Videotaped Deposition Excerpts Of Bill Gates

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VIDEOTAPED DEPOSITION EXCERPTS OF BILL GATES

13           BY MR. HOUCK:

14           QUESTION: IN OR ABOUT JUNE 1995,

15      MR. GATES, DID YOU BECOME INVOLVED IN THE

16      PLANNING FOR SOME MEETINGS WITH NETSCAPE?

17           ANSWER: NO.

18           QUESTION: THE E-MAIL I WANT TO ASK YOU

19      ABOUT FIRST, MR. GATES, IS DATED JUNE 1ST, 1995,

20      AND THE VERY TOP PORTION INDICATES THAT THE

21      BOTTOM PORTION IS BEING SENT TO YOU FOR YOUR

22      INFORMATION BY PAUL MARITZ, AND THE BOTTOM

23      PORTION IS AN E-MAIL FROM THOMAS REARDON, DATED

24      JUNE 1, 1995, ON THE SUBJECT OF WORKING WITH

25      NETSCAPE.


                                              PAGE 5

1      DO YOU RECALL RECEIVING THIS MEMORANDUM OR

2      E-MAIL?

3           ANSWER: E-MAIL, NO.

4           QUESTION: ALL RIGHT. I APOLOGIZE FOR USING

5      MY OLD-FASHIONED TERMINOLOGY.

6      YOU DON'T RECALL RECEIVING THIS E-MAIL

7      PARTICULARLY?

8           ANSWER: NO.

9           QUESTION: THE E-MAIL STATES, `DAN AND BARB

10      AND I MET LATE YESTERDAY TO REVIEW OUR RECENT

11      DISCUSSIONS WITH NETSCAPE AND FORM OUR NEXT FEW

12      ACTION ITEMS. DAN IS MEETING WITH JIM BARKSDALE,

13      THEIR CEO, SHORTLY.'

14      DO YOU UNDERSTAND THE REFERENCE TO DAN TO BE

15      A REFERENCE TO DAN ROSEN?

16           ANSWER: PROBABLY.

17           QUESTION: IS THE REFERENCE TO BARBARA A

18      REFERENCE TO BARBARA FOX?

19           ANSWER: I MEAN, YOU COULD ASK THOMAS.

20      PROBABLY.

21           QUESTION: DO YOU HAVE ANY UNDERSTANDING,

22      SIR?

23           ANSWER: BASED ON--I HAVE NEVER SPOKEN WITH

24      THOMAS ABOUT THIS. I DON'T REMEMBER SEEING THE

25      E-MAIL.


                                              PAGE 6

1           QUESTION: DO YOU RECALL SPEAKING TO ANYONE

2      ABOUT THE MEETING REFERRED TO HERE BETWEEN DAN

3      ROSEN AND JIM BARKSDALE?

4           ANSWER: NO.

5           QUESTION: THE E-MAIL GOES ON TO LIST

6      WORKING GOALS, WHICH ARE, ONE, LAUNCH STT, OUR

7      ELECTRONIC PAYMENT PROTOCOL. GET STT PRESENCE ON

8      THE INTERNET. TWO, MOVE NETSCAPE OUT OF THE

9      WIN32 INTERNET CLIENT AREA. THREE, AVOID COLD OR

10      HOT WAR WITH NETSCAPE. KEEP THEM FROM SABOTAGING

11      OUR PLATFORM EVOLUTION.

12      DO YOU UNDERSTAND THE REFERENCE TO WIN32

13      INTERNET CLIENT TO BE A REFERENCE TO WINDOWS 95?

14           ANSWER: NO.

15           QUESTION: WHAT DO YOU UNDERSTAND IT TO BE A

16      REFERENCE TO?

17           ANSWER: WIN32.

18           QUESTION: AND CAN YOU DESCRIBE WHAT THAT

19      IS.

20           ANSWER: 32-BIT WINDOWS.

21           QUESTION: IS WINDOWS 95 A 32-BIT WINDOWS

22      PRODUCT?

23           ANSWER: IT'S ONE OF THEM.

24           QUESTION: WERE THERE ANY OTHER 32-BIT

25      PRODUCTS IN DEVELOPMENT IN JUNE OF 1995?


                                              PAGE 7

1           ANSWER: CERTAINLY.

2           QUESTION: WHICH ONES?

3           ANSWER: WINDOWS NT.

4           QUESTION: DO YOU KNOW WHETHER MR. REARDON

5      WAS REFERRING TO WINDOWS NT AND WINDOWS 30 AND

6      WINDOWS 95, OR ONE OR THE OTHER?

7           ANSWER: WIN32'S A TERM THAT REFERS TO ALL

8      THE 32-BIT PLATFORMS.

9           QUESTION: AND AS I UNDERSTAND YOUR

10      TESTIMONY THAT THE 32-BIT PLATFORMS UNDER

11      DEVELOPMENT IN JUNE OF 1995 WERE WINDOWS NT AND

12      WINDOWS 95; IS THAT CORRECT?

13           ANSWER: NO. WINDOWS NT WAS SHIPPING, AND

14      THERE WAS A NEW VERSION THAT WAS UNDER

15      DEVELOPMENT.

16           QUESTION: AND WINDOWS 95 WAS IN DEVELOPMENT

17      AT THIS TIME?

18           ANSWER: CERTAINLY."

19      (PAUSE.)

20          "QUESTION: IN THE PORTION OF THE E-MAIL

21      DENOMINATED NUMBER TWO, WHICH IS "MOVE NETSCAPE

22      OUT OF WIN32/WIN95, AVOID BATTLING THEM IN THE

23      NEXT YEAR," THERE APPEARS THE FOLLOWING STATEMENT

24      IN THE SECOND PARAGRAPH, QUOTE, THEY APPEARED TO

25      BE MOVING FAST TO ESTABLISH THEMSELVES IN THE


                                              PAGE 8

1      VALUE-ADD APP BUSINESS BY LEVERAGING NETSCAPE

2      ITSELF AS A PLATFORM.

3      DO YOU RECALL WHETHER YOU AGREED THAT THAT'S

4      WHAT NETSCAPE WAS DOING BACK IN JUNE '95?

5           ANSWER: AT THIS TIME I HAD NO SENSE OF WHAT

6      NETSCAPE WAS DOING."

7      (PAUSE.)

8      "QUESTION: DO YOU RECALL, AS YOU SIT HERE

9      TODAY, APART FROM JUST READING THESE E-MAILS,

10      ANYTHING THAT WAS REPORTED BACK TO YOU BY ANY OF

11      THE PARTICIPANTS FROM MICROSOFT AT THIS JUNE 21ST

12      MEETING?

13           ANSWER: WELL, I THINK SOMEWHERE ABOUT THIS

14      TIME SOMEBODY SAID TO ME THAT--ASKED IF IT MADE

15      SENSE FOR US TO CONSIDER INVESTING IN NETSCAPE,

16      AND I SAID THAT THAT DIDN'T MAKE SENSE TO ME. I

17      DIDN'T SEE THAT AS SOMETHING THAT MADE SENSE.

18           QUESTION: DO YOU RECALL WHO SAID THAT TO

19      YOU?

20           ANSWER: IT WOULD HAVE BEEN PROBABLY

21      SUGGESTED IN A PIECE OF E-MAIL FROM DAN, I THINK.

22           QUESTION: DO YOU RECALL WHEN YOU GOT THAT

23      SUGGESTION, WHETHER IT WAS BEFORE OR AFTER THE

24      MEETING?

25           ANSWER: OH, IT WOULD HAVE BEEN AFTER THE


                                              PAGE 9

1      MEETING.

2           QUESTION: DO YOU RECALL ANYTHING ELSE THAT

3      ANYONE TOLD YOU BACK IN JUNE '95 ABOUT THE

4      MEETING?

5           ANSWER: NO."

6          (PAUSE.)

7      "BY MR. BOIES:

8           QUESTION: YOU ARE AWARE THAT IT HAS BEEN

9      ASSERTED THAT AT THAT MEETING THERE WAS AN

10      ATTEMPT TO ALLOCATE MARKETS BETWEEN NETSCAPE AND

11      MICROSOFT; CORRECT, SIR?

12           ANSWER: MY ONLY KNOWLEDGE OF THAT IS THAT

13      THERE WAS AN ARTICLE IN THE WALL STREET JOURNAL

14      VERY RECENTLY THAT SAID SOMETHING ALONG THOSE

15      LINES. OTHERWISE, NO.

16           QUESTION: IS IT YOUR TESTIMONY THAT THE

17      FIRST TIME THAT YOU WERE AWARE THAT THERE WAS AN

18      ASSERTION THAT THERE HAD BEEN A MARKETABLE

19      ALLOCATION MEETING OR AN ATTEMPT TO ALLOCATE

20      MARKETS AT A MEETING BETWEEN REPRESENTATIVES OF

21      MICROSOFT AND NETSCAPE WAS A RECENT WALL STREET

22      JOURNAL ARTICLE?

23           ANSWER: I'M NOT SURE HOW TO CHARACTERIZE

24      IT. THE FIRST THING--THE FIRST I HEARD ANYTHING

25      ABOUT THAT MEETING AND SOMEBODY TRYING TO


                                              PAGE 10

1      CHARACTERIZE IT IN SOME NEGATIVE WAY WAS AN

2      ANDREESSEN QUOTE THAT WAS IN THE WALL STREET

3      JOURNAL VERY RECENTLY, AND IT SURPRISED ME.

4           QUESTION: ARE YOU AWARE OF ANY INSTANCES IN

5      WHICH REPRESENTATIVES OF MICROSOFT HAD MET WITH

6      COMPETITORS IN AN ATTEMPT TO ALLOCATE MARKETS?

7      MR. HEINER: OBJECTION.

8      THE WITNESS: I'M NOT AWARE OF ANY SUCH

9      THING. I KNOW IT'S VERY MUCH AGAINST THE WAY WE

10      OPERATE.

11           BY MR. BOIES:

12           QUESTION: IT WOULD BE AGAINST COMPANY

13      POLICY TO DO THAT?

14           ANSWER: THAT'S RIGHT."

15          (PAUSE.)

