is 2 J/Direct. I guess we could have another thunk 3 and call it something other than J/Direct, and 4 that would be another way that they could do 5 it. But we didn't choose to do it twice. 6 Question: No, you didn't choose to do 7 it twice. That's not my question, Mr. Gates. 8 My question is why you were trying to 9 get program developers, independent programming 10 people, to use J/Direct. Why were you trying 11 to get them to do that? 12 Answer: Because it allows them to get 13 at the unique API functionality that's in the 14 Windows product and show off the innovations 15 that we do there. 16 Question: But you didn't have to -- 17 Answer: Tell me some other way. 18 Question: Well, I'm asking you. If 19 you tell me that that's what you say is the 20 only way that you could think of for them to do 21 it, that's your testimony. 22 I don't get to testify here. If I 23 did, there would have been a lot of things I 24 would have said along the way. 25 But since I don't get to testify, all 5797 1 I get to do is ask you questions. 2 And my question to you is whether 3 there was a way, that you were aware of at the 4 time, to let people see all of what you refer 5 to as the functionality of Windows without 6 getting people to write to what you refer to 7 here to use J/Direct if they wanted to write in 8 Java. 9 Answer: J/Direct is exactly the work 10 we did to make it possible and reasonable for 11 people writing in Java to call the unique 12 Windows APIs. 13 Question: Have you finished your 14 answer? 15 Answer: Yes. 16 Question: Okay. 17 Now, were you aware of other ways of 18 accomplishing the same result that you 19 considered and rejected at the time? 20 Answer: What time is that? 21 Question: The time that you developed 22 J/Direct. 23 Answer: We don't know what that time 24 is. 25 Question: Well, you may not know the 5798 1 exact year. But do you know that when -- were 2 you aware when J/Direct was being developed 3 within Microsoft? Were you aware of it at the 4 time? 5 Answer: I'm not sure. 6 Question: Did you know it was being 7 developed? 8 Answer: I'm not sure. 9 Question: Did you have any 10 discussions about the development of 11 J/Direct? 12 Answer: I was not involved in the 13 design of J/Direct. 14 Question: I'm not asking you whether 15 you were involved in the design of J/Direct. 16 I'm asking you whether you were aware 17 at the time that J/Direct was being developed, 18 that it was being developed? 19 Answer: I'm not sure. 20 Question: Did you ever have any 21 discussions with anyone about the development 22 of J/Direct at or about the time it was being 23 developed? 24 Answer: I don't think so. 25 Question: At the time that J/Direct 5799 1 was being developed, did you know that people 2 were trying to develop J/Direct? 3 Answer: It's just a thunk. 4 Question: My question is, did you 5 know that they were trying to develop this 6 thunk? 7 Answer: I doubt it. 8 Question: Did you participate at all 9 in any discussions as to what alternatives 10 there were to the development of J/Direct? 11 Answer: Before it was developed? 12 Question: Let's start with before it 13 was developed. 14 Answer: No, I don't think so. 15 Question: What about during the time 16 it was being developed? 17 Answer: I don't think so. 18 Question: How about after it was 19 developed? 20 Answer: I don't think so. 21 Question: Let me show you a document 22 that has been previously marked as Government 23 Exhibit 378. 24 In the middle of the first page there 25 is a message dated May 14, 1997, from Ben 5800 1 Slivka to you and others. 2 Did you receive this E-mail on or 3 about May 14, 1997? 4 Answer: I'm not sure, but I have no 5 reason to doubt that I did. 6 Question: When Mr. Slivka writes as 7 he does in the second paragraph, this summer 8 we're going to totally divorce Sun, do you know 9 what he's referring to? 10 Answer: I'm not sure. 11 Question: Did you ever ask him what 12 he was referring to? 13 Answer: No. 14 Question: In the next to the last -- 15 or in the last sentence, actually, in the last 16 sentence of the second paragraph, Mr. Slivka 17 writes that JDK 1.2 has JFC. And is the JFC 18 there the Java Foundation Classes that you 19 referred to earlier? 20 Answer: It's one of the many JFCs. 21 Question: What is one of the many 22 JFCs? 23 Answer: The one in JDK 1.2. 24 Question: Is the JFC in JDK 1.2 part 25 of what was described as a major threat to 5801 1 Microsoft? 2 Answer: I have no idea which JFC that 3 sentence written by somebody other than me 4 referred to is. 5 Question: Well, the sentence written 6 by somebody other than you was written to you; 7 right, sir? 8 Answer: It was sent to me. 9 Question: Yes. And it was sent to 10 you by one of your chief -- one of your top 11 executives; correct, sir? 12 Answer: In an E-mail. 13 Question: Yes. And that's a frequent 14 way that your top executives communicate with 15 you; correct, sir? 16 Answer: Yes. 17 Question: Now, Mr. Slivka here says 18 that Microsoft is going to be saying 19 uncomplimentary things about JDK 1.2 at every 20 opportunity. Do you see that? 21 Answer: Where's that? 22 Question: That is, JDK 1.2 has JFC, 23 which we're going to be pissing on at every 24 opportunity. 25 Answer: I don't know if he's 5802 1 referring to pissing on JFC or pissing on JDK 2 1.2, nor did I know what he specifically means 3 by pissing on. 4 Question: Well, do you know that 5 generally he means by pissing on he's going to 6 be saying and Microsoft is going to be saying 7 uncomplimentary things? 8 Answer: He might mean that we're 9 going to be clear that we're not involved with 10 it, that we think there's a better approach. 11 Question: Well, as you understand it, 12 when Mr. Slivka says he's going to be pissing 13 on JDK 1.2, as you seem to interpret it, at 14 every opportunity, do you interpret that as 15 meaning that Microsoft is going to be saying 16 uncomplimentary things about JDK 1.2? 17 Answer: I told you, I don't know 18 whether pissing applies to JFC or JDK. 19 Question: Well, he's going to be 20 pissing on or Microsoft is going to be pissing 21 on either JDK 1.2 or JFC or both according to 22 Mr. Slivka. 23 Is that at least fair? 24 Answer: That appears to be what the 25 sentence says. 5803 1 Question: Yeah. And as the chief 2 executive officer of Microsoft, when you get 3 these kind of E-mails, would it be fair for me 4 to assume that pissing on is not some kind of 5 code word that means saying nice things about 6 you, that has the usual meaning that it would 7 in the vernacular. 8 Answer: I don't know what you mean in 9 this kind of E-mail. 10 Question: The kind of E-mail that is 11 sent to you by executives in the course of your 12 business, Mr. Gates. 13 Answer: So all E-mails I get? Ben 14 Slivka's not an executive. 15 Question: All the E-mails you get 16 from people telling you that they're going to 17 piss on competitive products, that's what I'm 18 talking about. 19 Answer: I don't remember mail like 20 that. It looks like I got one, but believe me, 21 it's not a term that's commonly used. 22 Question: But you have no reason to 23 think that he means it in any way other than 24 the normal meaning of that term, do you, sir? 25 Answer: I think it's a term of 5804 1 multiple meanings. In this case, I think it 2 means what you've suggested it means. 3 Question: I thought it did too, and I 4 hope to avoid asking you going through the 5 actual language. 6 Okay. Let me -- and, Mr. Gates, let 7 me show you a document that has been previously 8 marked as Government Exhibit 377. 9 The second E-mail here refers to what 10 is attached as a final copy of the memo that 11 was sent to you for think week in November 12 1995. 13 Do you recall receiving this document, 14 sir? 15 Answer: No. What I recall about this 16 document is that it's already been marked as an 17 exhibit and that I spoke with Mr. Houck about 18 it yesterday. 19 Question: That may be so. My 20 question to you is, do you recall receiving 21 this -- let me make it simple. 22 Did you receive this memo in or about 23 November of 1995? 24 Answer: As I said before, for my 25 think weeks, I get about three cardboard boxes 5805 1 of materials that people put together for me. 2 And in looking at this memo, it's not 3 a memo that I had seen before Mr. Houck's 4 deposition questions put to me yesterday. 5 Question: So it's your testimony the 6 first time you saw this document was when 7 Mr. Houck showed it to you yesterday? 8 Answer: That's right. It had a 9 different exhibit number then. 10 Question: Let me ask you to go to 11 page 5 of the document which bears in the 12 bottom right-hand corner the Microsoft document 13 production number ending 4683. 14 Answer: Okay. 15 Question: Do you see the heading 16 shell integration? 17 Answer: Yes. 18 Question: Do you see the second 19 sentence where it says, we will bind the shell 20 to the Internet Explorer, so that running any 21 other browser is a jolting experience? 22 Answer: I see that. 23 Question: Do you have any 24 understanding as to what was meant by that? 25 Answer: I can guess. 5806 1 Question: Well, first, this is in a 2 memo that is entitled how to get 30 percent 3 share in 12 months; correct? 4 Answer: Let us take a look. Yeah, 5 that's on the first page. 6 Question: And is it clear to you that 7 that is referring to getting a 30 percent share 8 of the browser market? 9 Answer: I haven't read the document, 10 but it seems likely that's what it is. 11 Question: Okay. 12 Now, do you have an understanding -- 13 I'm not asking you to guess, but do you have an 14 understanding as to what it meant by this 15 statement, we will bind the shell to the 16 Internet Explorer, so that running any other 17 browser is a jolting experience? 18 Answer: I don't know what he meant by 19 it, but I can tell you what it likely means. 20 Question: Okay. I take it this is 21 really how you would have interpreted this when 22 you received it; is that fair? 23 Answer: I didn't read it, so -- 24 Question: I said if you had received 25 it, this is how you would interpret it? 5807 1 Answer: I said I didn't read it. I 2 actually -- I would have read the whole memo if 3 I had received it. I wouldn't have turned to 4 that one page and just looked at that one 5 sentence. 6 I would have read the memo from the 7 beginning page by page, and then I probably 8 would have understood it better than I do at 9 this moment. 10 Question: If you do not have an 11 understanding of what is meant by it, you can 12 tell me. If you do have an understanding of 13 what is meant by it, I would like to have it. 14 Answer: I don't know what he meant by 15 it, but I'd be glad to guess as to what it 16 might mean. 17 Question: I don't want you to guess, 18 but if you as the chief executive officer of 19 Microsoft can tell me how you would in the 20 ordinary course of your business interpret this 21 statement, I would like to have you do so. 22 Answer: He may be referring to the 23 fact that when you get a separate frame coming 24 up on the win -- on the screen, it's different 25 than having something take place in frame. 5808 1 And part of our shell integration 2 strategy going back all the way to 1990 3 included the idea that as you navigated or 4 browsed through different media types, you 5 didn't have to have another frame come up 6 because that -- that's sort of an artifact of 7 having to think about applications instead of 8 objects. 9 And so as we looked at integrating the 10 browser and the shell together, we were going 11 to create a form of navigation optionally but 12 as the default where you don't switch frames as 13 you navigate the links from the shell to what's 14 out on the Internet back to what's in the local 15 store. 16 Question: Did anyone ever tell you 17 independent of this document in words or in 18 substance that Microsoft intended to bind the 19 shell to the Internet Explorer so that running 20 any other browser is a jolting experience? 21 Answer: Well, certainly the idea of 22 integrating in a way that made a better 23 browsing experience was something we were 24 talking about quite a bit. Those words, no, I 25 never heard anything along the lines of those 5809 1 words. 2 Question: The words that are in this 3 document; is that what you're saying? 4 Answer: That's right. 5 Question: Okay. 6 Did Microsoft make any effort to 7 discourage Apple from writing in a JDK 1.2? 8 Answer: That never would have come 9 up. Apple is not an application developer. 10 Question: Let me back up. 11 Did Microsoft ever make an effort to 12 get Apple to discourage applications writers 13 for Apple's machines from writing in what you 14 have referred to as Sun's Java or using the Sun 15 Java runtimes? 16 Answer: I'm sure there was discussion 17 with Apple about the fact that their unique 18 operating system capabilities wouldn't show 19 through with the least common denominator pure 20 approach. 21 Whether that related specifically to 22 JDK 1.2 or not, I can't say. 23 Question: When you say you're sure 24 there were discussions, are you talking about 25 discussions between Microsoft representatives 5810 1 and Apple representatives? 2 Answer: Yes. 3 Question: What was Microsoft's 4 interest in having Apple discourage 5 applications writers for Apple's operating 6 system from using Java runtimes or JDK 1.2? 7 Answer: We thought they might share 8 the view that applications showing off unique 9 operating system features was a good thing. 10 But -- 11 Question: Was there any other reason, 12 sir? 13 Answer: No. 14 Question: Did you have personally any 15 discussions with Apple with regard to trying to 16 agree with Apple as to the extent to which 17 Apple and Microsoft would compete with respect 18 to Apple's QuickTime software? 19 Answer: No. 20 Question: Do you know if anyone from 21 Microsoft had such discussions with anyone at 22 Apple? 