IBM exec outlines 'secret' Microsoft talks

IBM executive Garry Norris was back on the witness stand today in the Microsoft Corp. antitrust trial, telling of "secret discussions" in which he said Microsoft executives pressured the company to drop its use of Netscape Communications Corp.'s Navigator.

Norris, testifying for the second day as a government witness in the case, filled out his portrait of Microsoft with new details about the company's tactics.

But Microsoft, which began its cross-examination shortly before the lunch break, immediately tried to create some perspective about the combatants.

Microsoft attorney Rick Pepperman pointed out that IBM posted $81.7 billion in revenue last year, its fourth straight year of record sales, vs. Microsoft's $14.5 billion.

IBM, not Microsoft, was the world's largest software producer in the mid-1990s, Pepperman said. "You wouldn't know that from the press reports, but that's correct," Norris said.

The impression Norris sought to convey on the witness stand was that IBM had an unequal relationship with Microsoft. Microsoft's power was such that it could raise royalty fees and even delay hardware configuration tests for 60 to 90 days that PC competitors got back in two weeks, Norris testified.

Handwritten notes Norris took at meetings with Microsoft officials were used by the government to back up his testimony.

In a meeting held March 6, 1997, Microsoft outlined a plan that would give IBM favorable Windows licensing conditions if it made its operating systems "neutral" and dropped all use of competing software programs, such as IBM subsidiary Lotus Development Corp.'s SmartSuite.

Norris met with Bengt Akerlind and other Microsoft negotiators. Norris' notes include the reference "no Netscape." He put three asterisks next to it. "Bengt was very specific. He said 'no Netscape,' " Norris said today in court.

That same month, IBM and Microsoft officials met again, this time holding a much larger meeting to discuss the issues separating them.

But Norris testified that Microsoft official Ted Hannun also wanted to hold a smaller meeting, a "secret discussion," because Microsoft wanted to offer a proposal on Internet Explorer.

There appeared to be some concern about that upcoming meeting.

Norris' handwritten notes of a March 21, 1997 telephone conversation with Hannun make the following statement: "'MS lawyers' say 'horizontal restraint' " -- a potential reference to an antitrust violation, when a competitor seeks to block the products produced by another.

Government attorney Philip Malone didn't pursue the "horizontal restraint" reference with Norris in detail. Norris said "it wasn't very clear" what Hannun was referring to, but Judge Thomas Penfield Jackson took what appeared to be copious notes.

The "secret discussion" meeting was held March 27, 1997.

"After an exchange of niceties," Norris said, "the first thing Bengt said is, 'We have a problem if you load Netscape.' "

Soon after that meeting, Norris was promoted to program director of IBM's Network and Hardware Division. But he said IBM eventually signed an agreement with Microsoft that allowed it to continue to ship Netscape.

This story, "IBM exec outlines 'secret' Microsoft talks" was originally published by Computerworld.

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