16            "QUESTION: LET ME ASK YOU, DID YOU--WHEN

17      YOU SAW THE WALL STREET JOURNAL ARTICLE THAT

18      TALKED ABOUT A MAY MEETING IN TERMS OF ALLEGEDLY

19      MARKET DIVIDING CONDUCT, DID YOU TRY TO FIND OUT

20      WHETHER THERE HAD BEEN A MAY MEETING BETWEEN

21      REPRESENTATIVES OF MICROSOFT AND REPRESENTATIVES

22      OF NETSCAPE?

23           ANSWER: WELL, AGAIN, I WOULDN'T

24      CHARACTERIZE THE ARTICLE IN THAT WAY. WHEN I

25      READ THE ARTICLE, WHAT IT SAID INTERESTED ME


                                              PAGE 11

1      ENOUGH AND CONCERNED ME ENOUGH I DID SEEK TO FIND

2      OUT IF THERE WAS A MAY MEETING, BUT I DON'T THINK

3      THE ARTICLE IS WHAT YOU'RE SUGGEST--SAID WHAT

4      YOU'RE SUGGESTING. I MEAN, WE SHOULD GET A COPY

5      OF THE ARTICLE. I DON'T REMEMBER IT THAT WAY. I

6      REMEMBER ANDREESSEN TALKING ABOUT HOW HE HAD BEEN

7      IN FEAR THAT DON CORLEONE HAD COME TO SEE HIM.

8      AND, YOU KNOW, ONCE I REALIZED THAT THERE

9      WAS NO MEETING IN MAY AND THAT IT WASN'T--YOU

10      KNOW, THAT HE, AFTER THE MEETING, SAID HE ENJOYED

11      THE MEETING AND THAT IT WAS, YOU KNOW, JUST A

12      GROUP OF OUR GUYS DOWN THERE TRYING TO TALK ABOUT

13      IF THERE WAS ANYWAY AREAS OF COOPERATION, IT

14      SEEMED--THE WHOLE THING SEEMED VERY STRANGE TO

15      ME.

16           QUESTION: DID YOU TALK TO PEOPLE TO FIND

17      OUT WHETHER THERE WAS A MAY MEETING?

18           ANSWER: YES.

19           QUESTION: WHO DID YOU TALK TO?

20           ANSWER: I CONSULTED WITH MY LAWYERS.

21           QUESTION: OTHER THAN CONSULTING WITH YOUR

22      LAWYERS, DID YOU TRY TO FIND OUT WHETHER THERE

23      WAS A MAY MEETING?

24           ANSWER: WELL, MY LAWYERS, THEN, TALKED TO

25      ALL THE PEOPLE THAT MIGHT HAVE MET WITH NETSCAPE,


                                              PAGE 12

1      AND I MADE SURE THEY DID THAT PRETTY BROADLY.

2           QUESTION: YOU WERE INFORMED THAT THERE WAS

3      NO MAY MEETING; IS THAT YOUR TESTIMONY?

4           ANSWER: THAT'S THE UNDERSTANDING I WAS

5      GIVEN, YES, AND THEN I WAS GIVEN SOME OTHER

6      INFORMATION THAT I HAVE ALREADY MENTIONED.

7           QUESTION: BUT ALL OF THAT INFORMATION CAME

8      FROM YOUR LAWYERS AND NOT FROM NONLAWYER

9      EMPLOYEES OF MICROSOFT; IS THAT WHAT YOU'RE

10      SAYING?

11           ANSWER: IT CAME TO ME THROUGH MY LAWYERS.

12           QUESTION: DID YOU EVER HAVE A CONVERSATION

13      WITH ANYONE IN THE LAST 12 MONTHS, OTHER THAN

14      YOUR LAWYERS, CONCERNING WHETHER THERE WERE

15      MEETINGS IN MAY OR JUNE OF 1995 WITH NETSCAPE,

16      AND IF SO, WHAT HAPPENED AT THOSE MEETINGS?

17           ANSWER: WELL, THERE MIGHT HAVE BEEN A POINT

18      AFTER I GOT ALL THE DATA FROM THE LAWYERS WHERE I

19      SAID TO SOME OF THE PR PEOPLE WHAT AN OUTRAGEOUS

20      SLANDER THAT ARTICLE HAD BEEN AND HOW UNFAIR I

21      FELT IT WAS. AND SO, I MAY HAVE MENTIONED THAT

22      TO THEM.

23           QUESTION: DID YOU HAVE ANY CONVERSATIONS,

24      IN THE LAST 12 MONTHS, WITH ANY PERSON WHO WAS

25      DEALING WITH NETSCAPE IN 1995 ABOUT WHETHER THERE


                                              PAGE 13

1      WERE MAY OR JUNE MEETINGS, AND IF SO, WHAT

2      HAPPENED AT THOSE MEETINGS?

3           ANSWER: NO. I RELIED ON THE LAWYERS TO GO

4      AND MEET WITH THOSE PEOPLE AND GATHER THE FACTS

5      AND EDUCATE ME ABOUT WAS THERE A MAY MEETING AND

6      WHAT WAS THE AGENDA, WHAT WAS ANDREESSEN'S STATE

7      OF MIND AFTER THE MEETING, WHAT DID THE NOTES

8      LOOK LIKE. BUT THAT'S ALL VERY RECENT. THAT IS

9      AFTER THE JOURNAL ARTICLE.

10           QUESTION: NOW, HAVE YOU EVER READ THE

11      COMPLAINT IN THIS CASE?

12           ANSWER: NO.

13           QUESTION: HAVE YOU EVER RECEIVED A SUMMARY

14      OF THE COMPLAINT IN THIS CASE?

15           ANSWER: I WOULDN'T SAY I'VE RECEIVED A

16      SUMMARY, NO. I HAVE TALKED TO MY LAWYERS ABOUT

17      THE CASE, BUT NOT REALLY THE COMPLAINT.

18           QUESTION: DO YOU KNOW WHETHER IN THE

19      COMPLAINT THERE IS AN ASSERTION--I'M NOT TALKING

20      ABOUT THE WALL STREET JOURNAL ARTICLE. I'M

21      TALKING ABOUT THE COMPLAINT THAT WAS FILED LAST

22      MAY. DO YOU KNOW WHETHER IN THAT COMPLAINT THERE

23      ARE ALLEGATIONS CONCERNING A 1995 MEETING BETWEEN

24      NETSCAPE AND MICROSOFT REPRESENTATIVES RELATING

25      TO ALLEGED MARKET DIVISION DISCUSSIONS?


                                              PAGE 14

1           ANSWER: I HAVEN'T READ THE COMPLAINT, SO I

2      DON'T KNOW FOR SURE. BUT I THINK SOMEBODY SAID

3      THAT THAT IS IN THERE.

4           QUESTION: DID YOU FIND THAT OUT BEFORE OR

5      AFTER THE WALL STREET JOURNAL ARTICLE?

6           ANSWER: THE FIRST TIME I KNEW ABOUT THESE

7      ALLEGATIONS WAS THE WALL STREET JOURNAL ARTICLE,

8      SO--

9           QUESTION: THAT IS, THAT ARTICLE PRECEDED

10      ANY KNOWLEDGE THAT YOU HAD OR DIDN'T HAVE RELATED

11      TO THE COMPLAINT?

12           ANSWER: THAT'S RIGHT."

13          (PAUSE.)

14            "QUESTION: HAVE YOU EVER HAD DISCUSSIONS

15      WITHIN MICROSOFT ABOUT THE DESIRABILITY OF TRYING

16      TO UNDERMINE SUN BECAUSE OF WHAT SUN WAS DOING IN

17      JAVA?

18           ANSWER: I SAID TO YOU, PART OF OUR ACTIVITY

19      IS TO GO OUT AND WORK WITH CUSTOMERS TO SEE WHAT

20      IT TAKES TO HAVE THEM CHOOSE TO LICENSE OUR

21      PRODUCTS, AND THAT'S IN COMPETITION WITH MANY

22      OTHER COMPANIES, INCLUDING SUN."

23          (PAUSE.)

24            "QUESTION: I'M NOT NOW TALKING ABOUT WHAT

25      YOU DO IN COMPETITION WITH OTHER PRODUCTS OR


                                              PAGE 15

1      OTHER COMPANIES. WHAT I'M TALKING ABOUT IS

2      WHETHER OR NOT YOU'VE HAD DISCUSSIONS WITH PEOPLE

3      WITHIN MICROSOFT IN WHICH YOU TALKED ABOUT THE

4      NEED TO UNDERMINE SUN--USING THOSE WORDS, IF THAT

5      WILL HELP YOU--WITHIN MICROSOFT.

6           ANSWER: I DON'T REMEMBER USING THOSE WORDS.

7           QUESTION: YOU DON'T?

8           ANSWER: NO.

9           QUESTION: DO YOU THINK YOU DID USE THOSE

10      WORDS, OR YOU JUST DON'T KNOW, ONE WAY OR THE

11      OTHER?

12           ANSWER: I DON'T KNOW.

13           QUESTION: WOULD IT BE CONSISTENT WITH THE

14      WAY YOU FELT ABOUT JAVA, FOR YOU TO HAVE TOLD

15      PEOPLE THAT YOU WANTED TO UNDERMINE SUN?

16           ANSWER: AS I'VE SAID, ANYTHING ABOUT JAVA,

17      YOU'VE GOT TO SHOW ME A CONTEXT BEFORE I CAN

18      ANSWER, BECAUSE JUST THE TERM "JAVA" ITSELF CAN

19      MEAN DIFFERENT THINGS."

20          (PAUSE.)

21            "QUESTION: DID YOU HAVE DISCUSSIONS WITH

22      APPLE IN WHICH YOU WERE TRYING TO GET APPLE TO

23      AGREE TO HELP YOU UNDERMINE SUN?

24           ANSWER: THERE WAS SOME DISCUSSION ABOUT

25      WHAT RUNTIME API'S APPLE WOULD SUPPORT, WHETHER


                                              PAGE 16

1      THEY WOULD SUPPORT SOME OF OURS OR SOME OF SUN'S.

2      I DON'T THINK I WAS INVOLVED IN ANY DISCUSSIONS,

3      MYSELF, WITH APPLE ABOUT THAT.

4           QUESTION: WELL, LET ME SHOW YOU A DOCUMENT

5      AND TRY TO PROBE WHAT YOU MEAN BY BEING INVOLVED.

6      LET ME GIVE YOU A COPY OF A DOCUMENT THAT HAS

7      BEEN PREVIOUSLY MARKED AS GOVERNMENT EXHIBIT 265.

8      A PORTION OF THIS DOCUMENT IS AN E-MAIL

9      MESSAGE FROM YOU TO PAUL MARITZ AND OTHERS, AND

10      THE PORTION THAT I'M PARTICULARLY INTERESTED

11      IN--AND YOU CAN READ AS MUCH OF THE THREE-LINE

12      E-MAIL AS YOU WISH--IS THE LAST SENTENCE, WHICH

13      READS, QUOTE, DO WE HAVE A CLEAR PLAN ON WHAT WE

14      WANT APPLE TO DO TO UNDERMINE SUN, CLOSED QUOTES?

15      DID YOU SEND THIS E-MAIL, MR. GATES, ON OR

16      ABOUT AUGUST 8TH, 1997?

17           ANSWER: I DON'T REMEMBER SENDING IT.

18           QUESTION: DO YOU HAVE ANY DOUBT THAT YOU

19      SENT IT?

20           ANSWER: NO. IT APPEARS TO BE E-MAIL I

21      SENT.

22           QUESTION: DO YOU RECOGNIZE THAT THIS IS A

23      DOCUMENT PRODUCED FROM MICROSOFT'S FILES, DO YOU

24      NOT, SIR?

25           ANSWER: NO.


                                              PAGE 17

1           QUESTION: YOU DON'T?

2           ANSWER: WELL, HOW WOULD I KNOW THAT?

3           QUESTION: WELL, DO YOU SEE THE DOCUMENT

4      PRODUCTION NUMBERS DOWN AT THE BOTTOM?

5           ANSWER: I HAVE NO IDEA WHAT THOSE NUMBERS

6      ARE."

7            "QUESTION: LET ME GO BACK TO THE E-MAIL,

8      MR. GATES.

9      WHAT DID YOU MEAN WHEN YOU ASKED MR. MARITZ

10      WHETHER OR NOT, QUOTE, WE HAVE A CLEAR PLAN ON

11      WHAT WE WANT APPLE TO DO TO UNDERMINE SUN, CLOSED

12      QUOTE?

13           ANSWER: I DON'T REMEMBER.

14           QUESTION: DID YOU PERSONALLY PARTICIPATE IN


                                              PAGE 19

1      ANY CONVERSATIONS WITH APPLE IN 1997 AND 1998?

2           ANSWER: OF ANY KIND?

3           QUESTION: LET ME BE A LITTLE MORE SPECIFIC.

4      DID YOU PARTICIPATE IN ANY CONVERSATIONS

5      WITH APPLE IN 1997 OR 1998, CONCERNING WHAT APPLE

6      WOULD OR WOULD NOT DO THAT WOULD AFFECT MICROSOFT

7      COMPETITIVELY?

8           ANSWER: WELL, THERE WERE SOME CONVERSATIONS

9      WITH STEVE JOBS ABOUT MICROSOFT OFFICE AND

10      SOME--AND A RELATIONSHIP WE FORMED AROUND THAT

11      AND SOME OTHER ISSUES.

12           QUESTION: AND DID YOU PARTICIPATE IN THOSE

13      CONVERSATIONS?

14           ANSWER: I TALKED TO STEVE JOBS ON THE

15      PHONE, I THINK, TWICE.

16           QUESTION: AND WHAT WAS THE NATURE OF YOUR

17      CONVERSATIONS WITH MR. JOBS?

18           ANSWER: WELL, STEVE HAD--STEVE CALLED ME UP

19      AND SAID THAT HE HAD BECOME THE CEO OF APPLE,

20      SORT OF, AND THAT GIL AMELIO WASN'T THE CEO OF

21      APPLE. AND HE RAISED THE QUESTION OF WAS THERE

22      SOME BENEFICIAL AGREEMENT THAT WE COULD ENTER

23      INTO DIFFERENT THAN WE'D BEEN DISCUSSING WITH

24      GIL. AND IT WASN'T A VERY LONG CALL, BUT THE

25      CONCLUSION WAS THAT GREG MAFFEI WOULD GO SEE


                                              PAGE 20

1      STEVE."

2          (PAUSE.)

3            "QUESTION: AND WAS IT YOUR UNDERSTANDING

4      THAT MICROSOFT OFFICE FOR MACINTOSH WAS BELIEVED

5      BY APPLE TO BE VERY IMPORTANT TO THEM?

6           ANSWER: I REALLY HAVE A HARD TIME

7      TESTIFYING ABOUT THE BELIEF OF A CORPORATION. I

8      REALLY DON'T KNOW WHAT THAT MEANS.

9           QUESTION: WELL, SIR, IN MAKING THE

10      DECISIONS AS TO WHAT YOU WOULD ASK OF APPLE, DID

11      YOU BELIEVE THAT WHAT YOU WERE OFFERING APPLE

12      WITH RESPECT TO MICROSOFT OFFICE FOR MACINTOSH

13      WAS IMPORTANT ENOUGH TO APPLE SO THAT THEY OUGHT

14      TO GIVE YOU SOMETHING FOR IT?

15           ANSWER: I HAVE NO IDEA WHAT YOU'RE TALKING

16      ABOUT WHEN YOU SAY "ASK."

17           QUESTION: WELL, LET ME SHOW YOU A DOCUMENT

18      THAT HAS PREVIOUSLY BEEN MARKED AS GOVERNMENT

19      EXHIBIT 268. THIS IS A DOCUMENT BEARING

20      MICROSOFT DOCUMENT PRODUCTION STAMPS MS 98

21      0110952 THROUGH 53.