23 Answer: I know over a course of years 24 we've talked to them about what their plans are 25 for QuickTime, but that's all. 5811 1 Question: Does Microsoft have 2 software that competes with QuickTime? 3 Answer: Since QuickTime's a free 4 runtime, you could answer that either yes or 5 no. 6 It's not a revenue source for Apple, 7 but there is an Apple technology that has some 8 common things with some Microsoft technologies. 9 Question: Do you believe that 10 QuickTime software competes with any software 11 distributed by Microsoft? 12 Answer: Depends on what you mean 13 compete. 14 Question: Using that in the way that 15 you would ordinarily understand it in the 16 operation of your business, sir. 17 Answer: No. 18 Question: Did you make any effort or 19 did Microsoft make any effort to get Apple to 20 agree not to market QuickTime in any respect or 21 to limit the marketing of QuickTime in any 22 respect? 23 Answer: There were discussions about 24 whether we could help them with their QuickTime 25 goals at various points in time. 5812 1 And, in fact, they encouraged us to do 2 something where we'd actually by working with 3 them make QuickTime even more popular than it 4 is. 5 MR. BOIES: Would you read back my 6 question, please? 7 (Requested portion of the record was 8 read.) 9 Question: Can you answer that 10 question, sir? 11 Answer: I'm not aware of anything 12 that was directly aimed at those things, no. 13 Question: Are you aware of anything 14 that was indirectly aimed at those things? 15 Answer: No. 16 Question: Did, to your knowledge, any 17 representative of Microsoft try to convince 18 Apple not to sell or promote QuickTime for uses 19 for which Microsoft promotes the use of 20 NetShow? 21 Answer: There was some discussion 22 about the future development of the runtime 23 code and whether we could work together on the 24 Windows side of that runtime code that would 25 enhance their goal and our goals. 5813 1 Question: And was there a discussion 2 in that context about Apple agreeing not to 3 sell or promote QuickTime for uses that 4 Microsoft was promoting NetShow to fulfill? 5 Answer: Not that I'm aware of. 6 MS. CONLIN: This would be a good 7 time, Your Honor. 8 THE COURT: Very well. Take a 9 10-minute recess. 10 Remember the admonition previously 11 given. 12 Thank you. 13 All rise. 14 (A recess was taken from 1:16 p.m. 15 to 1:32 p.m.) 16 (The following record was made out of 17 the presence of the jury.) 18 THE COURT: Ms. Nelles, you had an 19 issue before the jury is brought back. 20 MS. NELLES: Yes, Your Honor, very 21 briefly. 22 Earlier in the testimony this 23 afternoon, there was a series of Q and A's, the 24 substance of which had to do with calling APIs, 25 Microsoft APIs from Java, the very last 5814 1 question and answer in that Q and A had been 2 designated by the Plaintiffs as Plaintiffs have 3 said they've designated essentially the 4 entirety of this transcript, but it actually 5 wasn't played by the Plaintiffs, and I just -- 6 I don't know if it was an accident or 7 intentional, but I want to be clear that with 8 respect to any designated portions of the 9 questioning on a substantive topic in this 10 deposition, to the extent Plaintiffs have 11 determined at the last minute not to play them, 12 Microsoft has cross designated the remainder of 13 those Q and A's and expect them to be played 14 throughout remainder of this testimony. 15 THE COURT: Was this one in particular 16 you crossed -- or you didn't need to? 17 MS. NELLES: It was given to us as 18 designated so there was no necessity for us to 19 cross-designate. But we do expect that 20 everything that they have designated will be 21 played, and if it's not, we cross-designate it 22 now and ask that it be played. 23 MS. CONLIN: And your complaint is 24 with respect to page 417? 25 MS. NELLES: Yes. 5815 1 MS. CONLIN: And you say line 9 to 25, 2 but on my play list I have on page 417, lines 1 3 through 14 and line 25. 4 I don't know what appears between 5 those lines, but my guess at this point, though 6 I've tried to find a definitive answer, is that 7 Microsoft, in fact, did object to that or in 8 some fashion it was eliminated. 9 I will check into it, Your Honor, and 10 report back to the Court tomorrow. 11 I'm not in a position to know right at 12 this moment why those lines were not played 13 today. If there's a mistake, we will certainly 14 endeavor to correct it. 15 THE COURT: Okay. 16 So I can rest assured that any 17 designated portions will be played? 18 MS. CONLIN: Your Honor, we did, in 19 fact, designate the entire thing. 20 The only things that we have 21 eliminated, to the best of my knowledge, are 22 those to which Microsoft objected, not to those 23 -- and colloquy between the attorneys. Those 24 are the two things as far as I am aware that we 25 have eliminated in any way. 5816 1 MS. NELLES: That's not correct, but I 2 very much would appreciate if Ms. Conlin would 3 check into it this evening. 4 THE COURT: What's not correct? 5 MS. NELLES: The material here was on 6 their designated play list, and it came to us 7 at 3:30 a.m. last Friday. It was not played. 8 THE COURT: If it's on the list and 9 should have been played, then it will be 10 played. 11 MS. NELLES: Thank you, Your Honor. 12 THE COURT: There's a question from a 13 juror. 14 I'll read it. Then we'll give you a 15 copy. 16 Your Honor, I realize you may not be 17 able to answer this question, but if you can, I 18 would appreciate an answer. 19 Issue Number 1. Question: If a 20 witness, parenthesis, expert or nonexpert, is 21 not answering questions, can you make a 22 judgment for a question to be answered? 23 Thank you. Juror Number 10. 24 Issue 2. If people testify before 25 they leave the stand, what is the process if we 5817 1 have a question? To hold a paper up so you see 2 it? Please explain before the first witness 3 will testify in this courtroom. 4 Thank you. 5 I'll be happy to tell them at the end 6 of any direct or cross-examination if they have 7 questions, then, I'll ask them to give me a 8 paper. 9 MS. CONLIN: As to the first question, 10 Your Honor, I don't see how you can -- I'm not 11 exactly sure what the question is, but -- 12 THE COURT: I'm not sure either. 13 MS. CONLIN: I don't see how you can 14 answer that, but the second question, we should 15 be able to provide some answer to. 16 MR. TULCHIN: We agree that there's 17 nothing to be said in response to the first 18 question. We shouldn't say anything. 19 THE COURT: Okay. 20 So do you want me to just say I can't 21 answer the question? 22 MS. CONLIN: I think so, Your Honor. 23 MR. TULCHIN: Yes, Your Honor. 24 Perhaps the way to say it is -- 25 THE COURT: I don't understand. 5818 1 MS. CONLIN: We don't have a clue. 2 MR. TULCHIN: The Court cannot now 3 answer Question Number 1. 4 MS. CONLIN: And will answer Question 5 Number 2 before the first witness comes. 6 THE COURT: Okay. 7 (The following record was made in the 8 presence of the jury.) 9 THE COURT: Everyone else may be 10 seated. 11 Sorry for the delay. We took up a 12 couple matters, plus a question from a juror. 13 A juror asked a question, and as to 14 your first question, the Court cannot answer it 15 at this time. 16 As to the second question, when people 17 are testifying on the stand, after direct and 18 cross-examination, I will ask the jurors if 19 there's any questions in writing they wish to 20 present for review by the Court to see if they 21 can be questioned. Just give them to the court 22 attendant. We'll review them with the 23 attorneys and decide if they can be, according 24 to the rules of evidence, be asked. Okay? 25 (Whereupon, the following video 5819 1 resumed playing to the jury.) 2 Question: Insofar as you're aware, 3 did Microsoft representatives tell Apple 4 representatives that if Apple would agree not 5 to sell or promote QuickTime for uses for which 6 Microsoft offered NetShow, that Microsoft would 7 help Apple in other areas? 8 Answer: Well, the Quick -- as far as 9 I know, the QuickTime runtime is free. So when 10 you say sell, I don't -- I'm not sure what you 11 mean there. 12 Question: I think I said sell or 13 promote, I certainly meant to. 14 But I will use the word distribute if 15 that will help. 16 Answer: I think there was a technical 17 discussion about whether a common runtime was 18 achievable, which would have enhanced their 19 QuickTime goals. 20 Question: When you say a common 21 runtime, would you explain what you mean by 22 that? 23 Answer: I mean that the Windows media 24 player runtime would combine technology from 25 them and from us that met all of their goals 5820 1 for QuickTime. 2 Question: And so there would be a 3 Windows media player that would be distributed, 4 and Apple would stop distributing QuickTime for 5 purposes for which the Windows media player was 6 distributed. Is that what you're saying? 7 Answer: No, they wouldn't have to 8 stop anything. There would just be a new 9 runtime that might incorporate some of their 10 technology and help them with their QuickTime 11 goals. 12 Question: Well, when you say there 13 would be a new program that would incorporate 14 or might incorporate some of their technology, 15 would that result in them stopping the 16 distribution of their existing QuickTime 17 technology? 18 Answer: There's no reason it would 19 need to. 20 Question: Was that part of the 21 discussions? 22 Answer: I don't think so. But as I 23 told you, I wasn't part of any of those 24 discussions. 25 Question: Were you aware of those 5821 1 discussions while they were going on? 2 Answer: I knew that Apple had a -- 3 had the QuickTime runtime for Windows. And 4 there was always a question of whether we could 5 create a Windows runtime that combined what 6 their goals were there and what they had done 7 well there for the work we were doing. 8 And I know we talked to Apple about 9 whether we could help each other in an effort 10 like that. 11 Question: When you talk about helping 12 each other, would that result in a single 13 product that would then be distributed in place 14 of both QuickTime and NetShow? 15 Answer: No. People could still 16 distribute their old things. But if you 17 created a new thing that's better, some people 18 might use it. 19 Question: Well, was the purpose of 20 creating the new Windows media player that you 21 referred to to obsolete QuickTime? 22 Answer: Whatever functionality 23 QuickTime had previously would be unaffected by 24 any such effort. 25 Question: That really wasn't my 5822 1 question, Mr. Gates. 2 Maybe I can state it more clearly. 3 Did Microsoft try to convince Apple to 4 take actions which would have resulted in Apple 5 no longer distributing QuickTime to people to 6 whom Microsoft was distributing NetShow or a 7 successor Microsoft product? 8 Answer: I'm not aware of anything 9 that would have stopped them from distributing 10 the QuickTime they had, but it was possible we 11 could come up with something that would be 12 helpful to both companies in terms of a product 13 that took some of their technology and ours and 14 was better for users. 15 Question: Did Microsoft offer to have 16 Apple continue to offer a multimedia player for 17 the Mac platform and to assist Apple in that if 18 Apple would agree not to distribute that 19 multimedia player for the Windows platform? 20 Answer: As I said, I don't think 21 there was any discussions about not 22 distributing some old thing, but rather a 23 question that was could something new be 24 created, which would be better for both 25 companies. 5823 1 Question: Was the idea that once this 2 new thing was created, the old thing that Apple 3 was distributing would no longer be distributed 4 by Apple? 5 Answer: As I said, I don't think that 6 was part of the discussion. 7 Question: Have you ever been told 8 anything or have you ever read anything about 9 any contentions that Apple may or may not make 10 concerning these discussions? 11 Answer: No. 12 Question: Are you aware of any 13 assertions by Apple representatives that 14 Microsoft representatives tried to get them to 15 agree to divide the market? 16 Answer: No. 17 Question: No one's ever told you 18 that; is that your testimony? 19 Answer: That's right. 20 Question: And you've never heard that 21 from any source? 22 Answer: That's right. 23 Question: Do I take it from what you 24 said yesterday that if, in fact, Microsoft 25 representatives had attempted to get Apple 5824 1 representatives to participate in a market 2 division, that would be contrary to Microsoft 3 policy? 4 Answer: That's right. 5 Question: And I take it that if you 6 found out that people had done that contrary to 7 Microsoft's policy, they would be appropriately 8 dealt with? 9 Answer: Yes. 10 Question: Are you a regular reader of 11 the Wall Street Journal? 12 Answer: Some days I read the Wall 13 Street Journal. 14 Question: Are you aware of a Wall 15 Street Journal article that discusses 16 assertions by Apple concerning alleged efforts 17 by Microsoft to get Apple to agree to divide 18 markets? 19 Answer: No. 20 Question: Let me ask you to go to a 21 different issue of market division or alleged 22 market division. 23 But before I do that, let me just 24 refer you to a Wall Street Journal article of 25 July 23, 1998, entitled U.S. Probing 5825 1 Microsoft's Multimedia Role. 2 Does that refresh your recollection as 3 to whether you ever saw a -- a Wall Street 4 Journal article about alleged market division 5 attempts between Microsoft and Apple? 6 MR. HEINER: Do you want to show us 7 the article? 8 MR. BOIES: I have no objection to 9 showing it. And I have no objection to marking 10 it. 11 MR. HEINER: I don't care if it's 12 marked or not. 13 MR. BOIES: My purpose is just to try 14 to refresh his recollection, to see whether he 15 recalls having ever seen this. 16 Answer: No. 17 Question: Okay. 18 In that case, let me show you a 19 document marked as Government Exhibit 375. 