22      THE FIRST PART OF THIS PURPORTS TO BE A COPY

23      OF AN E-MAIL FROM DAN--DON BRADFORD TO BEN

24      WALDMAN, WITH A COPY TO YOU, MR. MARITZ AND

25      OTHERS, ON THE SUBJECT OF, QUOTE, JAVA ON


                                              PAGE 21

1      MACINTOSH/IE CONTROL.

2      DID YOU RECEIVE A COPY OF THIS E-MAIL ON OR

3      ABOUT FEBRUARY 13TH, 1998?

4           ANSWER: I DON'T KNOW."

5            "QUESTION: DO YOU HAVE ANY REASON TO DOUBT

6      THAT YOU RECEIVED A COPY OF THIS E-MAIL?

7           ANSWER: NO.

8           QUESTION: THE FIRST PARAGRAPH READS, QUOTE,

9      APPLE WANTS TO KEEP BOTH NETSCAPE AND MICROSOFT

10      DEVELOPING BROWSERS FOR MAC--BELIEVING IF ONE

11      DROPS OUT, THE OTHER WILL LOSE INTEREST (AND ALSO

12      NOT REALLY WANTING TO PICK UP THE DEVELOPMENT

13      BURDEN). GETTING APPLE TO DO ANYTHING THAT

14      SIGNIFICANTLY MATERIALLY DISADVANTAGES NETSCAPE

15      WILL BE TOUGH. DO YOU AGREE THAT APPLE SHOULD BE

16      MEETING--IT READS, DO AGREE THAT APPLE SHOULD BE

17      MEETING THE SPIRIT OF OUR CROSS-LICENSE AGREEMENT

18      AND THAT MACOFFICE IS THE PERFECT CLUB TO USE ON

19      THEM.

20      DO YOU HAVE AN UNDERSTANDING OF WHAT

21      MR. BRADFORD MEANS WHEN HE REFERS TO MACOFFICE

22      AS, QUOTE, THE PERFECT CLUB TO USE ON APPLE,


                                              PAGE 22

1      CLOSED QUOTE?

2           ANSWER: NO.

3           QUESTION: THE SECOND SENTENCE OF THAT

4      PARAGRAPH, THE ONE THAT READS `GETTING APPLE TO

5      DO ANYTHING THAT SIGNIFICANTLY MATERIALLY

6      DISADVANTAGES NETSCAPE WILL BE TOUGH,' WAS IT

7      YOUR UNDERSTANDING IN FEBRUARY OF 1998 THAT

8      MICROSOFT WAS TRYING TO GET APPLE TO DO SOMETHING

9      TO DISADVANTAGE NETSCAPE?

10           ANSWER: NO.

11           QUESTION: DO YOU KNOW WHY MR. BRADFORD

12      WOULD HAVE WRITTEN THIS IN FEBRUARY OF 1998 AND

13      SENT A COPY TO YOU?

14           ANSWER: I'M NOT SURE.

15           QUESTION: DID YOU EVER SAY TO MR. BRADFORD,

16      IN WORDS OR IN SUBSTANCE, IN FEBRUARY OF 1988 OR

17      THEREAFTER, `MR. BRADFORD, YOU GOT IT WRONG. WE

18      ARE NOT OUT TO SIGNIFICANTLY OR MATERIALLY

19      DISADVANTAGE NETSCAPE THROUGH APPLE?

20           ANSWER: NO.

21           QUESTION: DID YOU EVER TELL MR. BRADFORD OR

22      ANYONE ELSE IN FEBRUARY 1998 OR THEREAFTER THAT

23      THEY SHOULD NOT BE TRYING TO GET APPLE TO DO

24      THINGS THAT WOULD SIGNIFICANTLY OR MATERIALLY

25      DISADVANTAGE NETSCAPE?


                                              PAGE 23

1           ANSWER: NO.

2           QUESTION: WHAT WAS MR. BRADFORD'S POSITION

3      IN FEBRUARY OF 1998?

4           ANSWER: I THINK HE HAD A SMALL GROUP IN

5      CALIFORNIA THAT WORKED--I'M NOT SURE WHO HE

6      WORKED FOR. HE PROBABLY WORKED FOR SOMEBODY WHO

7      WORKED FOR SILVERBERG--NO. NO, I'M NOT SURE WHO

8      HE WORKED FOR.

9           QUESTION: LET'S BEGIN WITH WHAT COMPANY HE

10      WORKED FOR. HE CLEARLY WORKED FOR MICROSOFT;

11      CORRECT, SIR?

12           ANSWER: THAT'S RIGHT.

13           QUESTION: AND DO YOU KNOW WHAT HIS TITLE

14      WAS?

15           ANSWER: NO.

16           QUESTION: DO YOU KNOW WHO MR. WALDMAN IS?

17           ANSWER: YES.

18           QUESTION: WHAT WAS HIS TITLE IN FEBRUARY OF

19      1998?

20           ANSWER: I DON'T KNOW.

21           QUESTION: WHAT WERE HIS RESPONSIBILITIES IN

22      FEBRUARY OF 1998?

23           ANSWER: HE WAS--HE RAN A GROUP THAT WAS

24      DOING MACINTOSH SOFTWARE. NEITHER OF THESE GUYS

25      HAVE A TITLE LIKE `VICE PRESIDENT;' THAT I CAN


                                              PAGE 24

1      SAY FOR SURE. SO, THEY--YOU KNOW, THEY HAVE A

2      TITLE LIKE ENGINEER OR SOFTWARE ENGINEER,

3      SOFTWARE ENGINEER MANAGER, BUT I DON'T KNOW THEIR

4      TITLE. THEY'RE NOT EXECUTIVES.

5           QUESTION: IN ADDITION TO YOU AND

6      MR. MARITZ, COPIES OF THIS GO TO DAVID COLE, DAVE

7      REED, CHARLES FITZGERALD, AND JOHN DEVAAN.

8      DO YOU KNOW WHAT MR. COLE'S POSITION WAS IN

9      1998?

10           ANSWER: YES.

11           QUESTION: WHAT WAS IT?

12           ANSWER: HE WAS THE VP--ACTUALLY, I DON'T

13      KNOW VP OF WHAT, BUT HE WAS A VP WORKING FOR--I

14      DON'T KNOW IF WE REORGANIZED BY THEN. HE WAS IN

15      MARITZ'S ORGANIZATION SOMEWHERE."

16          (PAUSE.)

17            "QUESTION: AND MR. DEVAAN?

18           ANSWER: MR. DEVAAN WAS MANAGING THE OVERALL

19      OFFICE DEVELOPMENT.

20           QUESTION: DID YOU HAVE ANY CONVERSATIONS

21      WITH ANYONE WITHIN MICROSOFT AS TO WHAT POSITION

22      MICROSOFT SHOULD TAKE WITH APPLE IN TERMS OF WHAT

23      MICROSOFT SHOULD ASK APPLE FOR IN RETURN FOR

24      MICROSOFT DEVELOPING MACOFFICE?

25           ANSWER: WHAT TIME FRAME ARE YOU IN?


                                              PAGE 25

1           QUESTION: 1997 OR 1998.

2           ANSWER: WELL, IT ACTUALLY MAKES A BIG

3      DIFFERENCE. WE REACHED AN AGREEMENT WITH APPLE

4      IN 1997, AND THERE IS NO--I'M NOT AWARE OF ANY

5      AGREEMENT OTHER THAN THE 1997 ONE.

6      MR. BOIES: COULD I HAVE THE QUESTION READ

7      BACK.

8      (THE RECORD WAS READ AS FOLLOWS):