20 The second item on the first page is 21 an E-mail message from you to Jim Allchin and 22 others dated October 12, 1997. 23 Did you send this E-mail October 12, 24 1997? 25 Answer: I don't remember it, but I 5826 1 have no reason to doubt that I did. 2 Question: In the first paragraph, you 3 say, quote, I have a critical meeting with 4 Intel a week from Wednesday. I want to 5 convince them that they need to stay away from 6 Oracle NCs and work more closely with 7 Microsoft, closed quote. 8 Do you see that? 9 Answer: Uh-huh. 10 Question: Did you have that meeting? 11 Answer: I had a meeting. 12 Question: Do you recall having that 13 meeting? 14 Answer: I don't know what you mean, 15 that meeting. 16 Question: You say, I have a critical 17 meeting with Intel a week from Wednesday. Did 18 you have that meeting? 19 Answer: I feel sure I had a meeting 20 with Intel after this piece of E-mail was sent. 21 Question: In October of 1997? 22 Answer: Could have been November. 23 You'd have to -- let's see. No. October. 24 Question: Let me ask you to look at 25 the last paragraph under the heading, Sun byte 5827 1 codes are bad for them. 2 And you say, quote, I want them to 3 understand that helping NCs and Java will push 4 us to do Windows and other software in Sun byte 5 codes even if we don't rewrite them in Java, 6 closed quote. 7 Do you see that? 8 Answer: Uh-huh. 9 Question: When you say I want them to 10 understand, are you referring to Intel? 11 Answer: I think so. 12 Question: Did Microsoft make any 13 effort to convince Intel not to help Sun and 14 Java? 15 Answer: Not that I know of. 16 Question: Did you or anyone at 17 Microsoft attempt to convince Intel not to 18 engage in any software activity? 19 Answer: No -- 20 Question: Did you or to your 21 knowledge anyone at Microsoft try to convince 22 Intel that it should not engage in any software 23 activity unless Microsoft was involved in that 24 activity? 25 Answer: I'm sure we pointed out 5828 1 sometimes how sometimes a lack of 2 communications between the two companies on 3 various subjects including software development 4 led to unfortunate unreliability and mismatch, 5 which led to bad customer experiences. 6 Question: And what did that lead you 7 to ask Intel to do? 8 Answer: Oh, in general, to see if we 9 couldn't do a better job communicating with 10 each other so that people would have better 11 experiences using the PC. 12 Question: Did you tell or did anyone, 13 insofar as you were aware, from Microsoft tell 14 Intel representatives that you did not want 15 Intel's software engineers interfering with 16 Microsoft's existing domination of the software 17 side of the PC industry? 18 Answer: No. 19 Question: Are you aware of an Intel 20 operation referred to as the Intel architecture 21 labs? 22 Answer: Yes. 23 Question: Did you tell Intel chief 24 executive officer Andy Grove that you believed 25 that Intel should shut down its Intel 5829 1 architecture labs? 2 Answer: No. 3 Question: What did you understand the 4 Intel architecture labs to be doing? 5 Answer: I can't claim to have a lot 6 of expertise on the broad set of things the 7 Intel architecture labs was doing. 8 Question: What did you know the Intel 9 architecture labs was doing? 10 Answer: Well, they were doing some 11 plumbing software to try to get some things to 12 run on Windows 3.1 at one point. That's one 13 thing I know they were doing. But in terms of 14 their breadth of activities, I'm -- the most of 15 it I wouldn't have any familiarity with. 16 Question: Did you believe that there 17 was anything about what Intel was doing in the 18 Intel architecture labs that was inconsistent 19 with Microsoft's interests? 20 Answer: Well, the fact that their 21 software didn't run with Windows 95 and would 22 break if the user wanted to move up to Windows 23 95 was a subject of concern and discussion for 24 us related to an overall set of projects that 25 were sometimes called NSP, although that term 5830 1 had many meanings. 2 Question: What does NSP stand for? 3 Answer: Sometimes it means native 4 signal processing. 5 Question: And how did what the Intel 6 architecture labs was doing relate to NSP? 7 Answer: That was the plumbing. 8 Question: For NSP? 9 Answer: I believe so. 10 Question: Did you tell Intel CEO, 11 Mr. Grove, that you believed that what Intel 12 was doing in the Intel architecture labs was 13 contrary to Microsoft's interests? 14 Answer: In a broad sense, no. 15 In terms of some specific things that 16 broke software for users, I did evidence that 17 concern. 18 Question: And you did so personally? 19 Answer: Personally and inpersonally. 20 Question: Did you ask Mr. Grove to 21 cancel the Intel architecture labs' work? 22 Answer: No. 23 Question: Did you or, insofar as 24 you're aware, anyone else at Microsoft tell 25 people at Intel that they should leave the 5831 1 software side of the PC business entirely to 2 Microsoft? 3 Answer: We were having a hard time 4 coordinating our work with Intel, and we 5 thought the quality of some of their work was 6 very low as well as not working with any of our 7 new Windows work. 8 We may have suggested at some point 9 that the net contribution of their software 10 activities could even be viewed to be negative. 11 Question: Did you or insofar as you 12 are aware or anyone else at Microsoft tell 13 representatives of Intel that their software 14 activities were inconsistent with cooperation 15 between Intel and Microsoft? 16 Answer: The specific work they did 17 that completely broke our work, I'm sure I 18 indicated I didn't think that was a good idea 19 for either company. 20 Question: Other than the specific 21 software that would not work on Windows 95 that 22 Intel was working on, did you or, insofar as 23 you are aware, anyone else at Microsoft tell 24 Intel representatives that the software work 25 that Intel was doing was inconsistent with 5832 1 cooperation between Intel and Microsoft? 2 Answer: Well, there's some other 3 things they did that created incompatibilities. 4 Question: Incompatibilities between 5 what and what? 6 Answer: Between their software and 7 Windows that was intended to run on Windows, 8 but created incompatibilities. 9 Question: And did you tell them that 10 that software also was not consistent with 11 cooperation between Microsoft and Intel? 12 Answer: I doubt I used those words. 13 I suggested that it wasn't helpful to any of 14 their goals or our goals to have software that 15 had incompatibilities and was low quality and 16 broke. 17 Question: Did you tell Intel 18 representatives or did, insofar as you're 19 aware, any Microsoft employee tell Intel 20 representatives that you were concerned about 21 Intel support for Netscape? 22 Answer: I don't remember that. 23 Question: Do you remember telling 24 Intel representatives that you were concerned 25 that Intel support for Netscape could allow 5833 1 Netscape to grow into a de facto standard? 2 Answer: No. 3 Question: Did you tell 4 representatives of Intel that you were 5 concerned that Intel's use of Netscape could 6 set up a positive feedback loop for Netscape 7 that would allow it to grow into a de facto 8 standard? 9 Answer: What do you mean Intel's use 10 of Netscape? 11 Question: I'm asking whether you told 12 this to Intel. If you didn't -- 13 Answer: Given that I don't know what 14 you mean by Intel's use of Netscape, if you're 15 not going to clarify what you mean by that -- 16 Question: All I'm asking is whether 17 you told them something, Mr. Gates. And if you 18 tell me, I didn't tell them that. Not only 19 would I not tell them that because I don't 20 understand what it could be, that's an answer. 21 But what I'm asking you is whether you 22 told them that in words or substance. And if 23 you didn't, you didn't. Or if you say you 24 didn't, you say you didn't. But all I want to 25 do is get your answer. 5834 1 Well, let me try to approach it this 2 way. I wouldn't have thought the term used is 3 quite so ambiguous. 4 But, Mr. Gates, did you tell 5 representatives of Intel that Intel using 6 Netscape in a Windows environment would not be 7 a problem so long as Intel did not assist in 8 setting up a positive feedback loop for 9 Netscape that allowed it to grow into a de 10 facto standard? Did you say that or write that 11 or communicate that, those words or words that 12 you recognize to mean the same thing? 13 Answer: I'm still confused about what 14 you mean Intel's using something. Are you 15 talking about like in their internal IT 16 systems? What's this about? 17 Question: Mr. Gates, either you told 18 that to Netscape or you didn't. If you tell me 19 you didn't tell that to Netscape, I'll go on to 20 the next question. 21 Answer: I did not. 22 Question: Okay. 23 MR. HEINER: Let's get one point 24 clear. When the witness has some confusion on 25 a question, should he or should he not bring 5835 1 that to your attention? 2 MR. BOIES: I think the witness should 3 tell me that I don't understand your question. 4 MS. NELLES: Objection, Your Honor. 5 THE COURT: Stop it, please. 6 MS. NELLES: Your Honor, this is not 7 designated -- this is colloquy between counsel. 8 This should not be in. 9 MS. CONLIN: It's going to take just a 10 minute, Your Honor. 11 MS. NELLES: Thank you. 12 (Whereupon, the following video 13 resumed playing to the jury.) 14 Question: Did you, Mr. Gates, 15 personally ever express concern to Mr. Grove 16 that Intel's software work was beginning to 17 overlap with Microsoft's software work? 18 Answer: Only in the sense that the 19 low quality and incompatibilities were 20 inconsistent with any goals that Intel might 21 have had in doing that work. 22 Question: Why was that a concern? 23 Answer: Because Intel was wasting its 24 money by writing low quality software that 25 created incompatibilities for users, and those 5836 1 negative experiences weren't helpful for any 2 goal that Intel had. 3 Question: Were they harmful to any 4 goal that Microsoft had? 5 Answer: Only in the sense of hurting 6 PC popularity by creating negative user 7 experiences. 8 Question: Is it your testimony that 9 your only concern with what Intel was doing in 10 the software area was a concern to avoid 11 negative user experiences? 12 Answer: That's right. Low quality 13 and incompatibilities. 14 Question: Which, according to you, 15 would lead to negative users experiences, 16 correct? 17 Answer: That's right. 18 Question: Did you or, insofar as you 19 are aware, anybody at Microsoft ever tell Intel 20 representatives in words or in substance that 21 they should stick to hardware and leave the 22 software to Microsoft? 23 Answer: I'm sure there were times 24 when we were frustrated about the quality and 25 incompatibility problems created by their 5837 1 software where someone might have expressed 2 that sentiment in an extreme feeling about how 3 tough it had been for Intel to do quality work 4 that would have advanced any Intel goal. 5 Question: Were you aware of any work 6 that Intel was doing relating to Internet 7 software development? 8 Answer: I can't think of any. 9 Question: Did you ever express any 10 concern to anyone at Intel or, to your 11 knowledge, did anyone at Microsoft ever express 12 any concern to anyone at Intel concerning 13 Intel's Internet software work, if any? 14 Answer: I don't think Intel ever did 15 any Internet software work. 16 Question: And if they did, I take it 17 it's your testimony no one ever told you about 18 it? 19 Answer: That's right. 20 Question: Did you or, to your 21 knowledge, anyone at Microsoft express concern 22 to Intel about the success of Java or what you 23 have referred to in this deposition as Java 24 runtimes? 25 Answer: From time to time we'd have 5838 1 general discussions with Intel about things 2 going on in the industry. And I'm sure our 3 views of the Java runtime competition may have 4 come up in some of these discussions. 5 Question: In those discussions, did 6 you or others from Microsoft express concern 7 about Java and Java runtime's popularity to 8 Intel representatives? 9 Answer: I think it's likely in those 10 general discussions. We talked about some of 11 the opportunity and competitive things going 12 on, including our view of what was going on in 13 Java runtime. 14 Question: Did you tell 15 representatives of Intel or, to your knowledge, 16 anyone from Microsoft tell representatives of 17 Intel that in Microsoft's opinion the wide 18 distribution of Java and Java runtimes were 19 incompatible with interests of both Intel and 20 Microsoft? 21 Answer: Actually, there -- there's 22 one aspect of Java that could have an effect on 23 Intel and would have no effect on Microsoft. 24 So it's completely orthogonal. And I pointed 25 out to them what that was. 5839 1 And so I did think there was one thing 2 they ought to think about in terms of where the 3 world of software development was going, but it 4 wasn't an issue that related to Microsoft. 5 Question: Irrespective of what you 6 said about that particular issue, did you or 7 others from Microsoft tell Intel in words or in 8 substance that as a general matter, general 9 conclusion, the popularity of Java and Java 10 runtimes was not in your joint interest? And 11 joint interest, I mean Microsoft and Intel. 12 Answer: No. There was nothing about 13 it that related to any joint interest. There 14 was one thing about it that related to some of 15 Intel's interests and there were other things 16 about it that related to some of Microsoft's 17 interests, but there's no overlap between those 18 two. 19 Question: Let me put the question 20 this way: Did you or, to your knowledge, 21 others from Microsoft tell Intel that for 22 whatever reasons you believed that the 23 widespread distribution of Java and Java 24 runtimes was inconsistent with both interests 25 of Intel and interests of Microsoft? 5840 1 Answer: Well, it's like you're trying 2 to rephrase what I said in a more inaccurate 3 way. I told you there's an aspect of it that I 4 thought they should think about that related to 5 them only, that's the byte code piece. 6 And then there's an aspect of it that 7 relates to us only. So there's no end there, 8 there's just a piece that might have been of 9 interest to them that I articulated, and then 10 there's the part that relates strictly to us. 11 Question: Let me take it in two 12 pieces. 13 Did you tell Intel representatives 14 that you believed that there were reasons why 15 the widespread distribution of Java and Java 16 runtimes were not in Intel's interests? 17 Answer: Not in that general sense. I 18 pointed out the very specific aspect of it, the 19 byte code aspect, that I thought they ought to 20 think about that had no effect on us. 21 Question: Did you tell Intel 22 representatives that there were things about 23 the wide distribution of Java and Java runtimes 24 that Microsoft believed was not in Microsoft's 25 interests? 5841 1 Answer: It's likely that in the 2 general discussion the notion of some of the 3 new competitive activities, including the Java 4 runtime issues, would have come up in some 5 discussions with Intel, but not -- not related 6 to anything they were doing. 7 Question: Did you ask Intel to keep 8 you apprised of what software work Intel was 9 doing? 10 Answer: I think I made that request 11 in vain on several occasions. Nothing ever 12 came of it. 13 Question: Is it your testimony that 14 they refused to keep you apprised of the 15 software work they were doing? 16 Answer: No. I just said to them that 17 if they would -- whatever software work they 18 were doing that was intended to help Windows, 19 they should talk to us about it early on if 20 they wanted to have the highest probability 21 that it would, in fact, achieve that goal. 22 And, unfortunately, we never achieved 23 that result; that is, they would do things 24 related to Windows that without talking to us 25 in advance, and then once they had done the 5842 1 work, there would be some incompatibilities 2 between what they had done and Windows itself. 3 Question: When is the last time that 4 you asked Intel to keep you apprised of what 5 software work they were doing? 6 Answer: I'm not sure. 7 Question: Approximately when? 8 Answer: I don't know. 9 Question: Was it within the last 10 year? 11 Answer: I don't know. 12 Question: Was it within the last two 13 years? 14 Answer: I honestly don't know. 15 Question: Was it within the last 16 three years? 17 Answer: There's probably one instance 18 where I asked them to tell us about things they 19 were doing related to Windows. 20 Question: Did you or others, to your 21 knowledge, from Microsoft tell Intel that if 22 Intel began to compete with Microsoft, 23 Microsoft would be forced to begin to compete 24 with Intel? 25 Answer: No. 5843 1 Question: Not at all, sir; never said 2 that in words or in substance? 3 Answer: No. 4 Question: To your knowledge, did 5 anyone else from Microsoft ever say that? 6 Answer: I'm not aware of anybody 7 saying that. 8 Question: If anybody had said that, 9 would you consider that to be inconsistent with 10 company policy. 11 Answer: I'm confused. Intel and 12 Microsoft are not in the same businesses, so 13 there's no policy about one of our people 14 suggesting that we're going to go into the chip 15 business. 16 Question: Was it part of what you 17 wanted to accomplish, Mr. Gates, to be to keep 18 Intel and Microsoft in separate businesses? 19 Answer: No. 20 Question: Did you ever take any 21 action intended to accomplish that? 22 Answer: No. 23 Question: Did you or, to your 24 knowledge, anyone from Microsoft ever tell 25 people at Intel that Microsoft would hold up 5844 1 support for Intel's microprocessors if Intel 2 didn't cooperate with Microsoft in areas that 3 Microsoft wanted Intel's cooperation in? 4 A. When we saw Intel doing the low 5 quality work that was creating 6 incompatibilities in Windows that served 7 absolutely no Intel goal, we suggested to Intel 8 that that should change. 9 And it became frustrating to us 10 because it was a long period of time where they 11 kept doing work that we thought, although it 12 was intended to be positive in the Windows 13 environment, it was actually negative. 14 And we did point out the irony of how 15 while we seemed to communicate with them on 16 microprocessor issues and yet they seemed on 17 the areas where they were trying to enhance 18 Windows that the communication worked very 19 poorly. 20 Question: Did you or others on behalf 21 of Microsoft tell Intel that Microsoft would 22 hold up support for Intel's microprocessors if 23 Intel did not cooperate with Microsoft? 24 Answer: No. 25 Question: No one ever told Intel 5845 1 that, to your knowledge? 2 Answer: That's right. 3 Question: Let me see if I can refresh 4 your recollection. 5 Did you or anyone from Microsoft ever 6 tell Intel representatives that Microsoft would 7 hold up support for Intel's microprocessors if 8 Intel didn't cooperate with Microsoft on the 9 Internet? 10 Answer: No. 11 Question: Did you or anyone from 12 Microsoft ever tell representatives of Intel 13 that Intel would not cooperate -- that if Intel 14 would not cooperate with Microsoft on 15 communications programs, Microsoft would hold 16 up support for Intel's microprocessors? 17 Answer: No. 18 Question: Did you or to your 19 knowledge anyone from Microsoft ever tell Intel 20 that you wanted Intel to reduce its support of 21 Netscape? 22 Answer: It's very likely that our 23 sales force that calls on Intel as a software 24 customer talked to them about their website and 25 their browsers and they may have tried to 5846 1 convince them to use our browser in terms of 2 their internal efforts. It's kind of a knit, 3 but I think it's possible. 4 Question: Did you, Mr. Gates, ever 5 yourself try to get Intel to reduce its support 6 of Netscape? 7 Answer: I'm not aware of any work 8 that Intel did in supporting Netscape. 9 They may have used their browser 10 internally or one of their server things, but 11 that's -- that's not really support. 12 So I'm not sure of any support they 13 were giving to Netscape. 14 Question: You may mean that to answer 15 my question, but I want to be clear. 16 It is your testimony that you're not 17 aware of any instance where you asked anybody 18 at Intel to reduce the support that Intel was 19 providing to Netscape; is that your testimony? 20 Answer: No. I may have asked -- I 21 may have -- and I don't remember, but I may 22 have talked to them about their internal 23 browser use. I don't think so, but I may have. 24 And I may have talked to them about their web 25 servers and -- 5847 1 MS. CONLIN: Well, Your Honor, this is 2 a good time to stop -- let me just read into 3 the record the rest of that. 4 MS. CONLIN (reading): 5 Answer: I don't think so, but I may 6 have. And I may have talked to them about 7 their web servers and what they were using, but 8 I don't think so. 9 MS. CONLIN: That's the end of that 10 subject matter, Your Honor, so this would be a 11 good time to stop. 12 THE COURT: Very well. 13 Ladies and Gentlemen of the jury, time 14 to take your break for the day. 15 Remember the admonition previously 16 given. We will see you tomorrow at 8:30 a.m. 17 Have a good evening. You can leave 18 your notebooks here. They will be collected 19 and locked up. 20 All rise. 21 (A recess was taken from 2:30 p.m. 22 to 2:38 p.m.) 23 (The following record was made out of 24 the presence of the jury.) 25 THE COURT: Whose testimony are we 5848 1 talking about? 2 MR. CASHMAN: Today, Your Honor, we 3 are going to be talking about testimony -- some 4 testimony and some exhibits relating to the 5 deposition -- the prior deposition of Mark 6 Chestnut, a Microsoft employee. 7 And if we finish that, which we hope 8 we can, then we'll be talking about Brad 9 Silverberg, who is another Microsoft employee. 10 THE COURT: The court reporters are 11 very excited about Mr. Chestnut since he talks 12 too slowly. In that little excerpt, wasn't he 13 talking fast? 14 MR. TUGGY: He talks fast. 15 THE COURT: They're not looking 16 forward to it. 17 MR. TUGGY: I wonder if there's a way 18 technologically to slow it down. 19 MR. GRALEWSKI: That's why we'll have 20 the transcript to you. 21 THE COURT: Okay. 22 MR. CASHMAN: Okay. So Michael 23 Cashman for the Plaintiffs, and I will address 24 the Mark Chestnut issues. 25 THE COURT: Okay. 5849 1 MR. CASHMAN: There are two portions 2 of testimony, Your Honor, I'm going to identify 3 them for the record, and then I'm going to hand 4 some materials up to the Court. 5 But the two portions of testimony to 6 which Microsoft objects on hearsay grounds are 7 181, 11, to 181, 16, and 192, 20, to 192, 23. 8 In addition, the Plaintiffs are going 9 to be seeking admission generally for 10 nonhearsay uses as I will describe in more 11 detail of four exhibits that are related to 12 those snippets of testimony and to 13 Mr. Chestnut's testimony in general. 14 They are Plaintiffs' Exhibit 5180 15 which Plaintiffs will seek admission for a 16 nonhearsay use. 17 Plaintiffs' Exhibit 429, which has 18 some embedded hearsay in it, and the Plaintiffs 19 will seek to have that embedded hearsay 20 admitted unredacted for a nonhearsay use. 21 Then there's Plaintiffs' Exhibit 276, 22 which is another internal Microsoft business 23 record that has an embedded hearsay snippet in 24 it, and the Plaintiffs seek admission of that 25 embedded hearsay unredacted for a nonhearsay 5850 1 use. 2 And then lastly, we'll talk about 3 Plaintiffs' Exhibit 5131, which the Plaintiffs 4 seek admission for a nonhearsay use. 5 And I'm going to hand some materials 6 up to the Court, if I may. 7 THE COURT: Sure. 8 MR. CASHMAN: First, I will hand up 9 copies of the pertinent exhibits that I 10 mentioned. 11 THE COURT: Okay. 12 MR. CASHMAN: I'm handing the Court 13 Plaintiffs' Exhibit 276, Plaintiffs' Exhibit 14 5180, Plaintiffs' Exhibit 429, and Plaintiffs' 15 Exhibit 5131. 16 THE COURT: All right. 17 MR. CASHMAN: And then also for the 18 Court, I have a copy of the deposition 19 testimony of Mr. Chestnut that the Plaintiffs 20 intend to read into the record, and then the 21 portions to which Microsoft has asserted 22 objections I have highlighted for the Court's 23 convenience and attached a blue tag there so 24 that you can easily locate and identify them. 25 THE COURT: Very good. Thank you very 5851 1 much. 2 MR. CASHMAN: So with those 3 preliminaries, I would like to speak first 4 about Plaintiffs' Exhibit 5180 and the related 5 testimony to that exhibit, which is at 181, 11, 6 to 181, 16. 7 That's at page 32 of the transcript 8 materials that I handed up to the Court. 9 THE COURT: I am there. 10 MR. CASHMAN: This is a question 11 concerning an article, Plaintiffs' Exhibit 12 5180, written by Paul Sherer, titled Microsoft 13 outlines DS-DOS 5.0 to ward off DR-DOS. 14 The reason that this testimony is 15 properly admissible is that this is 16 cross-examination of Mr. Chestnut primarily on 17 his credibility, bias, and motives. 18 And that is, here Mr. Chestnut is 19 asked some questions about Exhibit 5180, and 20 previously he was asked whether he knew that 21 this article was going to be published by PC 22 Week and whether he had spoken with anybody at 23 PC Week about its investigation into the 24 particulars. 25 And for that foundation, Your Honor, 5852 1 you can look first at Plaintiffs' Exhibit 429, 2 which I handed up to the Court, and Plaintiffs' 3 Exhibit 429 is a series of E-mails, and the 4 pertinent E-mail for the Court's attention is 5 -- it starts at the bottom of the first page. 6 It's an E-mail from Mr. Chestnut, Mark 7 Chestnut, dated October 18th to some people, 8 including Brad Silverberg. These are internal 9 Microsoft people. 10 And you can see there the subject is 11 described as Paul Sherer on Exhibit 429. 12 And the testimony that Mr. Chestnut 13 provides is that Paul Sherer, as described in 14 this E-mail, is the same Paul Sherer that is 15 identified as the author of Plaintiffs' Exhibit 16 5180. 17 And you can see that the PC Week date 18 of publication of Mr. Sherer's article is 19 October 22, 1990. 20 So Plaintiffs' Exhibit 429 shows that 21 Mr. Chestnut, in fact, had a conversation with 22 Mr. -- with Mr. Sherer prior to the publication 23 of that article. 24 And you can further see from the 25 context of the E-mail from Mr. Chestnut to 5853 1 Mr. Silverberg and others -- this is 2 Plaintiffs' Exhibit 429 -- that it's clear 3 Chestnut discussed with Mr. Sherer the contents 4 of the article. 5 And in particular, probably of 6 greatest note, are the last two paragraphs of 7 Mr. Chestnut's E-mail to Mr. Silverberg and 8 others. 9 On the second page of 429 in which he 10 says, if we really wanted to preempt DR-DOS 11 sales, we'd be fully divulging the futures of 12 DR-DOS 5, et cetera, and he continues. But 13 that is the subject of Mr. Sherer's article in 14 PC Week. 15 And in the global sense, what this 16 article in PC Week concerns is Microsoft's 17 efforts to conduct a PR campaign against 18 DR-DOS. 19 And there is an Exhibit 276, which I 20 handed up to the Court, which is a May 2, 1990 21 memo from Mark Chestnut to a variety of people, 22 and I want to direct the Court's attention for 23 a moment to page MS PCA 1176213. 24 And there you'll see a statement in 25 the first paragraph, quote, on the PR side, we 5854 1 have begun an aggressive leak campaign for 2 MS-DOS 5.0. The goal is to build anticipation 3 for MS-DOS 5.0 and diffuse potential excitement 4 momentum for the DR-DOS 5.0 announcement. 5 At this point, we are telling the 6 press that a major new release from Microsoft 7 is coming this year, which will provide 8 significant memory relief and other important 9 features. 