9           QUESTION: DID YOU HAVE ANY CONVERSATIONS

10      WITH ANYONE WITHIN MICROSOFT AS TO WHAT POSITION

11      MICROSOFT SHOULD TAKE WITH APPLE IN TERMS OF WHAT

12      MICROSOFT SHOULD ASK APPLE FOR IN RETURN FOR

13      MICROSOFT DEVELOPING MACOFFICE?

14      THE WITNESS: I'M NOT SURE WHAT YOU'RE

15      SAYING ABOUT MACOFFICE. WE DEVELOPED MACOFFICE

16      BECAUSE IT'S A PROFITABLE BUSINESS FOR US.

17           BY MR. BOIES:

18           QUESTION: WELL, YOU THREATENED TO CANCEL

19      MACOFFICE, DID YOU NOT, SIR?

20           ANSWER: NO.

21           QUESTION: YOU NEVER THREATENED APPLE THAT

22      YOU WERE GOING TO CANCEL MACOFFICE? IS THAT YOUR

23      TESTIMONY?

24           ANSWER: THAT'S RIGHT.

25           QUESTION: DID YOU EVER DISCUSS WITHIN


                                              PAGE 26

1      MICROSOFT THREATENING APPLE THAT YOU WERE GOING

2      TO CANCEL MACOFFICE?

3           ANSWER: YOU WOULDN'T CANCEL--NO."

4            "QUESTION: NOW, LET ME DIRECT YOUR

5      ATTENTION TO THE SECOND ITEM ON THE FIRST PAGE OF

6      THIS EXHIBIT. AND THIS PURPORTS TO BE AN E-MAIL

7      FROM MR. WALDMAN TO YOU, DATED JUNE 27, 1997; IS

8      THAT CORRECT, SIR?

9           ANSWER: THE SECOND ONE, UMM-HMM.

10           QUESTION: YOU HAVE TO ANSWER AUDIBLY YES OR

11      NO, MR. GATES.

12           ANSWER: YES, THE SECOND ONE.

13           QUESTION: NOW, IN THE SECOND PARAGRAPH OF

14      THIS E-MAIL TO YOU, THE SECOND SENTENCE READS,

15      QUOTE, THE THREAT TO CANCEL MACOFFICE 97 IS

16      CERTAINLY THE STRONGEST BARGAINING POINT WE HAVE,

17      AS DOING SO WILL DO A GREAT DEAL OF HARM TO APPLE

18      IMMEDIATELY,.

19      DO YOU SEE THAT, SIR?

20           ANSWER: UMM-HMM.

21           QUESTION: DO YOU RECALL RECEIVING THIS


                                              PAGE 30

1      E-MAIL IN JUNE OF 1997?

2           ANSWER: NOT SPECIFICALLY.

3           QUESTION: DO YOU HAVE ANY DOUBT THAT YOU

4      RECEIVED THIS E-MAIL IN JUNE OF 1997?

5           ANSWER: NO.

6           QUESTION: DO YOU KNOW WHY MR. WALDMAN WROTE

7      YOU IN JUNE OF 1997 THAT THE THREAT TO CANCEL

8      MACOFFICE 97 IS CERTAINLY THE STRONGEST

9      BARGAINING POINT WE HAVE, AS DOING SO WILL HAVE

10      DO A GREAT DEAL OF HARM TO APPLE IMMEDIATELY?

11           ANSWER: WELL, MR. WALDMAN WAS IN CHARGE OF

12      THIS UPDATE, AND THE MACOFFICE PRODUCT HAD BEEN

13      SHIPPING FOR OVER A DECADE BY NOW, AND THERE WAS

14      A FINANCIAL QUESTION OF WHETHER TO DO THIS

15      UPDATE. AND HE FELT IT MADE GOOD BUSINESS

16      SENTENCE TO DO IT. OTHER PEOPLE, IRRESPECTIVE OF

17      THE RELATIONSHIP WITH APPLE, HAD SAID THAT IT

18      DIDN'T MAKE SENSE TO DO THE UPDATE. AND SO,

19      THERE WAS SOME MAIL FROM BEN, INCLUDING THIS ONE,

20      WHERE HE WAS SAYING HE THOUGHT WE SHOULD GO AHEAD

21      AND FINISH THE PRODUCT.

22      I'M NOT SURE WHAT HE MEANS ABOUT THE

23      NEGOTIATIONS WITH APPLE. I'M NOT SURE WHAT WE

24      WERE NEGOTIATING WITH APPLE AT THIS POINT.

25           QUESTION: WAS THIS THE TIME THAT YOU WERE


                                              PAGE 31

1      NEGOTIATING WITH APPLE TO TRY TO FIND OUT WHAT

2      YOU COULD GET APPLE TO DO TO UNDERMINE SUN?

3           ANSWER: WELL, THE ONLY E-MAIL--THE ONLY

4      THING YOU'VE SHOWN ME WHERE THAT TERM WAS USED IS

5      AFTER WE REACHED A MACOFFICE AGREEMENT WITH

6      APPLE.

7           QUESTION: YOU'RE REFERRING TO YOUR E-MAIL

8      DATED AUGUST 8, 1997; IS THAT CORRECT?

9           ANSWER: THAT'S RIGHT.

10           QUESTION: THAT HAS BEEN MARKED AS

11      EXHIBIT 265; IS THAT CORRECT?

12           ANSWER: THAT'S RIGHT. THAT'S AFTER.

13           QUESTION: THAT'S AUGUST 8TH, 1997?

14           ANSWER: THAT'S RIGHT.

15           QUESTION: AND IT IS CLEAR FROM YOUR AUGUST

16      8TH, 1997, MEMO THAT YOU ARE STILL ATTEMPTING TO

17      GET APPLE TO DO ADDITIONAL THINGS, IS IT NOT,

18      SIR?

19           ANSWER: NO.

20           QUESTION: WELL, SIR, LET'S READ IT. IT IS

21      ONLY THREE LINES. YOU QUITE, QUOTE, I WANT TO

22      GET AS MUCH MILEAGE AS POSSIBLE OUT OF OUR

23      BROWSER AND JAVA RELATIONSHIP HERE.

24      AND WHEN YOU TALK ABOUT `HERE,' YOU'RE

25      TALKING ABOUT WITH APPLE, ARE YOU NOT, SIR?


                                              PAGE 32

1           ANSWER: I'M NOT SURE.

2           QUESTION: WELL, THE SUBJECT OF THIS IS `FW:

3      POST-AGREEMENT;' CORRECT, SIR?

4           ANSWER: YEAH. THAT'S WHAT MAKES ME THINK

5      THIS WAS PROBABLY POST-AGREEMENT.

6           QUESTION: POST-AGREEMENT WITH APPLE; RIGHT?

7           ANSWER: YES.

8           QUESTION: OKAY. SO, THE SUBJECT IS

9      POST-AGREEMENT WITH APPLE, AND THE VERY FIRST

10      SENTENCE SAYS, `I WANT TO GET AS MUCH MILEAGE AS

11      POSSIBLE OUT OF OUR BROWSER AND JAVA RELATIONSHIP

12      HERE.'

13      THE SECOND SENTENCE SAYS, `IN OTHER WORDS, A

14      REAL ADVANTAGE AGAINST SUN AND NETSCAPE.'

15      THE THIRD LINE SAYS, `WHO SHOULD AVI BE

16      WORKING WITH? DO WE HAVE A CLEAR PLAN ON WHAT WE

17      WANT APPLE TO DO TO UNDERMINE SUN?'

18      NOW, DO YOU HAVE ANY DOUBT THAT WHEN YOU

19      TALK ABOUT `I WANT TO GET AS MUCH MILEAGE AS

20      POSSIBLE OUT OF OUR BROWSER AND JAVA RELATIONSHIP

21      HERE,' YOU'RE TALKING ABOUT APPLE?

22           ANSWER: THAT'S WHAT IT APPEARS.

23           QUESTION: OKAY. DO YOU HAVE ANY

24      RECOLLECTION OF ANY DISCUSSIONS ABOUT THE SUBJECT

25      MATTER OF THIS E-MAIL IN OR ABOUT AUGUST OF 1997?


                                              PAGE 33

1      IF THE QUESTION WAS CONFUSING, I WOULD BE

2      HAPPY TO REPHRASE IT, MR. GATES.

3           ANSWER: GO AHEAD.

4           QUESTION: DID YOU SEND THIS E-MAIL?

5           ANSWER: IT APPEARS I DID.

6           QUESTION: DID YOU DISCUSS THIS E-MAIL WITH

7      ANYONE?

8           ANSWER: I DON'T REMEMBER THAT.

9           QUESTION: LET ME GO BACK TO EXHIBIT 263,

10      WHICH IS THE JUNE 27, 1997, E-MAIL FROM

11      MR. WALDMAN TO YOU.

12      DO YOU RECALL--AND I KNOW YOU'VE SAID YOU

13      DON'T RECALL RECEIVING THIS E-MAIL, BUT DO YOU

14      RECALL ANYONE DESCRIBING THE THREAT TO CANCEL

15      MACOFFICE 97 AS A BARGAINING POINT THAT YOU HAVE

16      IN DEALINGS WITH APPLE, IN OR ABOUT JUNE OF 1997?

17           ANSWER: I REMEMBER GOING TO MEETINGS WHERE

18      PAUL MARITZ TOOK THE POSITION THAT WE SHOULDN'T

19      DO THE UPDATE, AND--THE MACOFFICE 97 UPDATE.

20      AND THE MAIN NEGOTIATION WE HAD WITH APPLE

21      AT THIS POINT WAS A DISCUSSION ABOUT A PATENT

22      CROSS-LICENSE, AND SO I SAID TO PAUL I WANTED TO

23      UNDERSTAND BETTER WHERE WE WERE ON THE PATENT

24      CROSS-LICENSE AND UNDERSTAND THE STATE OF THE

25      MACOFFICE DEVELOPMENT.


                                              PAGE 34

1      AND THEN IT APPEARS THAT THIS IS AN E-MAIL

2      THAT IS COMING AFTER THAT MEETING. I DON'T

3      REMEMBER SOMEBODY USING THOSE EXACT WORDS.

4           QUESTION: WHETHER YOU REMEMBER SOMEBODY

5      USING THE EXACT WORDS THAT MR. WALDMAN USES IN

6      HIS JUNE 27, 1997, E-MAIL TO YOU, DO YOU REMEMBER

7      PEOPLE TELLING YOU, IN SUBSTANCE, THAT THE THREAT

8      TO CANCEL MACOFFICE 97 WAS A STRONG BARGAINING

9      POINT THAT YOU HAD AGAINST APPLE AND THAT

10      CANCELING MACOFFICE 97 WOULD DO A GREAT DEAL OF

11      HARM TO APPLE IMMEDIATELY?

12           ANSWER: I KNOW THERE WAS THE INTERNAL

13      DEBATE ABOUT WHETHER TO DO THE UPDATE, AND I KNOW

14      THERE WAS THE PATENT DISCUSSION GOING ON. AND I

15      SAID THAT MAYBE--EVEN IF IT DIDN'T MAKE BUSINESS

16      SENSE TO DO THE UPDATE, MAYBE AS PART OF AN

17      OVERALL RELATIONSHIP WITH THE PATENT

18      CROSS-LICENSE, THAT WE SHOULD GO AHEAD AND DO IT.

19      AND SO, A COMMITMENT TO DO THE UPGRADE WAS

20      ONE OF THE THINGS THAT WE TOLD APPLE WE MIGHT

21      COMMIT TO AS PART OF THE PATENT CROSS-LICENSE

22      RELATIONSHIP.

23           QUESTION: AND DID YOU BELIEVE IN 1997 THAT

24      CANCELING MACOFFICE 97 WOULD DO A GREAT DEAL OF

25      HARM TO APPLE, AS MR. WALDMAN WRITES YOU IT


                                              PAGE 35

1      WOULD?

2           ANSWER: THERE WAS A QUESTION ABOUT WHETHER

3      TO DO THE UPGRADE AND WHETHER IT MADE BUSINESS

4      SENSE. I CAN'T REALLY SAY HOW MUCH IMPACT IT

5      WOULD HAVE ON APPLE OF US DOING THE UPGRADE OR

6      NOT. CERTAINLY BEN, AS THE PERSON IN CHARGE OF

7      THE UPGRADE, WAS VERY PASSIONATE ABOUT ITS

8      IMPORTANCE AND ITS DRAMATIC NATURE.

9           QUESTION: MY QUESTION TO YOU NOW, SIR, IS

10      WHETHER YOU BELIEVED THAT CANCELING MACOFFICE 97

11      WOULD DO A GREAT DEAL OF HARM TO APPLE.

12           ANSWER: WELL, I KNOW THAT APPLE WOULD

13      PREFER THAT WE HAVE A MORE UPDATED VERSION OF

14      MACOFFICE, THAT THAT WOULD BE A POSITIVE THING

15      FOR THEM, AND SO THAT'S WHY IT WAS PART OF THE

16      NEGOTIATION RELATIVE TO THE PATENT CROSS-LICENSE.

17           QUESTION: AND DID YOU BELIEVE THAT

18      CANCELING MACOFFICE 97 WOULD DO A GREAT DEAL OF

19      HARM TO APPLE?

20           ANSWER: I TOLD YOU I THINK IT WOULD BE

21      BETTER FOR APPLE TO HAVE EVERYBODY DOING MAJOR

22      UPGRADES LIKE THIS. I DOUBT--YOU KNOW, I

23      DON'T--I CAN'T CHARACTERIZE THE LEVEL OF BENEFIT

24      OF THE UPGRADE TO APPLE, BUT CERTAINLY IT'S

25      SOMETHING THEY WANTED US TO COMPLETE.


                                              PAGE 36

1           QUESTION: THE NEXT SENTENCE IN

2      MR. WALDMAN'S JUNE 27, 1997, E-MAIL TO YOU

3      BEGINS, `I ALSO BELIEVE THAT APPLE IS TAKING THIS

4      THREAT PRETTY SERIOUSLY.'

5      DID SOMEONE TELL YOU, IN OR ABOUT JUNE OF

6      1997, THAT APPLE WAS TAKING MICROSOFT'S THREAT TO

7      CANCEL MACOFFICE 97 SERIOUSLY OR PRETTY

8      SERIOUSLY?

9           ANSWER: WELL, MARITZ HAD TAKEN THE POSITION

10      THAT IT DIDN'T MAKE BUSINESS SENSE TO FINISH THIS

11      UPGRADE, AND IT'S VERY POSSIBLE APPLE MIGHT HAVE

12      HEARD ABOUT MARITZ'S OPINION THERE AND,

13      THEREFORE, BEEN WORRIED THAT WE, BUSINESS-WISE,

14      DIDN'T SEE A REASON TO COMPLETE THE UPGRADE, AND

15      THAT THEY--THEY WOULD HAVE THE OLDER MACOFFICE AS

16      OPPOSED TO THIS NEW WORK THAT WE WERE PARTWAY

17      ALONG ON.

18           QUESTION: MR. GATES, MY QUESTION IS NOT

19      WHAT POSITION MR. MARITZ DID OR DID NOT TAKE. MY

20      QUESTION IS WHETHER ANYONE TOLD YOU, IN OR ABOUT

21      JUNE OF 1997, THAT APPLE WAS TAKING PRETTY

22      SERIOUSLY MICROSOFT'S THREAT TO CANCEL

23      MACOFFICE 97.

24           ANSWER: APPLE MAY HAVE KNOWN THAT SENIOR

25      EXECUTIVES AT MICROSOFT, MARITZ IN PARTICULAR,


                                              PAGE 37

1      THOUGHT THAT IT DIDN'T MAKE BUSINESS SENSE TO

2      COMPLETE THAT UPGRADE.

3           QUESTION: MR. GATES, I'M NOT ASKING YOU

4      WHAT APPLE MAY HAVE KNOWN OR MAY NOT HAVE KNOWN.

5      WHAT I'M ASKING YOU IS WHETHER ANYBODY TOLD YOU,

6      IN OR ABOUT JUNE OF 1997, THAT APPLE WAS TAKING

7      PRETTY SERIOUSLY MICROSOFT'S THREAT TO CANCEL

8      MACOFFICE 97.

9           ANSWER: THOSE PARTICULAR WORDS?

10           QUESTION: TOLD YOU THAT IN WORDS OR IN

11      SUBSTANCE.

12           ANSWER: I THINK I REMEMBER HEARING THAT

13      APPLE HAD HEARD ABOUT MARITZ'S VIEW THAT IT

14      DIDN'T MAKE SENSE TO CONTINUE THE UPGRADE,

15      BUT--AND THAT, YOU KNOW, THEY WANTED US TO

16      CONTINUE THE UPGRADE. BUT I--I DON'T REMEMBER

17      ANY OF THE--IT BEING PHRASED AT ALL THE WAY

18      YOU'RE PHRASING IT.

19           QUESTION: WELL, THE WAY I'M PHRASING IT IS

20      THE WAY THAT MR. WALDMAN PHRASED IT TO YOU IN HIS

21      E-MAIL OF JUNE 27 OF 1997; CORRECT, SIR?

22           ANSWER: WELL, IN READING IT, I SEE THOSE

23      WORDS, YES."

24          (PAUSE.)

25            "QUESTION: MR. GATES, MR. WALDMAN, ON JUNE


                                              PAGE 38

1      27, 1997, SENDS YOU AN E-MAIL THAT SAYS, `THE

2      THREAT TO CANCEL MACOFFICE 97 IS CERTAINLY THE

3      STRONGEST BARGAINING POINT WE HAVE, AS DOING SO

4      WILL DO A GREAT DEAL OF HARM TO APPLE

5      IMMEDIATELY. I ALSO BELIEVE THAT APPLE IS TAKING

6      THIS THREAT PRETTY SERIOUSLY,' CLOSED QUOTE.

7      DO YOU RECALL ANYONE--

8           ANSWER: DO YOU WANT TO FINISH THE SENTENCE

9      OR NOT?

10           QUESTION: YOU CAN, IF YOU THINK IT IS

11      NECESSARY TO ANSWER THE QUESTION.

12      DO YOU RECALL ANYONE TELLING YOU WHAT I HAVE

13      JUST QUOTED, IN WORDS OR IN SUBSTANCE, IN OR

14      ABOUT JUNE OF 1997?

15           ANSWER: NO."

16          (PAUSE.)