10 This was picked up by major weeklies 11 in the U.S. and was the page 1 story in PC Week 12 on April 30th. See attached. 13 And you can see attached to this memo 14 are some articles which are part of this 15 aggressive leak campaign. 16 What happened, Your Honor, is that 17 DR-DOS came out with its Version 5.0 and 18 Microsoft saw the favorable press that DR-DOS 19 was getting. 20 They decided they had to do something 21 about it, and what they did decide to do was 22 create FUD, as you've heard, and vaporware by 23 announcing that MS-DOS was going to be coming 24 out -- a new version of MS-DOS was going to be 25 coming out even though it had no planned 5855 1 release date. 2 So this is a campaign, as Microsoft 3 calls it their aggressive leak campaign. 4 So you've got the foundation showing 5 that, first, in Plaintiffs' Exhibit 276, 6 Mr. Chestnut describes this campaign and 7 attaches some article showing that this 8 campaign is going to happen. 9 Then eventually PC Week started to 10 learn that Microsoft was leaking these details. 11 That's what the article and Plaintiffs' Exhibit 12 5180 is about. 13 Microsoft found out about this article 14 that Mr. Sherer was going to publish in October 15 and Mr. Chestnut called him to see if they 16 could do something about preventing that 17 publication, and that's discussed in the E-mail 18 of Mr. Chestnut on October 18th. That's 19 Plaintiffs' Exhibit 429. 20 Now, I point all that out in the 21 exhibits because it's pertinent to the 22 testimony because the testimony 181, 11, to 23 181, 16, is examination -- cross-examination of 24 Mr. Chestnut that's directed towards his 25 credibility. 5856 1 Plaintiffs submit that it's evidence 2 of the direct, direct evidence of the leak 3 campaign so it's unrelated to the contents of 4 the statements in 5180. 5 It's designed to address Mr. 6 Chestnut's credibility and direct evidence of 7 the anticompetitive conduct, the leak campaign. 8 The testimony in which Mr. Chestnut 9 states that at first that he was unaware that 10 Plaintiffs' Exhibit 5180 was going to be 11 published is at -- I think that's at 192, 20 -- 12 pardon me, Your Honor. Let me see if I can 13 locate this for you, quickly. 14 THE COURT: That's what you have 15 highlighted. 16 MR. CASHMAN: Pardon me? 17 THE COURT: That's what you have 18 highlighted, if that's what you're referring 19 to, 192, 20. 20 MR. CASHMAN: One second, Your Honor. 21 THE COURT: Okay. 22 MR. CASHMAN: Yes, it's at 192, 22, 23 23 on page 36, I believe. 24 Yes, this is the examination relevant 25 to Plaintiffs' Exhibit 429, which shows that, 5857 1 in fact, Mr. Chestnut did have conversation 2 with Mr. Sherer. 3 And back at 180, line 1 to line 3, 4 which is not highlighted because Microsoft 5 hasn't objected to it, but back at 180, line 1 6 to line 3, Mr. Chestnut is asked if Microsoft 7 was aware in advance of the article, and that's 8 referring to 5180. 9 THE COURT: Where are you looking at 10 now? 11 MR. CASHMAN: This is on page 32. 12 THE COURT: Line? 13 MR. CASHMAN: Line 180, line 1 -- page 14 180, line 1. 15 THE COURT: I got it. 16 MR. CASHMAN: Question: And was 17 Microsoft aware in advance of this article that 18 it was being investigated; correct? 19 And if you look above, what they're 20 talking about is Plaintiffs' Exhibit 5180. 21 And Mr. Chestnut answers on line 3, I 22 don't know that to be true, no. 23 So Mr. Chestnut was denying knowledge 24 when he was shown PX 5180 that PC Week was 25 looking into Microsoft's prerelease 5858 1 announcements. 2 And then at 192, 20, to 192, 23, is 3 when Plaintiffs' Exhibit 429 is used to show 4 that Mr. Chestnut, in fact, did know about 5 Plaintiffs' Exhibit 5180 before it was 6 published because he had the conversation with 7 Mr. Sherer about its contents. 8 So what Plaintiffs' position is then 9 that Plaintiffs' Exhibit 429 and Plaintiffs' 10 Exhibit 5180 -- or let me clarify. 11 Plaintiffs' Exhibit 429, the embedded 12 hearsay statement, and all of Plaintiffs' 13 Exhibit 5180, the PC Week article, are 14 admissible for the nonhearsay purpose of 15 cross-examining Mr. Chestnut on his 16 credibility, his bias, and his motive. 17 THE COURT: When you talk about 18 Plaintiffs' Exhibit 429, it's the last two 19 paragraphs you want in? 20 MR. CASHMAN: The embedded hearsay in 21 Plaintiffs' Exhibit 429 is the first -- 22 THE COURT: First paragraph? 23 MR. CASHMAN: The first two sentences 24 in the E-mail. 25 THE COURT: Okay. 5859 1 MR. CASHMAN: Paul's big unanswered 2 question was why is DOS any different from 3 other products like Excel, et cetera. 4 Microsoft never says anything prior to 5 announce about new releases for any other 6 products. That's the embedded hearsay. 7 So Plaintiffs believe that embedded 8 hearsay should be admitted for the nonhearsay 9 purpose of cross-examination of Mr. Chestnut 10 relative to his credibility, bias, and motive; 11 and in particular, the fact that he wasn't 12 being forthcoming when he first denied having 13 knowledge that PC Week was going to be 14 publishing an article about this issue before 15 it was actually published. 16 The rest of the E-mail on Plaintiffs' 17 Exhibit 429 -- the reason I pointed that out 18 earlier is because it demonstrates that Mr. 19 Chestnut was talking with Mr. Sherer about the 20 substance of what Mr. Sherer later published a 21 couple days later. 22 And the Plaintiffs then request that 23 5180 be admitted unredacted for the nonhearsay 24 purpose of, again, Mr. Chestnut's credibility, 25 bias, and motive and also because just the 5860 1 publication of that article is -- it doesn't 2 matter whether the statements in there are true 3 or not, but the article is direct evidence of 4 Microsoft's anticompetitive conduct, and in 5 particular, its aggressive leak campaign. 6 And turning back, then, to the 7 testimony to which Microsoft objects in 8 particular on 181, 11 to 16, that is -- that 9 question is taken from 5180, and Plaintiffs, 10 again for the reasons that I've stated, that 11 testimony should be permitted because it goes 12 to Mr. Chestnut's credibility, bias, and 13 motive. That's the purpose of that line of 14 questioning, and it's not related to the truth 15 or otherwise of the statements in 5180 itself. 16 It goes to whether -- Mr. Chestnut's 17 credibility and the anticompetitive conduct of 18 the aggressive leak campaign. 19 And then the other snippet of 20 testimony to which Microsoft objects, the 192 21 -- the 192, 20 to 23 is the flip side of that 22 as I've discussed. That's the embedded hearsay 23 in Plaintiffs' Exhibit 429. 24 That is used to show that Mr. Chestnut 25 was not being honest when he said that he 5861 1 didn't know about the publication of that 2 article or the contents of that article in 3 advance. 4 So the two exhibits that I've 5 mentioned, 429 and 5180, and these two snippets 6 of testimony to which Microsoft objects are 7 interrelated and intertwined, and Plaintiffs 8 believe that the Microsoft objections to the 9 testimony should be overruled because it goes 10 to credibility and is direct evidence of the 11 anticompetitive conduct. 12 And Plaintiffs then further believe 13 that these exhibits should be admissible for 14 the non -- for those same nonhearsay purposes. 15 Thank you. 16 And then I'll address the other 17 exhibits after we finish these two and these 18 two snippets of testimony. 19 THE COURT: Very well. 20 MR. TUGGY: May I approach? 21 THE COURT: Mr. Tuggy, yes. 22 MR. TUGGY: I'm handing the Court a 23 rulings chart that I provided to Plaintiffs on 24 this and then also a transcript of the Chestnut 25 deposition. 5862 1 I don't have a copy of what 2 Mr. Cashman provided to you, but I find these 3 easier to work with, and here's a copy to 4 Mr. Cashman. 5 With respect to Mr. Chestnut, we have 6 only 11 lines I think at issue. 7 The first is at page 181 of the 8 deposition. 9 And as you take a look at that page in 10 the transcript I provided the Court, the 11 highlighting in yellow is the Plaintiffs' 12 designation and the highlighting in pink are 13 Microsoft cross designations. That's what 14 those different colors mean. 15 I'd also -- I'm sorry, I would like to 16 approach to provide the Court with a 17 highlighted copy of 5180. 18 THE COURT: Thank you. 19 MR. TUGGY: The highlights that I've 20 provided to the Court are the embedded hearsay 21 objections that Microsoft made back in the 22 Special Master process to this exhibit. 23 As the rulings chart indicates, for 24 Plaintiffs' Exhibit 5180, Microsoft had 25 asserted a hearsay and embedded hearsay 5863 1 objection, the embedded hearsay objection to 2 the highlighted portions. 3 And the Plaintiffs have conceded that 4 objection by not submitting it to the Special 5 Master for ruling. 6 And also on this exhibit, Microsoft 7 asserted a foundation objection, and again the 8 Plaintiffs didn't -- there was no ruling by the 9 Special Master because the Plaintiffs stated 10 they were using this only for a nonhearsay 11 purpose. 12 In the testimony at issue, which is at 13 page 181, lines 11 to 16, the examiner here, 14 who is Plaintiffs' counsel, asks Mr. Chestnut a 15 question, and in the statement of the question, 16 he first quotes a portion of this article 5180, 17 the first paragraph of it. 18 And then he asks a question that while 19 related in subject matter to what is quoted, 20 can stand alone. 21 So what Microsoft has done is not to 22 object to the entire line of testimony about 23 5180, or even the particular question that was 24 asked, but we are objecting to the preamble, 25 which states as if it's true hearsay. 5864 1 And what Microsoft has done by way of 2 its objection is to cause what is presented to 3 the jury to be the question beginning at line 4 17: Do you agree with the assertion that 5 product details were emerging in a steady 6 stream to put the squeeze on DRI? 7 So that would be the question. And 8 then Mr. Chestnut's answer. 9 And the quoted material, which is 10 offering and showing hearsay to the jury for 11 its truth, is not necessary for the question 12 and not appropriate because it's hearsay and 13 the Plaintiffs concede it. 14 The only nonhearsay purpose Plaintiffs 15 suggest for this particular use is that 16 Mr. Chestnut had denied, according to 17 Plaintiffs, knowing that the article was going 18 to be published before it was published, and 19 they want to use the existence of the article 20 to attack the credibility of that statement. 21 Now, the particular lines of that 22 testimony that I've identified have no -- are 23 completely unnecessary for that attack on 24 Mr. Chestnut's credibility. 25 There's a lot of testimony here on 5865 1 this article showing that the article existed. 2 That particular thing is not necessarily for 3 showing that fact. 4 In addition, I think it's worth 5 mentioning that at page 180, lines 12 to 15, 6 Mr. Chestnut clarifies his response. 7 He says, I talked to Paul Sherer 8 before the article. Did I have advanced 9 warning of what exactly he was going to write? 10 No. I don't recall having any such advance 11 warning. 12 That's what he means when he is 13 responding to the question whether he was aware 14 in advance of the article being written that it 15 was going to be written; was that he did not 16 know precisely what was going to be in the 17 article, which, of course, he can't know. He 18 didn't write it. 19 So with respect to page 181, lines 11 20 to 16, Microsoft has asserted a hearsay 21 objection to the article itself, and this 22 testimony is based on that inadmissible aspect 23 of the article and so ought not to be admitted. 24 And Microsoft is allowing the question 25 to be asked of the witness, which is all within 5866 1 the Plaintiffs' designations for this witness. 2 Now, with respect to Plaintiffs' 3 Exhibit 5180, Plaintiffs say that they want to 4 offer this into evidence and have it admitted. 5 A couple of points. One is 6 procedural. 7 In my view, the best way to do the 8 admission of documents such as this is after 9 the videotape has played and the testimony has 10 come in. 11 I was not, frankly, aware that we were 12 going to address the admissibility -- actually, 13 the actual admission of exhibits for the 14 purpose of this particular hearing, but I'm 15 more than willing to argue this one. 16 It just seems to me that there's going 17 to be a whole series of exhibits used in 18 Chestnut, and at the end of the day when the 19 Chestnut deposition is completed, they can be 20 offered into evidence. 21 And I'd be happy to meet and confer 22 with Plaintiffs prior to that event to 23 determine whether there was any issues the 24 Court would have to resolve at that time. 25 But specifically as to the 5867 1 admissibility of 5180, it's clearly hearsay, 2 and there is also quite clearly embedded 3 hearsay which Microsoft has highlighted. 4 And, in fact, there's a great deal of 5 embedded hearsay Microsoft has highlighted that 6 is never referenced in the deposition. 7 For example, the italics portion, 8 which is a statement by the Digital Research 9 president, according to Mr. Sherer. It says, 10 there's no way Microsoft would have been 11 spending anything on DOS if we hadn't brought 12 this product to market. 13 Now, instead of competing with a real 14 product, what they're trying to compete with is 15 a lot of FUD. 16 And Plaintiffs want that to be 17 admitted into evidence and to be available to 18 the jury for what purpose? 19 They have no nonhearsay purpose for 20 that statement being admitted, and that's true 21 with all the embedded hearsay that Microsoft 22 has highlighted in this document. 23 So offering 5180 as a whole to go in 24 is inappropriate. Perhaps to the extent that 25 they want to use this for a nonhearsay purpose 5868 1 to show statements in the article that 2 Microsoft is permitting to be used in the 3 deposition testimony. 4 There are several statements in here 5 that are the subject of testimony we're not 6 objecting to. 7 That could remain in the 5180 to be 8 admitted for a nonhearsay purpose, but major 9 parts of 5180 have to be redacted because 10 they're subject to good objections that 11 Plaintiffs are -- cannot appeal at this point 12 and have no nonhearsay purpose for them and 13 they're highly prejudicial. 14 There's no reason the jury ought to 15 see this purported statement by Dick Williams, 16 which is hearsay within hearsay, and consider 17 it as possibly true. 18 It's highly prejudicial to require 19 Microsoft to ask for a limiting instruction 20 when the Plaintiffs have no use for that 21 statement. It's not mentioned in the 22 deposition or testified to by Mr. Chestnut. 23 So for those reasons, Plaintiffs 24 current offer of Plaintiffs' Exhibit 5180 as a 25 whole for a nonhearsay purpose ought to be 5869 1 rejected because of the outstanding and 2 conceded hearsay and embedded hearsay 3 objections which remain on the document and the 4 lack of a bona fide nonhearsay purpose. 5 With respect to the second set of 6 designations, which is only four lines, it's at 7 page 192, 23, 192, 23, there the question 8 states -- well, actually, it's useful to have 9 Plaintiffs' 429 before you as well. 10 You may recall this is the internal 11 Microsoft E-mail. 12 There is a portion of this exhibit 13 which we state on the rulings chart subject to 14 an embedded hearsay objection which was 15 sustained by the Special Master and which the 16 Plaintiffs did not appeal. So that ruling is 17 final, and the -- but the Special Master made 18 it clear in his ruling that he was not ruling 19 on a nonhearsay use, potential nonhearsay use. 20 The testimony that Microsoft is 21 objecting to is where in the question this 22 embedded hearsay is quoted at lines 20 to 23. 23 The question is: It begins, referring 24 to this Plaintiffs' Exhibit 429, Paul's big 25 unanswered question was, why is DOS any 5870 1 different from other products like Excel, et 2 cetera? Microsoft never says anything prior to 3 announce about new releases for any other 4 products. 5 It's those four lines that Microsoft 6 objects to because in the context of this 7 question, they're being offered to the jury for 8 their truth. 9 And then the next two lines are: 10 Having thought about it, this is how I would 11 answer today. And there's a list of bullet 12 points. 13 And the answer -- I mean, then the 14 question focuses the witness on the fourth 15 bullet point, which is on the second page of 16 PX 429, and it's as to that fourth bullet point 17 that the question -- that the substantive 18 question is: And, in fact, you were fully 19 divulging the features of DOS 5 to OEMs, 20 weren't you? 21 That relates to the bullet point, 22 which is all to say that this -- these four 23 lines in the question Microsoft is objecting 24 to, lines 20 to 23, are unnecessary for the 25 question. 5871 1 They're a gratuitous way to offer to 2 the jury nonhearsay as if it's true, and it's 3 subject to an embedded hearsay objection that's 4 been sustained by the Special Master. 5 So those four lines, the beginning of 6 that question, which are unnecessary for the 7 flow of the deposition, ought not to be 8 admitted. 9 Now, with respect to 429 itself, the 10 exhibit, this language here ought to be 11 redacted. 12 And then Plaintiffs' Exhibit 429 can 13 be admitted because Plaintiffs have not offered 14 a bona fide nonhearsay use for that language. 15 And in this case, there is also 16 particular sensitivity for Microsoft when 17 exhibits are offered for nonhearsay purposes 18 because then they go up on the website and 19 there ought to be a bona fide nonhearsay 20 purpose for something before it gets admitted 21 in this Court. 22 So with respect to Plaintiffs' Exhibit 23 429, Microsoft opposes its admission without 24 redaction. But with redaction, Plaintiffs' 25 Exhibit 429 may be admitted. And as it's used 5872 1 in this deposition, and Microsoft, as one can 2 see from the transcript, has permitted a great 3 deal of questioning from the document, just not 4 the embedded hearsay. 5 So for those reasons Microsoft 6 requests respectfully that the testimony 7 identified in the rulings chart, these 8 approximately 11 lines, which actually are 9 parts of questions, be excluded and that that 10 be done based on the fact that they are 11 attempts to use hearsay for their truth while 12 there are hearsay and embedded hearsay 13 objections that have been sustained or remain 14 and conceded on these documents. 15 With respect to 5180, Microsoft 16 requests that that not be admitted in its 17 complete form; that redactions may be possible. 18 But those need to be discussed and presented to 19 the Court, properly redacted. 20 And with respect to 429, that it not 21 be admitted unless the embedded hearsay is 22 redacted. 23 Thank you, Your Honor. 24 THE COURT: Mr. Tuggy, just a quick 25 question. 5873 1 Do you think that the first two 2 sentences on Plaintiffs' Exhibit 429 explain 3 the subsequent remainder of the exhibit? 4 MR. TUGGY: The first -- 5 THE COURT: In other words, could it 6 be for a nonhearsay purpose to explain why the 7 remaining E-mail or memo exists? 8 MR. TUGGY: Yes, Your Honor, it can -- 9 there is a bona fide nonhearsay purpose in the 10 abstract when to understand the context of a 11 document or of a response the material that is 12 used or that was heard that creates that 13 context could be a nonhearsay purpose. 14 In this situation, I haven't seen in 15 the testimony or otherwise why that context is 16 necessary. In other words, there doesn't 17 appear to me to be an issue that the bullet 18 points that follow come from this embedded 19 hearsay. It's really the statement in the 20 bullet points that were the subject of the 21 examination. 22 But I agree with the Court that there 23 are times when it might be quite important to 24 understand the context of the document and the 25 response to allow hearsay to be used for the 5874 1 nonhearsay purpose of explaining the subsequent 2 conduct essentially. 3 THE COURT: Okay. Thank you. 4 Anything else you want to add, 5 Mr. Tuggy? 6 MR. TUGGY: Nothing further, Your 7 Honor. 8 THE COURT: Mr. Cashman, any response 9 before we move on? 10 MR. CASHMAN: Yes, and thank you, Your 11 Honor. 12 First addressing 429. 13 Mr. Tuggy is just wrong when he says 14 this is unnecessary and should be redacted 15 because it would -- that redaction would 16 eviscerate not only the context of this E-mail 17 internally, its only internal context, but 18 would also eviscerate the credibility issue 19 that is the purpose of using this on 20 cross-examination because there would be no 21 reference other than the subject line to 22 Mr. Sherer. 23 And it would be impossible to draw the 24 link, for the jury to draw the link between 25 this E-mail and the fact that Mr. Chestnut had 5875 1 a conversation with Paul Sherer about the very 2 subject of the article, which Mr. Chestnut has 3 denied knowing about before it was published. 4 So for the purposes of the right that 5 the Plaintiffs have to a full, fair 6 cross-examination of Mr. Chestnut, including 7 Mr. -- on his credibility, and bias, and 8 motive, this is essential for context and to 9 show -- to establish that Mr. Chestnut was not 10 being forthcoming or not being honest in his 11 testimony about 5180 and his alleged lack of 12 knowledge about what was going on. 13 So that embedded hearsay in 429 has a 14 very legitimate and necessary nonhearsay use 15 and should be admitted unredacted. 16 Mr. Tuggy also, then, claims that the 17 testimony about 5180 is -- or the question 18 about 5180 and 429, that the specific lines of 19 testimony that they seek to exclude are 20 unnecessary. And that's not true from the 21 context of the questions. 22 It's necessary and appropriate to 23 examine, cross-examine Mr. Chestnut on his 24 credibility to put those quotes that are at 25 issue in front of him, which is what the 5876 1 cross-examiner did for the purposes of showing 2 that he wasn't being truthful. 3 So what Microsoft is really trying to 4 do is improperly limit the way that Plaintiffs' 5 counsel asks their cross-examination questions 6 about subjects such as this, which don't depend 7 on the truth of the statements in these 8 articles. 9 Those questions would be entirely 10 appropriate if the questioner had never put the 11 document in front of the witness. They could 12 have quoted right out of these documents and 13 asked the same question and it would have been 14 clearly nonobjectionable. 15 Just the fact that he puts the 16 document in front of it and then quotes out of 17 it doesn't make it inadmissible as Microsoft 18 suggests. 19 That's just not correct. The 20 cross-examiner is entitled to do it either way, 21 and either way is appropriate. 22 And it's particularly appropriate here 23 on a -- one of the most basic issues on 24 cross-examination, which is credibility. 25 So for those reasons, their objections 5877 1 to the testimony should be overruled. 2 Now, with respect to 5180, about 3 whether it should be admitted for a nonhearsay 4 purpose, again, not only is it necessary for 5 context, but it's also necessary for the 6 credibility and bias issues as I've described 7 before. 8 It's also -- and Mr. Tuggy didn't even 9 address this issue. It is direct evidence, 10 regardless of the truth or falsity of any 11 statement in 5180, it's direct evidence of the 12 aggressive leak campaign, the anticompetitive 13 conduct itself, and for that reason it's 14 admissible for nonhearsay purpose because that 15 doesn't depend on the truth or -- the truth of 16 any statement in 5180. 17 So it's admissible for that reason as 18 well. And Plaintiffs submit that it should be 19 admitted for those nonhearsay purposes without 20 redactions. 21 Thank you. 22 THE COURT: Anything else on these? 23 MR. TUGGY: Nothing further, Your 24 Honor. 25 THE COURT: Let's move on -- I assume 5878 1 the only thing left is the two exhibits, 276 2 and 5131? 3 MR. CASHMAN: I'm going to address 4 5131 first, Your Honor. 5 THE COURT: Okay. 6 MR. CASHMAN: The transcript which I 7 handed up. 8 THE COURT: Does it talk about this 9 too? 10 MR. CASHMAN: It does talk about this, 11 and this is what I wish to direct the Court's 12 attention to, page 159, line 10 through 161, 13 22. 14 That's on -- in the materials that I 15 handed up to the Court, which is what would be 16 read into the record, that's on page 28 and 29. 17 It starts at the bottom of page 28 and 18 continues over. 19 THE COURT: Okay, I'm there. 20 MR. CASHMAN: When Mr. Eskridge, the 21 Plaintiffs' examining counsel states at line 22 10, page 159, I'll give you an article that's a 23 reprint of an Infoworld article from July 2nd, 24 1990, he's referring there to what's marked as 25 Plaintiffs' Exhibit 5131. 5879 1 And here you'll see that Mr. Chestnut 2 recalls this article. That's at page 159, line 3 14. 4 Mr. Chestnut at line 17 acknowledges 5 that he's quoted several times there. 6 And then in that subsequent testimony, 7 and in particular on -- continuing over on to 8 page 29, Mr. Chestnut acknowledges and confirms 9 that he made the statements. 10 And, in fact, he acknowledges that all 11 the information reported by Stuart Johnston 12 here in Plaintiffs' Exhibit 5131 was provided 13 by Mr. Chestnut. 14 In particular, the first paragraph, 15 Mr. Chestnut says he made that statement that's 16 at 160, line 4. 17 The fourth paragraph, Mr. Chestnut 18 says he made that statement. That's 161, line 19 one. 20 The subsequent two or three 21 paragraphs, he confirms he made those 22 statements. That's 161, line 17. 23 THE COURT: Is there a challenge also 24 to the -- these designated portions of 25 testimony or are they coming in? 5880 1 MR. TUGGY: They're coming in. 2 MR. CASHMAN: Those testimony 3 designations are coming in. 4 So there's no doubt that Mr. Chestnut 5 made these statements that all the information 6 reported by Mr. Johnston here was provided by 7 Mr. Chestnut. 8 The examination of Mr. Chestnut on 9 this exhibit goes again to his credibility. 10 It's also direct evidence of the 11 anticompetitive conduct related to the leak 12 campaign as explained in Exhibit 276 that I 13 handed up to the Court. 14 THE COURT: What about the last two 15 pages of the exhibit? Are those discussed too? 16 MR. CASHMAN: There should only be two 17 pages to the exhibit. 18 THE COURT: Okay. 19 MR. CASHMAN: I believe, Your Honor. 20 THE COURT: I got a byline by Stuart 21 Johnston and Peggy Watt. Then on page 3, 22 byline, Smith, Gina Smith. 23 MR. CASHMAN: I think I may have 24 handed you more pages than you needed. 25 THE COURT: Should I get rid of those? 5881 1 MR. CASHMAN: Yes. I believe those 2 are not supposed to be part of the exhibit. 3 THE COURT: Okay. 4 MR. CASHMAN: I will double-check 5 that, Your Honor, but I'm pretty sure that is 6 correct. 7 MR. TUGGY: I know that when 8 Plaintiffs designated this exhibit it had all 9 four pages, so I take it that -- it doesn't 10 appear to be the deposition copy because 11 normally it would have a deposition label on 12 it, and I do believe that the deposition was on 13 the first two pages. So I believe that at 14 least for -- 15 THE COURT: I didn't see any reference 16 to the Gina Smith article. 17 MR. CASHMAN: Right, so -- I will 18 confirm this, but at least tentatively, to the 19 extent there's any doubt, we withdraw the last 20 two pages of the exhibit. 21 THE COURT: Thank you. 22 MR. CASHMAN: So Plaintiffs think it's 23 clear that this exhibit should be admitted. 24 And the nonhearsay purposes I've 25 already described so I won't go over those 5882 1 again. 2 And there's no reason why -- it 3 doesn't need any redactions or anything else. 4 It should be admitted as is for the nonhearsay 5 purposes I've discussed. 