17            "QUESTION: OKAY. LET ME ASK YOU TO LOOK AT

18      A DOCUMENT PREVIOUSLY MARKED AS GOVERNMENT

19      EXHIBIT 260."

20      DID YOU SEND THIS E-MAIL, MR. GATES, ON OR

21      ABOUT JUNE 23, 1996?

22           ANSWER: I DON'T REMEMBER IT SPECIFICALLY,

23      BUT I DON'T HAVE ANY REASON TO DOUBT THAT I DID.

24           QUESTION: IN THE SECOND PARAGRAPH YOU SAY,

25      QUOTE, I HAVE TWO KEY GOALS IN INVESTING IN THE

26      APPLE RELATIONSHIP: ONE, MAINTAIN OUR

27      APPLICATIONS SHARE ON THE PLATFORM; AND TWO, SEE

28      IF WE CAN GET THEM TO EMBRACE INTERNET EXPLORER

29      IN SOME WAY, CLOSED QUOTE.

30      DO YOU SEE THAT?

31           ANSWER: YEAH.

32           QUESTION: DOES THAT REFRESH YOUR

33      RECOLLECTION AS TO WHAT YOUR TWO KEY GOALS WERE

34      IN CONNECTION WITH APPLE IN JUNE OF 1996?

35           ANSWER: FIRST OF ALL, JUNE OF 1996 IS NOT

36      IN THE TIME FRAME THAT YOUR PREVIOUS QUESTION

37      RELATED TO. AND CERTAINLY IN THE E-MAIL TO THIS

38      GROUP, I'M NOT TALKING ABOUT THE PATENT THING,

39      BUT BELIEVE ME, IT WAS OUR TOP GOAL IN THINKING

40      ABOUT APPLE FOR MANY, MANY YEARS BECAUSE OF THEIR


                                              PAGE 40

1      ASSERTIONS.

2           QUESTION: MY TIME FRAME IN MY QUESTION,

3      SIR, WAS A TIME FRAME BEGINNING IN 1996, WHEN YOU

4      BEGAN TO VIEW NETSCAPE OR THE JAVA RUNTIME THREAT

5      AS A COMPETITIVE THREAT TO MICROSOFT.

6           ANSWER: AND THAT WAS AFTER JUNE OF 1996.

7           QUESTION: AND IS IT YOUR TESTIMONY THAT IN

8      JUNE OF 1996 YOU DID NOT CONSIDER NETSCAPE TO BE

9      A COMPETITIVE THREAT TO MICROSOFT?

10           ANSWER: NETSCAPE WAS A COMPETITOR, BUT IN

11      TERMS OF JAVA AND ALL THE RUNTIME-RELATED ISSUES,

12      WE DIDN'T HAVE A CLEAR VIEW OF THAT AT ALL.

13           QUESTION: SO THAT--I WANT TO BE SURE I'VE

14      GOT YOUR TESTIMONY ACCURATELY.

15      IT IS YOUR TESTIMONY THAT IN JUNE OF 1996

16      YOU CONSIDERED NETSCAPE TO BE A COMPETITIVE

17      THREAT, BUT YOU DID NOT CONSIDER JAVA OR JAVA

18      RUNTIME TO BE A COMPETITIVE THREAT; IS THAT YOUR

19      TESTIMONY?

20           ANSWER: WE CONSIDERED NETSCAPE TO BE A

21      COMPETITOR, AND I TOLD YOU EARLIER THAT UNTIL

22      LATE '96, WE WERE UNCLEAR ABOUT OUR POSITION ON

23      VARIOUS JAVA RUNTIME THINGS AND WHAT OTHER

24      COMPANIES WERE DOING AND WHAT THAT MEANT FOR US

25      COMPETITIVELY.


                                              PAGE 41

1           QUESTION: DO YOU AGREE THAT IN JUNE OF

2      1996, THE TWO KEY GOALS THAT YOU HAD IN TERMS OF

3      THE APPLE RELATIONSHIP WERE, QUOTE, ONE, MAINTAIN

4      YOUR APPLICATIONS SHARE ON THE PLATFORM; AND TWO,

5      SEE IF YOU COULD GET APPLE TO EMBRACE INTERNET

6      EXPLORER IN SOME WAY?

7           ANSWER: NO.

8           QUESTION: DO YOU HAVE ANY EXPLANATION FOR

9      WHY YOU WOULD HAVE WRITTEN TO MR. MARITZ AND

10      MR. SILVERBERG ON JUNE 23, 1996, THAT THOSE WERE

11      YOUR TWO KEY GOALS IN THE APPLE RELATIONSHIP?

12           ANSWER: NO, THEY WEREN'T INVOLVED IN THE

13      PATENT ISSUE AT ALL, SO WHEN I WRITE TO THEM, I'M

14      FOCUSED ON THE ISSUES THAT RELATE TO THEM.

15      I DO MENTION PATENTS IN HERE, BUT THAT

16      CERTAINLY WAS THE PRIMARY GOAL AT THIS TIME AND

17      IN SUBSEQUENT TIMES.

18           QUESTION: LET ME BE CLEAR. WHEN YOU WRITE

19      TO MR. MARITZ AND MR. SILVERBERG, YOU TALK ABOUT

20      PATENTS, DO YOU NOT, SIR?

21           ANSWER: WHERE DO YOU SEE THAT?

22           QUESTION: WELL, DID YOU TALK ABOUT PATENTS?

23           ANSWER: DO YOU WANT ME TO READ THE ENTIRE

24      MAIL?

25           QUESTION: HAVE YOU READ IT ENOUGH TO KNOW


                                              PAGE 42

1      WHETHER YOU TALK ABOUT PATENTS?

2           ANSWER: I SAW THE WORD "PATENT" IN ONE

3      PLACE. IF I READ THE WHOLE THING, I COULD FIND

4      OUT IF IT'S IN THE OTHER PLACES AS WELL.

5           QUESTION: YOU DO TALK ABOUT PATENT

6      CROSS-LICENSE, DO YOU NOT, IN THIS MEMO? AND IF

7      YOU WANT TO LOOK AT THE LAST PAGE, FIVE LINES

8      FROM THE BOTTOM.

9           ANSWER: YEAH, THEY WEREN'T INVOLVED IN THE

10      PATENT ISSUES AT ALL, SO IT LOOKS LIKE IN THIS

11      MAIL I JUST MENTION THAT IN A SUMMARY PART, BUT

12      IT WAS OUR TOP GOAL IN OUR DISCUSSIONS WITH

13      APPLE.

14           QUESTION: WHEN YOU WRITE TO MR. MARITZ AND

15      MR. SILVERBERG, YOU DON'T DESCRIBE THAT AS YOUR

16      TOP GOAL. IN FACT, YOU DON'T EVEN DESCRIBE IT AS

17      ONE OF YOUR TWO OR THREE KEY GOALS; CORRECT, SIR?

18           ANSWER: THIS PIECE OF E-MAIL DOESN'T TALK

19      ABOUT THE PATENT GOAL AS THE TOP GOAL. IT'S MOST

20      LIKELY THAT'S BECAUSE THE PEOPLE COPIED ON THE

21      MAIL DON'T HAVE A THING TO DO WITH IT, AND I

22      WOULDN'T DISTRACT THEM WITH IT.

23           QUESTION: I WANT TO BE SURE I HAVE YOUR

24      TESTIMONY CORRECT.

25      IN JUNE OF 1996, WHAT WAS PAUL MARITZ'S


                                              PAGE 43

1      TITLE?

2           ANSWER: HE WAS INVOLVED IN PRODUCT

3      DEVELOPMENT ACTIVITIES.

4           QUESTION: HE WAS INVOLVED IN PRODUCT

5      DEVELOPMENT ACTIVITIES.

6      WHAT WAS HIS TITLE?

7           ANSWER: I DON'T KNOW. SYSTEMS.

8           QUESTION: SYSTEMS?

9           ANSWER: UMM-HMM.

10           QUESTION: DID HE HAVE A TITLE THAT WENT

11      WITH THAT?

12           ANSWER: SENIOR VICE PRESIDENT-SYSTEMS. I

13      DON'T KNOW.

14           QUESTION: SENIOR VICE PRESIDENT-SYSTEMS, I

15      SEE.

16      DID MR. SILVERBERG HAVE A POSITION IN JUNE

17      OF 1996?

18           ANSWER: HE WORKED FOR MR. MARITZ.

19           QUESTION: DID HE HAVE A TITLE?

20           ANSWER: I DON'T KNOW WHAT HIS TITLE WAS AT

21      THE TIME. HE WOULD HAVE BEEN AN OFFICER OF SOME

22      KIND.

23           QUESTION: AN OFFICER OF SOME KIND.

24      SO, YOU'RE WRITING A MEMO TO PAUL MARITZ, A

25      SENIOR VICE PRESIDENT; AND BRAD SILVERBERG, AN


                                              PAGE 44

1      OFFICER OF SOME KIND, AND YOU'RE SENDING COPIES

2      TO FOUR OTHER PEOPLE ON THE SUBJECT OF THE APPLE

3      MEETING. AND YOU SAY, `I HAVE TWO KEY GOALS IN

4      INVESTING IN THE APPLE RELATIONSHIP.'

5           ANSWER: THAT'S QUITE DISTINCT THAN ANY

6      GOALS I MIGHT HAVE FOR A DEAL WITH APPLE. IT

7      SAYS, `I HAVE TWO KEY GOALS IN INVESTING IN THE

8      APPLE RELATIONSHIP,' NOT, `I HAVE TWO KEY GOALS

9      FOR A DEAL WITH APPLE.'

10           QUESTION: WELL, SIR, AT THE BOTTOM YOU SAY

11      WHAT YOU PROPOSE IN TERMS OF A DEAL, AND YOU TALK

12      ABOUT WHAT APPLE WILL GET OUT OF THE DEAL AND

13      WHAT MICROSOFT WILL GET OUT OF THE DEAL; CORRECT,

14      SIR?

15           ANSWER: DO YOU WANT ME TO READ TO YOU THE

16      E-MAIL? I MEAN, I DON'T KNOW ANYTHING MORE THAN

17      JUST WHAT IT SAYS IN THE E-MAIL. I'M GLAD TO

18      READ IT TO YOU.

19           QUESTION: WELL, SIR, DOES IT SAY AT THE

20      BOTTOM OF THE E-MAIL THAT YOU ARE PROPOSING

21      SOMETHING WITH APPLE AND YOU ARE IDENTIFYING WHAT

22      APPLE WOULD GET UNDER YOUR PROPOSED DEAL AND WHAT

23      MICROSOFT WOULD GET UNDER YOUR PROPOSED DEAL?

24           ANSWER: YEAH, THAT'S THE BOTTOM OF THE

25      E-MAIL.


                                              PAGE 45

1           QUESTION: IN FACT, THE BOTTOM OF THE E-MAIL

2      TALKING ABOUT A PROPOSED APPLE MICROSOFT DEAL,

3      YOU SAY, QUOTE, THE DEAL WOULD LOOK LIKE THIS,

4      AND THEN YOU GOT A COLUMN `APPLE GETS' AND A

5      COLUMN `MICROSOFT GETS' AND A COLUMN `BOTH GETS;'

6      RIGHT, SIR?

7           ANSWER: I'M READING THAT.

8           QUESTION: OKAY. NOW, IN THIS E-MAIL OF A

9      PAGE OR A 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; CORRECT?

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. THIS SAYS,

18      `I HAVE TWO KEY GOALS IN INVESTING IN THE APPLE

19      RELATIONSHIP.' THIS DOWN HERE IS AN AGREEMENT

20      WHICH I THOUGHT WE COULD REACH WITH APPLE.

21           QUESTION: AND IS IT YOUR TESTIMONY HERE

22      TODAY UNDER OATH THAT YOUR TWO KEY GOALS IN

23      INVESTING IN THE APPLE RELATIONSHIP, WHICH YOU

24      MENTIONED IN THE SECOND PARAGRAPH OF THIS E-MAIL,

25      IS DIFFERENT THAN YOUR TWO KEY GOALS IN THE


                                              PAGE 46

1      PROPOSED DEAL THAT YOU DESCRIBE FIVE PARAGRAPHS

2      LATER?

3           ANSWER: I DON'T SEE ANYTHING IN HERE ABOUT

4      THE KEY GOALS--TWO KEY GOALS IN THE DEAL. I'VE

5      TOLD YOU THAT I'M CERTAIN THAT MY PRIMARY GOAL IN

6      ANY DEAL WAS THE PATENT CROSS-LICENSE.

7           QUESTION: MR. GATES, MY QUESTION IS WHETHER

8      IT IS YOUR TESTIMONY TODAY HERE UNDER OATH THAT

9      WHEN YOU TALK ABOUT YOUR TWO KEY GOALS IN

10      INVESTING IN THE APPLE RELATIONSHIP IN THE SECOND

11      PARAGRAPH OF THIS E-MAIL, THAT IS DIFFERENT THAN

12      WHAT YOUR KEY GOALS WERE IN THE DEAL THAT YOU

13      PROPOSED FIVE PARAGRAPHS LATER?

14           ANSWER: THAT'S RIGHT. INVESTING IN A

15      RELATIONSHIP IS DIFFERENT THAN THE DEAL.

16           QUESTION: NOW, YOU DON'T TELL MR. MARITZ OR

17      MR. SILVERBERG THAT YOUR GOALS FOR INVESTING IN

18      THE APPLE RELATIONSHIP ARE DIFFERENT THAN YOUR

19      GOALS IN THE PROPOSED DEAL, DO YOU, SIR?

20           ANSWER: BUT THE GOALS AND THE DEAL ARE

21      QUITE DIFFERENT, SO OBVIOUSLY, THEY WOULD HAVE

22      KNOWN THEY WERE QUITE DIFFERENT.

23           QUESTION: WELL, SIR, YOU SAY THE GOALS AND

24      THE DEAL ARE QUITE DIFFERENT. ONE OF YOUR TWO

25      KEY GOALS THAT YOU TALK ABOUT IN YOUR FIRST


                                              PAGE 47

1      PARAGRAPH--IN YOUR SECOND PARAGRAPH IS TO GET

2      APPLE TO EMBRACE INTERNET EXPLORER IN SOME WAY.

3      AND THE VERY FIRST THING UNDER WHAT MICROSOFT

4      GETS IN YOUR PROPOSED DEAL IS, QUOTE, APPLE

5      ENDORSES MICROSOFT INTERNET EXPLORER TECHNOLOGY.

6      DO YOU SEE THAT, SIR?

7           ANSWER: UMM-HMM.

8           QUESTION: NOW, DOES THAT REFRESH YOUR

9      RECOLLECTION THAT THE DEAL THAT YOU WERE

10      PROPOSING HAD SOME RELATIONSHIP TO THE TWO KEY

11      GOALS THAT YOU WERE IDENTIFYING?

12           ANSWER: SOME RELATIONSHIP, YES, BUT THEY

13      AREN'T THE SAME THING AT ALL."

14          (PAUSE.)