6 And that's all I'll say on 5131. 7 MR. TUGGY: Your Honor, on 5131, which 8 is now a two-page exhibit, the question is 9 whether this can be admitted as a whole for a 10 nonhearsay purpose, and the nonhearsay purpose 11 apparently Plaintiffs are advocating is that 12 there are portions of this that were adopted by 13 Mr. Chestnut in his deposition. 14 So that we're clear on where we are in 15 the process, we have agreed that Plaintiffs can 16 use this and show to the jury these sections 17 that Mr. Chestnut has adopted. 18 What we haven't discussed with 19 Plaintiffs yet, because I wasn't aware this was 20 coming up, is how 5131 might be admitted into 21 evidence. 22 Now, what Mr. Cashman, I think, hasn't 23 informed you is that Microsoft has submitted 24 embedded hearsay and hearsay objections to 25 this, and foundation objection. None of those 5883 1 were presented by the Plaintiffs to the Special 2 Master and, therefore, they're conceded. 3 There were and there is, in fact, 4 embedded hearsay that doesn't relate to things 5 Mr. Chestnut said. 6 For example, in the fourth paragraph 7 of the body, at the end there is a quote to an 8 unidentified beta user. 9 On the last -- the second page, there 10 is a quote to a source -- 11 THE COURT: You're talking about the 12 last sentence on paragraph four? 13 MR. TUGGY: Yes. This will reduce DOS 14 virtual machines. 15 THE COURT: Next one you said? 16 MR. TUGGY: The last paragraph on the 17 second page, there's -- 18 THE COURT: That by one source said? 19 MR. TUGGY: Yes. 20 THE COURT: Okay. 21 MR. TUGGY: The paragraph above it, 22 Microsoft is reportedly working -- I say this 23 to say I've just looked at this quickly now, 24 that there appears to be quite a bit of 25 embedded hearsay not part of the deposition, 5884 1 not adopted by Mr. Chestnut as statements made 2 by him. 3 And with respect to 5131, to the 4 extent if it were redacted to reflect only the 5 statements made by Mr. Chestnut as adopted in 6 his deposition, Microsoft would not oppose 7 admitting it for the nonhearsay purpose of 8 explaining his testimony, I take it. 9 That would be the nonhearsay purpose 10 for which this is offered. 11 And that would be Microsoft's position 12 on the proffer of Plaintiffs' Exhibit 5131. 13 MR. CASHMAN: Your Honor, Plaintiffs 14 have no problem redacting the last sentence on 15 this exhibit. 16 THE COURT: Paragraph four. 17 MR. CASHMAN: The sentence which says, 18 whoever ships the ROM version, Plaintiffs have 19 no problem redacting that, but the rest of this 20 exhibit is -- I think it's clear from 21 Mr. Chestnut's testimony that all of this 22 exhibit -- all the information in this exhibit 23 was provided by Mr. Chestnut to Mr. Johnston, 24 and I don't think there's any reasonable 25 dispute about that. 5885 1 As for the alleged foundation problem, 2 Chestnut provided the foundation in his 3 testimony by saying I had this interview with 4 Mr. Johnston and, yes, I provided this 5 information and these are my quotes. 6 So that's not a legitimate basis for 7 opposing it. 8 And as for the nonhearsay purpose, not 9 only is it appropriate for Mr. -- to provide 10 context and to help explain Mr. Chestnut's 11 testimony, but just so the record is clear, 12 it's also admissible for the nonhearsay purpose 13 because the questioning related to this 14 document is Mr. Chestnut's credibility, his 15 bias, his motive, and his participation in the 16 aggressive leak campaign. 17 So the nonhearsay purpose is that this 18 is direct evidence of anticompetitive conduct 19 that's unrelated to the truth or otherwise of 20 any of the statements made in here by 21 Mr. Chestnut or anybody else. 22 So Plaintiffs believe it should be 23 admitted with the one redaction on the last -- 24 the last sentence on the second page of this 25 exhibit. 5886 1 MR. TUGGY: Your Honor, to -- just to 2 add briefly that there are multiple examples, 3 as I now read through this, on the first page 4 of statements by beta users that can't be 5 attributed to Mr. Chestnut, so based on that 6 this document has to be redacted in several 7 respects before it could be admitted for a 8 nonhearsay purpose. 9 For example, the very first two lines, 10 a new version of DOS that acts as a 11 significantly more memory is likely headed for 12 an early release according to beta testers. 13 Third paragraph, last two lines. Beta 14 users said DOS 5 needs as much as 630K free, 15 depending on the system configuration. 16 Last paragraph, last sentence. 17 However, beta users said. 18 THE COURT: Okay. 19 MR. CASHMAN: Well, Your Honor, just 20 one note on that. 21 As I've noted, those statements are 22 not being offered for the truth, and 23 consequently, this document should be permitted 24 without redactions. 25 There's no need for those redactions 5887 1 in light of the nonhearsay purpose for which 2 Plaintiffs are going to use this document. 3 And I'd just note in that -- in 4 passing, I guess, that when Microsoft was 5 arguing its trade press exhibits, they 6 certainly weren't proposing to make redactions 7 by -- of all the other incidental comments 8 contained in those articles when they wanted to 9 use those. So I mean, that's really not the 10 standard. 11 THE COURT: In some of those, though, 12 weren't they asking just for paragraphs and not 13 the entire article? 14 MR. TUGGY: Yes. 15 MR. CASHMAN: In the product reviews 16 they asked for sections that talked about 17 Microsoft products, but they didn't -- they 18 didn't try to parse out the sentences that were 19 to unattributed sources and all that kind of 20 thing. 21 I mean, these -- we have to look at, I 22 submit, each of these articles on an individual 23 basis. 24 And I want the record to be clear that 25 I continue to believe those articles didn't 5888 1 meet the test and are different than what we're 2 looking at here. 3 And here we have a legitimate 4 nonhearsay purpose where the vast majority of 5 this document was adopted by Mr. Chestnut. 6 THE COURT: Okay. Anything else on 7 this, Mr. Tuggy? 8 MR. TUGGY: Nothing further, Your 9 Honor. 10 THE COURT: Should we move on to 276 11 then? 12 MR. CASHMAN: The last exhibit that I 13 wish to talk about in the context of 14 Mr. Chestnut is Plaintiffs' Exhibit 276. 15 And the only, I guess, issue in 16 dispute here would be the material that is 17 found, Your Honor, at Bates page 185786, 18 185787, and 185788. 19 THE COURT: Were these three pages 20 included in the memo, attached to the memo? 21 MR. CASHMAN: They were, Your Honor. 22 THE COURT: By Mr. Chestnut? 23 MR. CASHMAN: Yes, they were, Your 24 Honor. 25 THE COURT: Proceed. 5889 1 MR. CASHMAN: And you can see, he 2 references them on page -- it's on page 3 1176213. 4 At the end of the first paragraph he 5 says, see attached articles. 6 MR. TUGGY: Mr. Cashman, pardon me. 7 Do you have a copy for me of this exhibit? 8 MR. CASHMAN: Yes, I do. 9 Hold on one moment, please. 10 THE COURT: Do you want Carrie -- 11 MR. TUGGY: I think the copy I have 12 has the wrong set of Bates numbers so I can't 13 follow. 14 THE COURT: Do you need a copy of that 15 done? 16 MR. CASHMAN: I just provided a copy 17 to Mr. Tuggy. 18 THE COURT: Is that your last one or 19 do you need a copy done by Carrie or something? 20 MR. CASHMAN: No. 21 THE COURT: Okay. 22 MR. TUGGY: What page are we on? 23 MR. CASHMAN: The material to which 24 Microsoft objects, Your Honor, is at the last 25 three pages of this exhibit. 5890 1 THE COURT: Right, and you were 2 telling me it was referenced in the -- 3 MR. CASHMAN: Referenced in the body 4 of the memo from Mr. Chestnut on page 1176213 5 wherein Mr. -- at the end of the first 6 paragraph up there, Mr. Chestnut says, see 7 attached articles. 8 THE COURT: Yes. 9 MR. CASHMAN: And this is in relation 10 to the aggressive leak campaign that had been 11 implemented by Microsoft and is described by 12 Mr. Chestnut. 13 And Microsoft has suggested that the 14 three articles attached to this memo by 15 Mr. Chestnut need to be redacted. 16 There's no dispute about the rest of 17 it being a business record, and that it's 18 admissible as a business record. 19 THE COURT: Yes. 20 MR. CASHMAN: But Microsoft has argued 21 for the redaction of these three articles. 22 Plaintiffs submit that this memo 23 should be admitted in its entirety without 24 redactions because -- well, for a couple 25 reasons. 5891 1 Number one, this is evidence -- it's 2 all evidence of the anticompetitive conduct. 3 Microsoft has no basis for saying that 4 these articles are -- that we're offering them 5 for a hearsay purpose because the articles are 6 false. It's Plaintiffs' position that the 7 contents of the articles are false. 8 And, indeed, they -- the PR aggressive 9 leak campaign described by Mr. Chestnut is that 10 we're going to make these announcements and 11 leak information about MS-DOS even though it's 12 not going to be coming out any time soon. 13 So there is no basis for Microsoft to 14 say that we're alleging these articles or want 15 to have these articles admitted for their 16 truth. That's not the case. 17 What we want is that these articles 18 are direct evidence of the anticompetitive 19 conduct as established right here in this memo. 20 So they should be admitted without 21 redaction. Thank you. 22 THE COURT: Thank you. 23 Mr. Tuggy? 24 MR. TUGGY: Yes. 25 On Plaintiffs' Exhibit 276, based on 5892 1 the foundation laid, which is that these 2 articles were referenced in the memorandum and 3 Plaintiffs' position that they're offering them 4 not for their truth, Microsoft does not oppose 5 to the admission of 276 on that basis. 6 THE COURT: Very well. 7 276 is admitted. 8 MR. CASHMAN: Thank you, Your Honor. 9 And that's it for Mr. Chestnut and the 10 exhibits related to Mr. Chestnut. 11 Mr. Gralewski is going to address 12 Mr. Silverberg now. 13 THE COURT: Okay. So I can take that 14 one off the list, 276. The rest I got to rule 15 on, right? 16 MR. CASHMAN: Correct. 17 THE COURT: 276 is off the list. 18 MR. CASHMAN: For your information, 19 Your Honor, Plaintiffs, just for timing 20 purposes, we may play Mr. Chestnut after 21 Mr. Gates is finished. So that's for your 22 information for the purpose of the timing of 23 the rulings. 24 THE COURT: I'm going to have a ruling 25 by tomorrow morning. Is that good enough? 5893 1 MR. TUGGY: Your Honor, with respect 2 to that, we are attempting to learn from 3 Plaintiffs which witness they're going to -- 4 video they're going to play after Gates so that 5 we can prioritize our final review of the video 6 and the transcripts and the like. 7 And so we'd request that as soon as 8 they know which one they're going to play that 9 they let us know. It seems to me that's 10 something at this point we -- 11 MR. CASHMAN: No problem. 12 MR. GREEN: Did you say you were going 13 to do Chestnut? Didn't you say you were going 14 to do Chestnut after Gates? 15 MR. CASHMAN: I didn't say that. I 16 said he may be one. 17 THE COURT: Well, from what I hear 18 from Mr. Cashman, he will be glad to let you 19 know; is that right? 20 MR. CASHMAN: That's correct. 21 THE COURT: You let him know as soon 22 as you know. Is that good enough? 23 MR. TUGGY: Yes, Your Honor. 24 THE COURT: Now what do you have? 25 MR. GRALEWSKI: Just a couple, eight 5894 1 or so lines. 2 On this last point, Your Honor, we 3 have provided a letter to Microsoft. Actually, 4 we've provided the same letter two or three 5 times now. 6 We tell them the Wednesday before the 7 next week of trial what witnesses we plan to 8 offer. 9 So they know that Williams, Chestnut, 10 and Silverberg may come up this week, but we'll 11 tell them which one's going to be next. 12 THE COURT: You'll tell them which 13 one's first, though? 14 MR. GREEN: We don't know the order. 15 THE COURT: They'll give you the 16 order. 17 MR. GREEN: Right. 18 THE COURT: Now, we're going to go to 19 Silverberg, and you're okay to start that, 20 Mr. Tuggy, too? 21 MR. TUGGY: Yes. 22 MR. GRALEWSKI: Mr. Tuggy, are you 23 going to provide the Court a transcript and a 24 rulings chart? 25 MR. TUGGY: Yes. 5895 1 MR. GRALEWSKI: Then I won't do that. 2 MR. TUGGY: I'm handing up a rulings 3 chart. 4 The section on Plaintiffs' Exhibit 276 5 can be ignored since we resolved that. 6 THE COURT: It comes up with 7 Silverberg too? 8 MR. TUGGY: Yes. 9 THE COURT: I'll just cross it out. 10 MR. TUGGY: Thank you. 11 MR. GRALEWSKI: Your Honor, while 12 you're crossing things out, you can also cross 13 out above and to the right the designation 111, 14 2 to 18. 15 THE COURT: Okay. 16 MR. GRALEWSKI: Plaintiffs will not 17 press that and will not play that testimony. 18 THE COURT: Okay. 19 MR. GRALEWSKI: Of course, we're doing 20 that as an accommodation. Our concession 21 shouldn't be taken as a tacit agreement that 22 their arguments are in any way well taken. 23 THE COURT: It's not a surrender of 24 any type, right? 25 MR. GRALEWSKI: No, Your Honor. 5896 1 MR. TUGGY: No liabilities admitted. 2 MR. GRALEWSKI: So directing your 3 attention to 86, 21, 24, and 102, 14 to 24. 4 Your Honor, they're both related and 5 similar, and they both discuss again 6 Plaintiffs' Exhibit 5180, which is that October 7 22, 1990 PC Week article that we've just been 8 talking about for about the last hour. 9 And these two blocks of testimony, 10 like much of the testimony that we've just -- 11 we were just talking about with Mr. Chestnut 12 are relevant because they go directly to 13 Mr. Silverberg's credibility. 14 Both snippets discuss related points, 15 and those points are Microsoft being 16 cooperative with information about MS-DOS 6.0 17 and product details emerging in a steady 18 stream. 19 And what you have after this is some 20 added information that wasn't discussed when 21 Mr. Cashman was arguing about the Chestnut 22 testimony. 23 What you have after 5180 comes out in 24 PC Week, you have a letter from Mr. Silverberg 25 to the editor of PC Week denying statements in 5897 1 5180. 