15            "QUESTION: AND WHEN YOU SAID IN YOUR

16      JUNE 23, 1996, E-MAIL, QUOTE, I HAVE TWO KEY

17      GOALS IN INVESTING IN THE APPLE RELATIONSHIP,

18      CLOSED QUOTE, YOU WERE TALKING ABOUT YOURSELF

19      PERSONALLY; IS THAT CORRECT?

20           ANSWER: YEAH. WHEN I SAY `INVESTING IN THE

21      APPLE RELATIONSHIP,' THAT MEANS SPENDING TIME

22      WITH APPLE AND GROWING THE RELATIONSHIP.

23           QUESTION: AND WHEN IN DESCRIBING THE DEAL

24      THE FIVE PARAGRAPHS LATER, THE VERY FIRST THING

25      THAT MICROSOFT GETS IS, QUOTE, APPLE ENDORSES


                                              PAGE 48

1      MICROSOFT INTERNET EXPLORER TECHNOLOGY, CLOSED

2      QUOTE, DID THAT INDICATE TO YOU THAT THAT WAS AN

3      IMPORTANT PART OF WHAT YOU WERE GETTING IN TERMS

4      OF THE DEAL?

5           ANSWER: NO SUCH DEAL WAS EVER STRUCK, SO

6      I'M NOT SURE WHAT YOU'RE SAYING.

7           QUESTION: WAS THAT AN IMPORTANT PART OF THE

8      DEAL THAT YOU WERE TRYING TO GET, SIR?

9           ANSWER: WE NEVER GOT AS FAR AS TRYING TO

10      GET THAT DEAL, UNFORTUNATELY.

11           QUESTION: YOU NEVER GOT AS FAR AS TRYING TO

12      GET THAT DEAL? IS THAT WHAT YOU'RE SAYING?

13           ANSWER: NO. WELL, IN THIS TIME FRAME, GIL

14      AMELIO'S TOTAL FOCUS WAS ON HIS NEW OS STRATEGY,

15      AND SO WHAT I OUTLINED HERE WE NEVER--WE NEVER

16      GOT THEM TO CONSIDER.

17           QUESTION: WELL, SIR, YOUR E-MAIL BEGINS,

18      `LAST TUESDAY NIGHT, I WENT DOWN TO ADDRESS THE

19      TOP APPLE EXECUTIVES;' CORRECT, SIR?

20           ANSWER: THAT'S RIGHT.

21           QUESTION: AND DOWN AT THE BOTTOM, WHEN

22      YOU'RE INTRODUCING THE DEAL, YOU SAY, QUOTE, I

23      PROPOSED.

24      NOW, YOU ARE REFERRING TO WHAT YOU PROPOSED

25      TO THE APPLE TOP EXECUTIVES, ARE YOU NOT, SIR?


                                              PAGE 49

1           ANSWER: YES.

2           QUESTION: OKAY. AND WHAT YOU PROPOSED WAS,

3      QUOTE, THE DEAL THAT YOU THEN DESCRIBE AT THE

4      BOTTOM OF THE FIRST PAGE AND THE TOP OF THE

5      SECOND PAGE; CORRECT, SIR?

6           ANSWER: THAT'S RIGHT.

7           QUESTION: AND THAT WAS A DEAL THAT YOU

8      PROPOSED THE TUESDAY NIGHT BEFORE JUNE 23, 1996,

9      TO WHICH YOU DESCRIBE AS THE TOP APPLE

10      EXECUTIVES; CORRECT, SIR?

11           ANSWER: I PUT FORWARD SOME OF THOSE POINTS.

12           QUESTION: WELL, YOU PUT THEM FORWARD, AND

13      YOU DESCRIBE THEM AS PROPOSING A DEAL; CORRECT,

14      SIR?

15           ANSWER: THAT'S HOW I DESCRIBE IT HERE, YES.

16           QUESTION: ALL RIGHT, SIR. NOW, YOU'D SAID

17      THAT THE DEAL THAT YOU WERE TALKING ABOUT NEVER

18      GOT DONE.

19      DID YOU EVER GET APPLE TO ENDORSE MICROSOFT

20      INTERNET EXPLORER TECHNOLOGY?

21           ANSWER: YOU'RE TRYING TO JUST READ PART OF

22      THAT?

23           QUESTION: I'M ACTUALLY--WHAT I'M DOING IS

24      ASKING A QUESTION RIGHT NOW, SIR. I'M ASKING

25      WHETHER IN 1996 OR OTHERWISE, AT ANY TIME, DID


                                              PAGE 50

1      YOU GET APPLE TO ENDORSE MICROSOFT INTERNET

2      EXPLORER TECHNOLOGY?

3           ANSWER: WELL, YOU CAN GET A COPY OF THE

4      AGREEMENT WE REACHED WITH APPLE AND DECIDE IF, IN

5      READING THAT, YOU THINK IT MEETS THAT CRITERIA OR

6      NOT.

7           QUESTION: SIR, I'M ASKING YOU--AS THE CHIEF

8      EXECUTIVE OFFICER OF MICROSOFT, I'M ASKING YOU

9      WHETHER YOU BELIEVE THAT YOU ACHIEVED THAT

10      OBJECTIVE.

11           ANSWER: WE DID NOT GET SOME EXCLUSIVE

12      ENDORSEMENT. WE DID GET SOME--THERE'S SOME PART

13      OF THE DEAL THAT HAS TO DO WITH INTERNET EXPLORER

14      TECHNOLOGY.

15           QUESTION: DO YOU KNOW WHAT THAT PART OF THE

16      DEAL IS?

17           ANSWER: NOT REALLY. IT HAS SOMETHING TO DO

18      WITH THEY WILL AT LEAST SHIP IT ALONG WITH OTHER

19      BROWSERS.

20           QUESTION: DOES THE DEAL PROHIBIT THEM FROM

21      SHIPPING NETSCAPE'S BROWSER WITHOUT ALSO SHIPPING

22      INTERNET EXPLORER?

23           ANSWER: I'D HAVE TO LOOK AT THE DEAL TO

24      UNDERSTAND.

25           QUESTION: IT'S YOUR TESTIMONY, SITTING HERE


                                              PAGE 51

1      TODAY UNDER OATH, THAT YOU SIMPLY DON'T KNOW, ONE

2      WAY OR THE OTHER, WHETHER APPLE IS TODAY FREE TO

3      SHIP NETSCAPE'S BROWSER WITHOUT ALSO SHIPPING

4      INTERNET EXPLORER?

5           ANSWER: THAT'S RIGHT.

6           QUESTION: WHEN YOU IDENTIFY THINGS AS `KEY

7      GOALS,' DO YOU TYPICALLY TEND TO FOLLOW UP AND

8      SEE TO WHAT EXTENT THOSE GOALS HAVE BEEN

9      ACHIEVED?

10           ANSWER: IN A VERY GENERAL SENSE, YES."

11          (PAUSE.)

12            "QUESTION: DID YOUR GOALS CHANGE?

13           ANSWER: GOALS FOR WHAT? FOR INVESTING IN

14      THIS RELATIONSHIP?

15           QUESTION: YOU SAY IN THIS E-MAIL THAT YOU

16      HAVE TWO KEY GOALS FOR INVESTING IN THE APPLE

17      RELATIONSHIP. ONE OF--

18           ANSWER: IN INVESTING IN THE APPLE

19      RELATIONSHIP.

20           QUESTION: ONE OF THEM IS TO GET APPLE TO

21      EMBRACE INTERNET TECHNOLOGY IN SOME WAY. WHAT

22      I'M ASKING YOU IS WHETHER THAT CHANGED AFTER THIS

23      PERSON GOT FIRED.

24           ANSWER: WE RE-EVALUATED ALL OF OUR THOUGHTS

25      ABOUT WORKING WITH APPLE BASED ON WHAT THE NEW


                                              PAGE 52

1      MANAGEMENT WAS GOING TO DO, WHETHER THEY WERE

2      GOING TO TARGET THE MACHINES, WHAT THEY WERE

3      GOING TO DO WITH THEIR MACHINES. SINCE THEY

4      CONTINUED TO SAY THAT WE WERE IN VIOLATION OF

5      THEIR PATENTS, IT CONTINUED TO BE OUR TOP GOAL TO

6      GET SOME TYPE OF PATENT CROSS-LICENSE.

7      MR. BOIES: READ THE QUESTION BACK, PLEASE.

8      (THE RECORD WAS READ AS FOLLOWS:)

9           QUESTION: YOU SAY IN THIS E-MAIL THAT YOU

10      HAVE TWO KEY GOALS FOR INVESTING IN THE APPLE

11      RELATIONSHIP. ONE OF--

12           ANSWER: IN INVESTING IN THE APPLE

13      RELATIONSHIP.

14           QUESTION: ONE OF THEM IS TO GET APPLE TO

15      EMBRACE INTERNET TECHNOLOGY IN SOME WAY. WHAT

16      I'M ASKING YOU IS WHETHER THAT CHANGED AFTER THIS

17      PERSON GOT FIRED.

18      THE WITNESS: YOU KEEP, EITHER INTENTIONALLY

19      OR UNINTENTIONALLY, TRYING TO CONFUSE MY GOALS

20      FOR INVESTING IN THE RELATIONSHIP WITH THE GOALS

21      WE HAD OVERALL FOR VARIOUS DEALINGS WITH APPLE.

22      CERTAINLY, THE GOALS I HAD FOR INVESTING IN THE

23      RELATIONSHIP, THAT I HAD TO START OVER AND

24      RETHINK BECAUSE THE INVESTMENT WAS TO SPEND TIME

25      WITH THE CEO WHO HAD BEEN FIRED.


                                              PAGE 53

1           BY MR. BOIES:

2           QUESTION: MR. GATES, NEITHER IN THIS E-MAIL

3      NOR IN ANY OTHER DOCUMENT THAT EITHER OF US IS

4      AWARE OF, DO YOU MAKE THAT DISTINCTION THAT

5      YOU'RE MAKING NOW; CORRECT?

6      MR. HEINER: OBJECTION.

7           BY MR. BOIES:

8           QUESTION: DO YOU UNDERSTAND THE QUESTION

9      I'M ASKING?

10           ANSWER: THIS DOCUMENT DOES NOT SAY THAT MY

11      GOALS FOR DEALING--DOES NOT STATE MY GOALS FOR

12      DEALING WITH APPLE UP HERE. IT STATES MY GOALS

13      IN INVESTING IN THE APPLE RELATIONSHIP. SO,

14      THERE IS A CLEAR DISTINCTION RIGHT THERE IN THAT

15      DOCUMENT.

16           QUESTION: MR. GATES, THIS DOCUMENT DEALS

17      WITH A PROPOSED DEAL THAT YOU MADE TO TOP APPLE

18      EXECUTIVES; CORRECT?

19           ANSWER: THAT'S ONLY ONE PART OF WHAT IS IN

20      THE DOCUMENT. THERE IS A PART WHERE IT TALKS

21      ABOUT--YOU NEVER MENTIONED IT, BUT THE FIRST GOAL

22      IS MAINTAIN OUR APPLICATIONS SHARE ON THE

23      PLATFORM. THAT'S SOMETHING I'M DOING IN

24      INVESTING IN THE APPLE RELATIONSHIP, AND THAT'S

25      NOT RELATED TO THE DEAL THAT'S GIVEN--THE


                                              PAGE 54

1      PROPOSED DEAL THAT'S DISCUSSED BELOW IN THE

2      E-MAIL.

3      SO, THOSE ARE CLEARLY TWO SEPARATE THINGS.

4      RELATED, BUT SEPARATE.

5           QUESTION: WHAT I THINK I'VE DONE IS I THINK

6      I HAVE MENTIONED THE FIRST GOAL A NUMBER OF

7      TIMES.

8           ANSWER: I DON'T THINK SO."

9            "QUESTION: NOW, YOU SAY HERE, `I HAVE TWO

10      KEY GOALS IN INVESTING IN APPLE RELATIONSHIP, ONE

11      OF WHICH WAS TO GET APPLE TO EMBRACE INTERNET

12      EXPLORER TECHNOLOGY IN SOME WAY.'

13      DID THAT CONTINUE TO BE A GOAL THAT YOU HAD

14      AFTER 1996?

15           ANSWER: IT WASN'T A GOAL IN INVESTING IN

16      THE APPLE RELATIONSHIP IN TERMS--IN THE SENSE I

17      MEANT IT HERE. IT WAS A GOAL FOR OUR OVERALL

18      DEALING WITH APPLE.

19           QUESTION: OKAY.


                                              PAGE 55

1           ANSWER: ONE OF MANY.

2           QUESTION: OKAY. WAS IT A KEY GOAL?

3           ANSWER: I'M NOT SURE WHAT YOU MEAN BY `KEY

4      GOAL.' IT WAS A GOAL.

5           QUESTION: WHAT I MEAN BY KEY GOAL IS WHAT

6      YOU MEANT BY KEY GOAL IN YOUR JUNE 23, 1996,

7      E-MAIL, MR. GATES.

8           ANSWER: THAT'S ABOUT INVESTING IN THE APPLE

9      RELATIONSHIP, WHICH MEANT SPENDING TIME WITH GIL

10      AMELIO, SO I DON'T KNOW WHY YOU CAN TAKE THE WORD

11      OUT OF THERE AND APPLY IT TO A COMPLETELY

12      DIFFERENT CONTEXT.

13           QUESTION: BUT, SIR, WHEN YOU SAY A

14      COMPLETELY DIFFERENT CONTEXT, LET'S BE CLEAR

15      ABOUT WHAT WE ARE TALKING ABOUT.

16      THE COMPLETELY DIFFERENT CONTEXT THAT YOU'RE

17      TALKING ABOUT IS THE DIFFERENCE BETWEEN INVESTING

18      IN THE APPLE RELATIONSHIP AND DOING A DEAL WITH

19      APPLE; IS THAT WHAT YOU'RE SAYING?

20           ANSWER: NO. WE HAVE GOALS FOR OUR GENERAL

21      DEALINGS WITH APPLE, WHICH CAME TO A DEAL--WE

22      ACTUALLY REACHED A DEAL EITHER IN LATE JULY '97

23      OR EARLY AUGUST. BUT THERE WAS A SEPARATE THING

24      OF WHAT WAS THAT DEAL, WHAT WERE WE ABLE TO

25      ACHIEVE, WHAT WERE WE TRYING TO ACHIEVE WHEN WE


                                              PAGE 56

1      WERE NEGOTIATING WITH THE PREVIOUS MANAGEMENT A

2      DEAL, AND WHAT I'M TRYING TO DO IN TERMS OF

3      SPENDING MY TIME INVESTING IN THE APPLE

4      RELATIONSHIP.

5           QUESTION: AND WHAT YOU'RE SAYING IS, IT IS

6      YOUR TESTIMONY UNDER OATH, AND ALTHOUGH YOU CAN'T

7      RECALL ACTUALLY HAVING SENT THIS E-MAIL, YOU'RE

8      CONFIDENT WHEN YOU WROTE THIS AND REFERRED TO

9      INVESTING IN THE APPLE RELATIONSHIP, YOU MEANT

10      ONLY WHAT YOU EXPECTED TO GET OUT OF SPENDING

11      TIME WITH THE APPLE EXECUTIVES; IS THAT YOUR

12      TESTIMONY?

13           ANSWER: YEAH, I WAS EXPLAINING WHY I WAS

14      SPENDING TIME WITH GIL AMELIO.

15           QUESTION: AND THAT'S ALL YOU MEANT TO BE

16      SAYING HERE, IS YOUR TESTIMONY?

17           ANSWER: THAT'S WHAT--IN READING THIS,

18      THAT'S WHAT I BELIEVE I WAS TRYING TO COMMUNICATE

19      TO THE RECIPIENTS OF THE E-MAIL.

20           QUESTION: ALL RIGHT, SIR. LET ME ASK YOU

21      TO LOOK AT A DOCUMENT PREVIOUSLY MARKED AS

22      GOVERNMENT EXHIBIT 255."


                                              PAGE 57

1      "QUESTION: THIS PURPORTS TO BE AN E-MAIL,

2      AND THE SECOND ITEM ON THE E-MAIL IS AN E-MAIL

3      FROM JOHN LUDWIG TO DON BRADFORD, DATED AUGUST

4      21, 1997, AND THE SUBJECT IS `CONVERSATIONS WITH

5      BILLG LAST NIGHT.'

6      AND THE BILLG REFERRED TO THERE IS YOU;

7      CORRECT, SIR?

8           ANSWER: YES.

9           QUESTION: AND IT BEGINS, `I WAS AT THE EXEC

10      STAFF MEETING LAST NIGHT.'

11      AND CAN YOU EXPLAIN FOR THE RECORD WHAT THE

12      `EXEC STAFF MEETING' WAS.

13           ANSWER: HE IS REFERRING TO A REGULAR

14      GET-TOGETHER FOUR TIMES A YEAR OF THE MICROSOFT

15      EXECUTIVE STAFF.

16           QUESTION: AND HE GOES ON TO SAY THAT THERE

17      WERE THREE INTERESTING EXCHANGES WITH BILL AND

18      THE WHOLE GROUP ABOUT APPLE. DO YOU SEE THAT?

19           ANSWER: I SEE IT.

20           QUESTION: AND NUMBER ONE IS, QUOTE, BILL'S

21      TOP PRIORITY IS FOR US TO GET THE BROWSER IN THE

22      OCTOBER OS RELEASE FROM APPLE. WE SHOULD DO

23      WHATEVER IT TAKES TO MAKE THIS HAPPEN. IF WE ARE

24      GETTING SHUT OUT, WE SHOULD ESCALATE TO BILL.


                                              PAGE 58

1      YOU SHOULD MAKE SURE THAT WE ARE ENGAGING DEEPLY

2      WITH APPLE ON THIS ONE AND RESOLVING ANY AND ALL

3      ISSUES, CLOSED QUOTE.

4      DO YOU RECALL CONVEYING TO YOUR EXECUTIVE

5      STAFF, IN OR ABOUT AUGUST OF 1997, THAT YOUR TOP

6      PRIORITY WAS TO GET MICROSOFT'S BROWSER IN THE

7      OCTOBER OS RELEASE FROM APPLE?

8           ANSWER: NO, I DON'T RECALL THAT.

9           QUESTION: THE TOP E-MAIL, WHICH IS FROM DON

10      BRADFORD TO A NUMBER OF PEOPLE, DATED AUGUST 21,

11      1997, AND IS ALSO ON THE SUBJECT OF, QUOTE,

12      CONVERSATIONS WITH BILLG LAST NIGHT, CLOSED

13      QUOTE, SAYS THAT MR. BRADFORD AND SOMEONE ELSE,

14      MOHAN THOMAS, QUOTE, WILL TAKE THE LEAD ON

15      WORKING OUT THE APPLE BUNDLE DEAL, CLOSED QUOTE.

16      DO YOU SEE THAT?

17           ANSWER: YES.

18           QUESTION: DID YOU INSTRUCT YOUR EXECUTIVE

19      STAFF, IN OR ABOUT AUGUST OF 1997, TO WORK OUT A,

20      QUOTE, APPLE BUNDLE DEAL, CLOSED QUOTE?

21           ANSWER: WELL, I THINK THIS IS POST THE

22      AUGUST AGREEMENT, LATE JULY OR EARLY AUGUST

23      AGREEMENT WE REACHED WITH APPLE. AND I THINK

24      THERE WERE SOME CIRCUMSTANCES UNDER WHICH THEY

25      WOULD INCLUDE OR BUNDLE IE WITH SOME OF THEIR


                                              PAGE 59

1      SHIPMENTS. I THINK THAT'S WHAT THAT'S REFERRING

2      TO.

3           QUESTION: AND IS THAT WHAT YOUR PRESENT

4      RECOLLECTION IS THAT YOU TOLD YOUR EXECUTIVE

5      STAFF IN AUGUST OF 1997?

6           ANSWER: WELL, I DON'T RECALL SPECIFICALLY

7      WHAT I SAID TO THE EXECUTIVE STAFF ABOUT APPLE,

8      BUT IT APPEARS LUDWIG TOOK OUT OF THAT THAT HE

9      WAS SUPPOSED TO MAKE SURE THAT WHATEVER OUTS THAT

10      APPLE HAD UNDER THE PREVIOUS AGREEMENT FOR NOT

11      SHIPPING OUR TECHNOLOGY, THAT WE AVOIDED THOSE

12      BEING A PROBLEM THAT PREVENTED THEM FROM SHIPPING

13      OUR TECHNOLOGY.

14           QUESTION: WELL, APPLE WASN'T PROHIBITED

15      FROM SHIPPING YOUR TECHNOLOGY IN AUGUST OF 1997,

16      WAS IT, SIR?

17           ANSWER: NO. I ACTUALLY THINK THERE WAS--IF

18      WE--I DON'T KNOW THE APPLE AGREEMENT, I HAVEN'T

19      READ IT, BUT I THINK THERE IS SOMETHING IN THERE

20      THAT IF WE GOT CERTAIN THINGS DONE AND IF THERE

21      WERE NO PROBLEMS AND IT PASSED TESTS AND WE WERE

22      READY IN TIME, THAT THEY WOULD ACTUALLY

23      AFFIRMATIVELY INCLUDE SOME OF OUR TECHNOLOGY IN

24      VARIOUS OS RELEASES. AND THIS APPEARS TO BE A

25      DISCUSSION ABOUT WHETHER OR NOT WE ARE GOING TO


                                              PAGE 60

1      BE ABLE TO MEET THE REQUIREMENTS ON US RELATED TO

2      THAT.

3           QUESTION: IT IS CLEAR THAT GETTING THE

4      BROWSER IN THE OCTOBER OS RELEASE FROM APPLE WAS

5      SOMETHING THAT YOU, BILL GATES, AND MICROSOFT

6      WANTED; CORRECT, SIR?

7           ANSWER: YES, THAT'S SOMETHING THAT WE

8      WANTED.

9           QUESTION: OKAY. THE LAST SENTENCE OF THE

10      SECOND PARAGRAPH SAYS, `BILL WAS CLEAR THAT HIS

11      WHOLE GOAL HERE IS TO KEEP APPLE AND SUN SPLIT.

12      HE DOESN'T CARE THAT MUCH ABOUT BEING ALIGNED

13      WITH APPLE. HE JUST WANTS THEM SPLIT FROM OTHER

14      POTENTIAL ALLIES.'

15      AND THAT RELATES TO JAVA, DOES IT NOT, SIR?

16           ANSWER: I DON'T HAVE A DIRECT RECOLLECTION,

17      BUT IF YOU READ THE SENTENCE IN FRONT OF IT, THAT

18      PARAGRAPH SEEMS TO RELATE TO JAVA RUNTIME.

19           QUESTION: NOW, DO YOU HAVE A RECOLLECTION

20      OF TELLING YOUR EXECUTIVE STAFF, IN OR ABOUT

21      AUGUST 21, THAT YOUR WHOLE GOAL WITH RESPECT TO

22      APPLE RELATING TO JAVA RUNTIME WAS TO KEEP APPLE

23      AND SUN SPLIT?

24           ANSWER: NO.

25           QUESTION: WHO WAS AT THIS EXECUTIVE STAFF


                                              PAGE 61

1      MEETING?

2           ANSWER: PROBABLY MEMBERS OF THE EXECUTIVE

3      STAFF.

4           QUESTION: AND WHO WERE THEY?

5           ANSWER: IT'S ABOUT 40 TO 50 PEOPLE. I

6      DOUBT YOU WANT TO TAKE THE TIME FOR ME TO GUESS.

7      WE GENERALLY GET ABOUT 70 PERCENT ATTENDANCE.

8      LOOKING AT THIS DOCUMENT, I THINK IT'S VERY

9      LIKELY THAT I WAS THERE AND JOHN LUDWIG WAS

10      THERE, BUT AS TO THE REST OF THE EXECUTIVE STAFF,

11      I'D JUST BE GUESSING.

12      IT'S VERY RARE FOR US TO HAVE NONEXECUTIVE

13      STAFF MEMBERS AT THOSE MEETINGS, ALTHOUGH

14      SOMETIMES IT HAPPENS.

15           QUESTION: IS MR. LUDWIG SOMEBODY WHO YOU

16      BELIEVE IS AN HONEST AND COMPETENT PERSON?

17           ANSWER: IN GENERAL, YES.

18           QUESTION: DO YOU HAVE ANY REASON TO BELIEVE

19      THAT HE WOULD MAKE UP ANYTHING ABOUT WHAT YOUR

20      STATEMENTS WERE?

21           ANSWER: NO."

1            "QUESTION: LET ME ASK YOU TO LOOK AT A

2      DOCUMENT THAT HAS BEEN PREVIOUSLY MARKED AS

3      GOVERNMENT 58.

4      THIS IS AN E-MAIL TO YOU FROM DAN SLIVKA,

5      DATED APRIL 14, 1997. AND THE SUBJECT IS, QUOTE,

6      JAVA REVIEW WITH YOU, CLOSED QUOTE.

7      DID YOU RECEIVE THIS E-MAIL IN OR ABOUT

8      APRIL OF 1997, MR. GATES?


                                              PAGE 68

1           ANSWER: I DON'T REMEMBER.

2           QUESTION: THE E-MAIL BEGINS THAT THE AUTHOR

3      IS WORKING WITH PAUL MARITZ TO SET UP A TWO- TO

4      THREE-HOUR REVIEW FOR YOU ON YOUR JAVA EFFORTS.

5      DO YOU SEE THAT?

6           ANSWER: ON OUR JAVA EFFORTS.

7           QUESTION: ON MICROSOFT'S JAVA EFFORTS.

8           ANSWER: NO, I THINK IT'S BEN SLIVKA'S

9      GROUP.

10           QUESTION: AND HE IS A MICROSOFT GROUP;

11      RIGHT?

12           ANSWER: YES. HE'S PART OF MICROSOFT, BUT

13      NOT ALL OF MICROSOFT.

14           QUESTION: SO, YOU WOULD INTERPRET THIS THAT

15      HE IS WORKING WITH PAUL MARITZ TO SET UP A TWO-

16      TO THREE-HOUR REVIEW FOR YOU OF PART OF

17      MICROSOFT'S JAVA EFFORTS BUT NOT ALL OF

18      MICROSOFT'S JAVA EFFORTS; IS THAT WHAT YOU'RE

19      SAYING?

20           ANSWER: YEAH, THE WORK HIS GROUP IS DOING.

21           QUESTION: THE WORK HIS GROUP IS DOING ON

22      JAVA; RIGHT?

23           ANSWER: RIGHT.

24           QUESTION: OKAY. AND HE LISTS WHAT HE

25      DESCRIBES AS SOME PRETTY POINTED QUESTIONS THAT


                                              PAGE 69

1      YOU, MR. GATES, HAD ABOUT JAVA. DO YOU SEE THAT?

2           ANSWER: WELL, I'M NOT SURE THOSE ARE THE

3      POINTED QUESTIONS. IT SAYS, `I WANT TO MAKE SURE

4      I UNDERSTAND YOUR ISSUES/CONCERNS.'

5           QUESTION: WELL, THAT'S ACTUALLY THE LAST

6      PART OF A SENTENCE THAT BEGINS, QUOTE, WHEN I MET

7      WITH YOU LAST, YOU HAD A LOT OF PRETTY POINTED

8      QUESTIONS ABOUT JAVA, SO I WANT TO MAKE SURE I

9      UNDERSTAND YOUR ISSUES/CONCERNS.

10      THAT'S WHAT THE SENTENCE SAYS; CORRECT, SIR?

11           ANSWER: RIGHT.

12           QUESTION: AND WHEN MR. SLIVKA SAYS, `I MET

13      WITH YOU LAST,' HE'S TALKING ABOUT YOU,

14      MR. GATES; CORRECT, SIR?

15           ANSWER: YES.

16           QUESTION: AND WHEN HE SAYS, `YOU HAD A LOT

17      OF PRETTY POINTED QUESTIONS ABOUT JAVA,' HE'S

18      AGAIN TALKING ABOUT YOU, MR. GATES; CORRECT?

19           ANSWER: RIGHT.

20           QUESTION: AND THEN HE LISTS WHAT HE REFERS

21      TO AS A START: `ONE, WHAT IS OUR BUSINESS MODEL

22      FOR JAVA? TWO, HOW DO WE WREST CONTROL OF JAVA

23      AWAY FROM SUN?'

24      DO YOU SEE THAT?

25           ANSWER: UMM-HMM.


                                              PAGE 70

1           QUESTION: SOMETIME PRIOR TO APRIL 14, 1997,

2      HAD YOU CONVEYED TO MR. SLIVKA THAT ONE OF YOUR

3      POINTED QUESTIONS ABOUT JAVA WAS, QUOTE, HOW DO

4      WE WREST CONTROL OF JAVA AWAY FROM SUN?

5           ANSWER: I DON'T THINK THAT I WOULD HAVE PUT

6      IT THAT WAY. CERTAINLY, IT WAS AN ISSUE ABOUT

7      THE POPULARITY OF SUN'S RUNTIME API'S VERSUS OUR

8      RUNTIME API'S."

9          (PAUSE.)

10            "QUESTION: I TAKE IT YOU KNOW MR. SLIVKA?

11           ANSWER: UMM-HMM.

12           QUESTION: YOU'VE GOT TO ANSWER YES OR NO

13      AUDIBLY SO THE REPORTER CAN TAKE IT DOWN.

14           ANSWER: YES.

15           QUESTION: AND YOU BELIEVE HIM TO BE A

16      PERSON OF COMPETENCE AND INTEGRITY?

17           ANSWER: YES.

18           QUESTION: DO YOU HAVE ANY REASON TO BELIEVE

19      THAT HE WOULD HAVE MISSTATED WHAT YOU TOLD HIM

20      WHEN YOU MET WITH HIM LAST, BEFORE APRIL 14,

21      1997?

22           ANSWER: IN NO WAY DOES THIS PURPORT TO BE

23      A RESTATEMENT OF THINGS I SAID TO BEN SLIVKA.

24           QUESTION: WELL, MR. GATES, WHAT THIS

25      MEMORANDUM SAYS IS, QUOTE, WHEN I MET WITH YOU


                                              PAGE 71

1      LAST, YOU HAD A LOT OF PRETTY POINTED QUESTIONS

2      ABOUT JAVA, SO I WANT TO BE SURE I UNDERSTAND

3      YOUR ISSUES AND CONCERNS. HERE IS A START. CAN

4      YOU PLEASE ADD ANY THAT I'M MISSING? AND THEN HE

5      LISTS SIX, THE SECOND OF WHICH IS, `HOW DO WE

6      WREST CONTROL OF JAVA AWAY FROM SUN?'

7      YOU SEE THAT IN THE EXHIBIT, DO YOU NOT,

8      SIR?

9           ANSWER: UMM-HMM, YES."

10            "QUESTION: DID YOU HAVE PERSONALLY ANY

11      DISCUSSIONS WITH APPLE WITH REGARD TO TRYING TO

12      AGREE WITH APPLE AS TO THE EXTENT TO WHICH APPLE

13      AND MICROSOFT WOULD COMPETE WITH RESPECT TO

14      APPLE'S QUICKTIME SOFTWARE?

15           ANSWER: NO.

16           QUESTION: DO YOU KNOW IF ANYONE FROM

17      MICROSOFT HAD SUCH DISCUSSIONS WITH ANYONE AT


                                              PAGE 72

1      APPLE?

2           ANSWER: I KNOW OVER A COURSE OF YEARS WE'VE

3      TALKED TO THEM ABOUT WHAT THEIR PLANS ARE FOR

4      QUICKTIME, BUT THAT'S ALL.

5           QUESTION: DOES MICROSOFT HAVE SOFTWARE THAT

6      COMPETES WITH QUICKTIME?

7           ANSWER: SINCE QUICKTIME'S A FREE RUNTIME,

8      YOU CAN ANSWER THAT EITHER YES OR NO. IT'S NOT A

9      REVENUE SOURCE FOR APPLE. BUT THERE IS AN APPLE

10      TECHNOLOGY THAT HAS SOME COMMON THINGS WITH SOME

11      MICROSOFT TECHNOLOGIES.

12           QUESTION: DO YOU BELIEVE THAT QUICKTIME

13      SOFTWARE COMPETES WITH ANY SOFTWARE DISTRIBUTED

14      BY MICROSOFT?

15      MR. HEINER: OBJECTION.

16      THE WITNESS: DEPENDS ON WHAT YOU MEAN

17      COMPETE.

18           BY MR. BOIES:

19           QUESTION: USING THAT IN THE WAY THAT YOU

20      WOULD ORDINARILY UNDERSTAND IT IN THE OPERATION

21      OF YOUR BUSINESS, SIR.

22           ANSWER: NO.

23           QUESTION: DID YOU MAKE ANY EFFORT, OR DID

24      MICROSOFT MAKE ANY EFFORT, TO GET APPLE TO AGREE

25      NOT TO MARKET QUICKTIME IN ANY RESPECT, OR TO


                                              PAGE 73

1      LIMIT THE MARKETING OF QUICKTIME IN ANY RESPECT?

2           ANSWER: THERE WERE DISCUSSIONS ABOUT

3      WHETHER WE COULD HELP THEM WITH THEIR QUICKTIME

4      GOALS AT VARIOUS POINTS IN TIME. AND, IN FACT,

5      THEY ENCOURAGED US TO DO SOMETHING WHERE WE'D

6      ACTUALLY, BY WORKING WITH THEM, MAKE QUICKTIME

7      EVEN MORE POPULAR THAN IT IS.

8      MR. BOIES: COULD YOU READ BACK MY QUESTION,

9      PLEASE.

10      (THE RECORD WAS READ AS FOLLOWS:)