2 And, Your Honor, I have just one copy 3 of Plaintiffs' Exhibit 2388. I apologize for 4 that, but if I may approach, I'll provide it to 5 Your Honor. 6 THE COURT: What is this again? 7 MR. GRALEWSKI: This is -- this is an 8 important exhibit. 9 This is Mr. Silverberg's letter 10 responding to that -- 11 THE COURT: To the editor? 12 MR. GRALEWSKI: Yes, responding to 13 5180. This is Plaintiffs' Exhibit 2388. 14 THE COURT: Is this going to be 15 admitted? 16 MR. GRALEWSKI: That one's clean. 17 MR. CASHMAN: No objections, yeah. 18 THE COURT: Do you have an objection 19 to this? 20 MR. TUGGY: I'm sorry? 21 THE COURT: Do you have an objection 22 to the letter? 23 MR. TUGGY: Correct. And we do not 24 intend to assert relevance or undue prejudice 25 objections. 5898 1 MR. GRALEWSKI: Your Honor, the reason 2 that the letter there is important and why I'm 3 providing it to you is to set the stage and to 4 provide the context why the questions at issue 5 go to credibility. 6 Because at various places in the 7 examination of Mr. Silverberg, he denies ever 8 reading or remembering the article, which is 9 5180, and he also denies ever writing that 10 letter to the editor of PC Week. 11 This is despite the E-mail string that 12 Mr. Cashman provided to you where Mr. Chestnut 13 and Mr. Silverberg are corresponding about 14 Mr. Chestnut's communications with the author 15 of that article, Mr. Sherer. 16 So, in other words, our position is 17 that we should be permitted on cross to explore 18 Mr. Silverberg's credibility to put 5180 and 19 the related testimony in front of him and say, 20 do you remember this? Do you remember that? 21 And the jury should be able to see 22 that despite the documents that are clean and 23 admissible, that he denies having any knowledge 24 of the statements. 25 Thank you, Your Honor. 5899 1 THE COURT: Is the paragraph that he's 2 quoting from in the question, Mr. Tuggy, is 3 that one of the paragraphs you sought to be 4 redacted when you showed me the highlighted 5 portion of 5180? 6 MR. TUGGY: The paragraph that's being 7 cited by the -- 8 THE COURT: Doesn't seem like it is. 9 MR. TUGGY: Correct. That paragraph 10 is subject to our hearsay objection. 11 THE COURT: Right. 12 MR. TUGGY: Not the -- and the 13 highlighting -- 14 THE COURT: The highlighting was just 15 the embedded? 16 MR. TUGGY: Correct. In our view, all 17 the hearsay needs to be redacted. 18 THE COURT: Okay. 19 MR. CASHMAN: By way of clarification, 20 Your Honor, I don't think that Mr. Tuggy has 21 pointed this out, but at the Special Master 22 level, when a document was deemed to be 23 hearsay, the Special Master didn't go on and 24 determine whether there was also hearsay in the 25 exhibit, I don't think. 5900 1 So there is usually only one issue. 2 Is it hearsay, or if it didn't have hearsay, 3 then he'd go to the embedded hearsay level. 4 I believe that was generally the case. 5 THE COURT: You're conceding its 6 hearsay, you're just offering it for a 7 nonhearsay purpose? 8 MR. CASHMAN: That's true. I just 9 mention that because Mr. Tuggy keeps on 10 bringing up the multiple objections, and 11 whatever was done at the Special Master level 12 and the fact that we're really talking about 13 nonhearsay uses makes what the Special Master 14 did irrelevant. 15 THE COURT: Okay. 16 MR. TUGGY: The first segment of 17 testimony at issue is at page 86, lines 21 to 18 24. 19 Again, it's not actually testimony. 20 It's part of a question, and it's in the form 21 of a sign post by the attorney, where the 22 attorney asks at line 21, referring to the 23 article, the fourth paragraph states, Microsoft 24 in a shift in its policy of not commenting on 25 unreleased products has been unusually 5901 1 cooperative in confirming details about MS-DOS. 2 That's a statement by an attorney that 3 Plaintiffs would like to show to the jury. 4 Highlighting this part of the article 5 clearly intending to offer it for its truth or 6 have the jury believe that somehow in the 7 question -- and in the quoting of that language 8 it has an imprimatur of truth because it comes 9 from an article. 10 Mr. Cashman argued with respect to 11 Mr. Chestnut -- and that argument would apply 12 here as well -- that, well, it doesn't matter 13 whether the attorney quotes from an article or 14 just asks the question and uses the article's 15 words. It does matter. 16 Had the attorney asked this question 17 without referencing the article and without 18 showing it to give it an imprimatur of truth, 19 that changes entirely the problem with the 20 question. 21 Now at line 25 the examiner goes on to 22 ask his question. The question was: Now, by 23 October of 1990, you had been at Microsoft for 24 approximately five months, correct? 25 It's a little bit hard to tie that 5902 1 question how long Mr. Silverberg had been at 2 Microsoft with the fourth paragraph that the 3 questioner quotes from the article. 4 It's just -- the connection is 5 unnecessary. That language is gratuitous, it's 6 hearsay, and it does not have a nonhearsay 7 purpose. 8 Now, Plaintiffs argued for two 9 nonhearsay purposes. 10 First, they say that Mr. Silverberg 11 denies reading or remembering the article. 12 Well, as you can see from the yellow 13 highlights, there's a great deal about this 14 article that Microsoft is permitting the 15 witness to be asked about. 16 The existence of the article is not an 17 issue in this particular designation. All 18 that's at issue is whether the questioner can 19 quote from an article something as if it's true 20 when it's subject to a hearsay objection that 21 Plaintiffs have conceded as being -- as being 22 appropriate. 23 It is not in the context of this 24 deposition being offered for a nonhearsay 25 purpose. 5903 1 The second nonhearsay purpose 2 Plaintiffs suggest is that Silverberg denies 3 writing a letter to PC Week, the letter that 4 they showed you. 5 Again, the Plaintiffs have that 6 letter. They have testimony designated 7 relating to that letter, I presume, and this 8 particular paragraph, fourth paragraph of the 9 article that's quoted as a preamble to this 10 question, is just completely unrelated to that 11 nonhearsay purpose. 12 Under McElroy it's clear that with the 13 way the testimony is being used and the 14 purported nonhearsay purpose, which is to 15 attack the credibility of the witness, the real 16 purpose for showing this to the jury is to give 17 an imprimatur of truth to the statement where 18 it ought not to be done, where there is no 19 nonhearsay purpose for it. 20 With respect to the designation at 21 page 102, we have basically the same problem. 22 The examiner's question now refers to 23 the first paragraph, which was also referenced 24 in Mr. Chestnut's testimony. 25 And the lines 14 to 19, the examiner 5904 1 quotes the article as if it were stating a 2 truth. 3 And then says at line 20, page 102, 4 now, I realize that doesn't have the word leak, 5 but -- and then the witness says okay. 6 And then the question is: Do you 7 suppose? 8 And then an answer: What's the 9 question? Just I'm on a soapbox. 10 It's those groups of lines that 11 Microsoft is objecting to because there's -- it 12 is just a gratuitous reading of the paragraph 13 out of the article. 14 Then the real question comes, which is 15 at line 25, would details emerging in a steady 16 stream be what the leaks are referring to, and 17 I'm just trying -- so and the word -- and the 18 leaks is going back to prior testimony above -- 19 Like on page 102, lines 4 to 7, there 20 is examination that is not objected to on a 21 document relating -- that has that word leaks. 22 So the question at line 25, would 23 details emerging in a steady stream be what the 24 leaks are referring to? 25 And then the answer: I don't recall 5905 1 authoring this letter. 2 So it's probably the letter that 3 Plaintiffs have referred to earlier, but it's 4 not referring back to the article. 5 So for those reasons, the quote from 6 the article at lines 14 to 19 don't relate to 7 the flow of the question are unnecessary, are 8 stated as if the article is true, and the 9 nonhearsay purposes offered by Plaintiffs that 10 is Mr. Silverberg has denied reading or 11 remembering the article or denied writing the 12 letter to PC Week. 13 But without admitting at all that 14 that's, in fact, what occurred in the 15 deposition, but that being their proffered 16 nonhearsay use, it just doesn't relate to this 17 particular piece of testimony. 18 So Microsoft requests that the 19 testimony be excluded, along with the exhibit, 20 as being hearsay without an appropriate 21 nonhearsay purpose, and if any part of this 22 article is admitted, that it be redacted and 23 offered up again in redacted form. 24 THE COURT: Thank you, Mr. Tuggy. 25 MR. GRALEWSKI: Briefly, Your Honor. 5906 1 I don't think it's appropriate in this 2 instance, or in any instance, really, to allow 3 Microsoft to carve up the cross-examination as 4 they're trying to do. 5 If I could refer Your Honor to the 6 question at the bottom of 86. 7 Mr. Tuggy suggests that the preamble 8 doesn't have anything to do with when 9 Mr. Silverberg started at Microsoft. 10 And I think we've all asked questions 11 where you start asking a question, then you 12 realize, wait a second, I need to lay 13 foundation or I want to ask a different 14 question. 15 And that's what's going on here. The 16 examiner is asking a question about the leaks, 17 and then he wants to pause and say okay, now, 18 tell me when you started. 19 And that goes on for about 10 or 15 20 lines, but then we get back into the tough 21 cross-examination on 87, 14, and that's really 22 -- that's really what's going on here. 23 The questioner wants to know about 24 what Microsoft's policy was about commenting on 25 unreleased products, and this entire line of 5907 1 questioning is related to that and goes to 2 whether Mr. Silverberg is being truthful or not 3 about providing advanced information or leaks 4 or details or whatever you want to call it. 5 Similarly, if Your Honor would go to 6 102 and 103, Mr. Tuggy suggests that the 7 preamble is gratuitous and it's unrelated to 8 the testimony that they don't object to, and I 9 would submit that that's not correct. 10 If you'll notice, in the part that 11 they're objecting to at line 16; 102, 16, the 12 article talks about product details. They use 13 the word details, and that is synonymous, at 14 least in the examiner's mind, with the concept 15 of leaking information. 16 And then if you go on, the part on 17 page 103 where they don't object, there's a 18 discussion about that -- the question is at 19 line 8: Well, let's assume, let's just assume 20 that the leaks that they're talking about -- 21 and then Mr. Silverberg takes the examiner on 22 and says, leaks that who are talking about? 23 They're talking about details, okay. 24 It doesn't use the word leaks. 25 And then the examiner continues: 5908 1 Okay, I was going to say that let's assume that 2 the leaks -- that the letter -- line 13 is 3 okay, I was going to say that let's assume that 4 the leaks that this letter that was published 5 over your signature refers to, et cetera, et 6 cetera. Again using the word details. 7 The point is, Your Honor, that it's 8 unfair to carve up this testimony to take out 9 an interrelated block of it that is necessary 10 to understand the later testimony. 11 Moreover, in getting to the heart of 12 the matter, all of this testimony relates to, 13 as we've been talking about, Microsoft carrying 14 out their plan, which is in black and white in 15 PX 276, that just about 25 minutes ago 16 Microsoft withdrew all objections to where 17 Microsoft admits and states we have begun an 18 aggressive leak campaign, and then they 19 continue at this point, we are telling the 20 press, et cetera, et cetera. 21 So what's happening is that 22 Mr. Silverberg is being cross-examined on these 23 issues -- the evidence is being offered to show 24 that Microsoft is indeed carrying out their 25 plan. 5909 1 The truth of whether they're being 2 cooperative or not does not matter. What 3 matters is that they're talking to the press, 4 and Mr. Silverberg is being cross-examined 5 about Microsoft's admitted PR campaign. 6 THE COURT: Very well. 7 MR. TUGGY: Your Honor, just to say 8 that Mr. Gralewski said that Microsoft had 9 withdrawn all of its objections to PX 276, I 10 just wanted to answer that we have said it 11 could be admitted for nonhearsay purpose which 12 is not withdrawing the hearsay objection. 13 That's all. 14 MR. CASHMAN: By way of clarification, 15 then, we're talking about nonhearsay purpose 16 only for those last three pages of 276. 17 The rest of the article is admitted 18 for the truth, the business record. 19 MR. TUGGY: That's correct. 20 MR. CASHMAN: Microsoft business 21 record. 22 THE COURT: Thank you. 23 MR. TUGGY: Thank you, Your Honor. 24 THE COURT: I'll have a ruling for you 25 tomorrow morning. 5910 1 (Proceedings concluded at 4:05 p.m.) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5911 1 CERTIFICATE TO TRANSCRIPT 2 The undersigned, Official Court 3 Reporters in and for the Fifth Judicial 4 District of Iowa, which embraces the County of 5 Polk, hereby certifies: 6 That she acted as such reporter in the 7 above-entitled cause in the District Court of 8 Iowa, for Polk County, before the Judge stated 9 in the title page attached to this transcript, 10 and took down in shorthand the proceedings had 11 at said time and place. 12 That the foregoing pages of typed 13 written matter is a full, true and complete 14 transcript of said shorthand notes so taken by 15 her in said cause, and that said transcript 16 contains all of the proceedings had at the 17 times therein shown. 18 Dated at Des Moines, Iowa, this 19th 19 day of December, 2006. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25