11           QUESTION: DID YOU MAKE ANY EFFORT, OR DID

12      MICROSOFT MAKE ANY EFFORT, TO GET APPLE TO AGREE

13      NOT TO MARKET QUICKTIME IN ANY RESPECT, OR TO

14      LIMIT THE MARKETING OF QUICKTIME IN ANY RESPECT?

15           BY MR. BOIES:

16           QUESTION: CAN YOU ANSWER THAT QUESTION,

17      SIR?

18      MR. HEINER: OBJECTION.

19      THE WITNESS: I'M NOT AWARE OF ANYTHING THAT

20      IS DIRECTLY AIMED AS THOSE THINGS, NO.

21           BY MR. BOIES:

22           QUESTION: ARE YOU AWARE OF ANYTHING THAT

23      WAS INDIRECTLY AIMED AT THOSE THINGS?

24           ANSWER: NO.

25           QUESTION: DID, TO YOUR KNOWLEDGE, ANY


                                              PAGE 74

1      REPRESENTATIVE OF MICROSOFT TRY TO CONVINCE APPLE

2      NOT TO SELL OR PROMOTE QUICKTIME FOR USES FOR

3      WHICH MICROSOFT PROMOTES THE USE OF NETSHOW?

4           ANSWER: THERE WAS SOME DISCUSSION ABOUT THE

5      FUTURE DEVELOPMENT OF THE RUNTIME CODE AND

6      WHETHER WE COULD WORK TOGETHER ON THE WINDOWS

7      SIDE OF THAT RUNTIME CODE THAT WOULD ENHANCE

8      THEIR GOALS AND OUR GOALS.

9           QUESTION: AND WAS THERE A DISCUSSION IN

10      THAT CONTEXT ABOUT APPLE AGREEING NOT TO SELL OR

11      PROMOTE QUICKTIME FOR USES THAT MICROSOFT WAS

12      PROMOTING NETSHOW TO FULFILL?

13           ANSWER: NOT THAT I'M AWARE OF.

14           QUESTION: INSOFAR AS YOU'RE AWARE, DID

15      MICROSOFT REPRESENTATIVES TELL APPLE

16      REPRESENTATIVES THAT IF APPLE WOULD AGREE NOT TO

17      SELL OR PROMOTE QUICKTIME FOR USES FOR WHICH

18      MICROSOFT OFFERED NETSHOW, THAT MICROSOFT WOULD

19      HELP APPLE IN OTHER AREAS?

20           ANSWER: WELL, THE QUICK--AS FAR AS I KNOW,

21      THE QUICKTIME RUNTIME IS FREE. SO, WHEN YOU SAY

22      `SELL,' I DON'T KNOW--I'M NOT SURE WHAT YOU MEAN

23      THERE.

24           QUESTION: I THINK I SAID SELL OR PROMOTE, I

25      CERTAINLY MEANT TO, BUT I WILL USE THE WORD


                                              PAGE 75

1      `DISTRIBUTE,' IF THAT WILL HELP.

2           ANSWER: I THINK THERE WAS A TECHNICAL

3      DISCUSSION ABOUT WHETHER A COMMON RUNTIME WAS

4      ACHIEVABLE WHICH WOULD HAVE ENHANCED THEIR

5      QUICKTIME GOALS.

6           QUESTION: WHEN YOU SAY `A COMMON RUNTIME,'

7      WOULD YOU EXPLAIN WHAT YOU MEAN BY THAT.

8           ANSWER: I MEAN THAT THE WINDOWS MEDIA

9      PLAYER RUNTIME WOULD COMBINE TECHNOLOGY FROM THEM

10      AND FROM US THAT MET ALL OF THEIR GOALS FOR

11      QUICKTIME.

12           QUESTION: AND SO THERE WOULD BE A WINDOWS

13      MEDIA PLAYER THAT WOULD BE DISTRIBUTED, AND APPLE

14      WOULD STOP DISTRIBUTING QUICKTIME FOR PURPOSES

15      FOR WHICH THE WINDOWS MEDIA PLAYER WAS

16      DISTRIBUTED; IS THAT WHAT YOU'RE SAYING?

17           ANSWER: NO, THEY WOULDN'T HAVE TO STOP

18      ANYTHING. THERE WOULD JUST BE A NEW RUNTIME THAT

19      MIGHT INCORPORATE SOME OF THEIR TECHNOLOGY AND

20      HELP THEM WITH THEIR QUICKTIME GOALS.

21           QUESTION: WELL, WHEN YOU SAY THERE WOULD BE

22      A NEW PROGRAM THAT WOULD INCORPORATE OR MIGHT

23      INCORPORATE SOME OF THEIR TECHNOLOGY, WOULD THAT

24      RESULT IN THEM STOPPING THE DISTRIBUTION OF THEIR

25      EXISTING QUICKTIME TECHNOLOGY?


                                              PAGE 76

1           ANSWER: THERE'S NO REASON IT WOULD NEED TO.

2           QUESTION: WAS THAT PART OF THE DISCUSSIONS?

3           ANSWER: I DON'T THINK SO, BUT AS I TOLD

4      YOU, I WASN'T PART OF ANY OF THOSE DISCUSSIONS.

5           QUESTION: WERE YOU AWARE OF THOSE

6      DISCUSSIONS WHILE THEY WERE GOING ON?

7           ANSWER: I KNEW THAT APPLE HAD A--HAD THE

8      QUICKTIME RUNTIME FOR WINDOWS. AND THERE WAS

9      ALWAYS A QUESTION OF WHETHER WE COULD CREATE A

10      WINDOWS RUNTIME THAT COMBINED WHAT THEIR GOALS

11      WERE THERE AND WHAT THEY HAD DONE WELL THERE FOR

12      THE WORK WE WERE DOING. AND I KNOW WE TALKED TO

13      APPLE ABOUT WHETHER WE COULD HELP EACH OTHER IN

14      AN EFFORT LIKE THAT.

15           QUESTION: WHEN YOU TALK ABOUT HELPING EACH

16      OTHER, WOULD THAT RESULT IN A SINGLE PRODUCT THAT

17      WOULD THEN BE DISTRIBUTED IN PLACE OF BOTH

18      QUICKTIME AND NETSHOW?

19           ANSWER: NO. PEOPLE COULD STILL DISTRIBUTE

20      THEIR OLD THINGS, BUT IF YOU CREATE A NEW THING

21      THAT'S BETTER, IT MIGHT--SOME PEOPLE MIGHT USE

22      IT.

23           QUESTION: WELL, WAS THE PURPOSE OF CREATING

24      THE NEW WINDOWS MEDIA PLAYER THAT YOU REFERRED

25      TO, TO OBSOLETE QUICKTIME?


                                              PAGE 77

1           ANSWER: WHATEVER FUNCTIONALITY QUICKTIME

2      HAD PREVIOUSLY WOULD BE UNAFFECTED BY ANY SUCH

3      EFFORT.

4           QUESTION: THAT REALLY WASN'T MY QUESTION,

5      MR. GATES. MAYBE I CAN STATE IT MORE CLEARLY.

6      DID MICROSOFT TRY TO CONVINCE APPLE TO TAKE

7      ACTIONS WHICH WOULD HAVE RESULTED IN APPLE NO

8      LONGER DISTRIBUTING QUICKTIME TO PEOPLE TO WHOM

9      MICROSOFT WAS DISTRIBUTING NETSHOW OR A SUCCESSOR

10      MICROSOFT PRODUCT?

11           ANSWER: I'M NOT AWARE OF ANYTHING THAT

12      WOULD HAVE STOPPED THEM FROM DISTRIBUTING THE

13      QUICKTIME THEY HAD, BUT IT WAS POSSIBLE WE COULD

14      COME UP WITH SOMETHING THAT WOULD BE HELPFUL TO

15      BOTH COMPANIES IN TERMS OF A PRODUCT THAT TOOK

16      SOME OF THEIR TECHNOLOGY AND OURS AND WAS BETTER

17      FOR USERS.

18           QUESTION: DID MICROSOFT OFFER TO HAVE APPLE

19      CONTINUE TO OFFER A MULTIMEDIA PLAYER FOR THE MAC

20      PLATFORM AND TO ASSIST APPLE IN THAT IF APPLE

21      WOULD AGREE NOT TO DISTRIBUTE THAT MULTIMEDIA

22      PLAYER FOR THE WINDOWS PLATFORM?

23           ANSWER: AS I SAID, I DON'T THINK THERE WAS

24      ANY DISCUSSIONS ABOUT NOT DISTRIBUTING SOME OLD

25      THING, BUT, RATHER, A QUESTION WAS COULD


                                              PAGE 78

1      SOMETHING NEW BE CREATED WHICH WOULD BE BETTER

2      FOR BOTH COMPANIES.

3           QUESTION: WAS THE IDEA THAT ONCE THIS NEW

4      THING WAS CREATED, THE OLD THING THAT APPLE WAS

5      DISTRIBUTING WOULD NO LONGER BE DISTRIBUTED BY

6      APPLE?

7           ANSWER: AS I SAID, I DON'T THINK THAT WAS

8      PART OF THE DISCUSSION.

9           QUESTION: HAVE YOU EVER BEEN TOLD ANYTHING,

10      OR HAVE YOU READ ANYTHING, ABOUT ANY CONTENTION

11      THAT APPLE MAY OR MAY NOT MAKE CONCERNING THESE

12      DISCUSSIONS?

13           ANSWER: NO."

14          (PAUSE.)

15            "QUESTION: ARE YOU AWARE OF ANY ASSERTIONS

16      BY APPLE REPRESENTATIVES THAT MICROSOFT

17      REPRESENTATIVES TRIED TO GET THEM TO AGREE TO

18      DIVIDE THE MARKET?

19           ANSWER: NO.

20           QUESTION: NO ONE HAS EVER TOLD YOU THAT?

21           ANSWER: THAT'S RIGHT.

22           QUESTION: AND YOU'VE NEVER HEARD THAT FROM

23      ANY SOURCE?

24           ANSWER: THAT'S RIGHT.

25           QUESTION: DO I TAKE IT FROM WHAT YOU SAID


                                              PAGE 79

1      YESTERDAY THAT IF, IN FACT, MICROSOFT

2      REPRESENTATIVES HAD ATTEMPTED TO GET APPLE

3      REPRESENTATIVES TO PARTICIPATE IN A MARKET

4      DIVISION, THAT WOULD BE CONTRARY TO MICROSOFT

5      POLICY?

6      MR. HEINER: OBJECTION.

7      THE WITNESS: THAT'S RIGHT.

8           BY MR. BOIES:

9           QUESTION: AND I TAKE IT THAT IF YOU FOUND

10      OUT THAT PEOPLE HAD DONE THAT CONTRARY TO

11      MICROSOFT'S POLICY, THEY WOULD BE APPROPRIATELY

12      DEALT WITH?

13           ANSWER: YES.

14           QUESTION: ARE YOU A REGULAR READER OF THE

15      WALL STREET JOURNAL?

16           ANSWER: SOME DAYS I READ THE WALL STREET

17      JOURNAL.

18           QUESTION: ARE YOU AWARE OF A WALL STREET

19      JOURNAL ARTICLE THAT DISCUSSES ASSERTIONS BY

20      APPLE CONCERNING ALLEGED EFFORTS BY MICROSOFT TO

21      GET APPLE TO AGREE TO DIVIDE MARKETS?

22           ANSWER: NO.

23           QUESTION: LET ME JUST REFER YOU TO A WALL

24      STREET JOURNAL ARTICLE OF JULY 23, 1998, ENTITLED

25      `U.S. PROBING MICROSOFT'S MULTIMEDIA ROLE.'


                                              PAGE 80

1      DOES THAT REFRESH YOUR RECOLLECTION AS TO

2      WHETHER YOU EVER SAW A--A WALL STREET JOURNAL

3      ARTICLE ABOUT ALLEGED MARKET DIVISION ATTEMPTS

4      BETWEEN MICROSOFT AND APPLE?

5      MR. HEINER: DO YOU WANT TO SHOW US THE

6      ARTICLE?

7      MR. BOIES: I HAVE NO OBJECTION TO SHOWING

8      IT. AND I HAVE NO OBJECTION TO MARKING IT.

9      MR. HEINER: I DON'T CARE IF IT'S MARKED OR

10      NOT.

11      MR. BOIES: MY PURPOSE IS JUST TO TRY TO

12      REFRESH HIS RECOLLECTION TO SEE WHETHER HE

13      RECALLS HAVING EVER SEEN THIS.

14      THE WITNESS: NO."

Updated August 14, 2015