By Nick Patience in Washington
Intuit Inc, given complete freedom of choice, would have chosen to bundle browsers from both Microsoft Corp and Netscape Communications Corp with its Quicken personal finance software, but it was prevented from doing so by a clause in its agreement with Microsoft, said Intuit chief executive William Harris at the end of his testimony in the Microsoft antitrust trial here yesterday. Outside the courtroom Microsoft’s spin doctor tried to portray Harris as saying he would choose Internet Explorer at the expense of Netscape Navigator because of its technical merit, but that was not the whole picture, which Harris clarified outside afterwards. Harris explained that his company had two decisions to make in the spring of 1997, when it was deciding whether to continue bundling only Navigator, or change. And the decisions Intuit was asked to make go to the heart of the government’s antitrust case against Microsoft. In addition to the question of which browser to integrate with Quicken, the two companies were also negotiating for a position on the active desktop push channel bar on the Windows desktop. They were talking about so-called Platinum-level placement, which would mean that it was one of the best positions on the active desktop. During re-direct examination, lead government attorney David Boies asked Harris if the active desktop consideration were removed from the total decision, which browser would Intuit have chosen at that time, in April 1997? Harris replied that from a pure technical view, the most likely outcome is that we would have distributed IE4, he said, which at the time was already offered in a componentized form. But he went on, probably, in the absence of the active desktop, Intuit would bundle both browsers. Boies asked why that would the case and Harris said that it provides more choice. Boies then produced an email from Microsoft VP Brand Chase to Bill Gates and others, forwarding a message that was originally from Microsoft senior business development manager Will Poole to Brad Chase referring to the terms agreed with Intuit. In that, Poole indicated that Intuit was obliged to bundle IE3 with Quicken and IE4 with other products; exclusively logo all Intuit web sites with the IE button; not enter into marketing or promotional agreements with any other browser manufacturer and create differentiated content area for Intuit channel that would be only available to IE users. So by tying the active desktop deal to the bundling of IE, the government argues, Microsoft put Intuit in an impossible position, leading it to abandon Netscape in favor of Microsoft in return for IE and a prominent place on the active desktop, which by Microsoft’s attorney’s own admission, has been something of a flop. To hammer the point home, the government resurrected its tactic of playing segments of the long Bill Gates video deposition, this time relating to the deal with Intuit. While Harris admitted that he had never had a conversation, either by phone or email with Gates about this matter, he had been told by Microsoft’s Poole that Gates was aware of the situation. The video showed Boies asking Gates about the Poole email that had been forwarded to Gates. Once again Gates had no recollection of ever seeing the email, though didn’t doubt that some such message may have arrived in his inbox. This continued for some time, with Gates seemingly still none the wiser and then moved on to the IE- specific differentiated content. Gates said he didn’t understand what the term meant. I don’t understand those words. So it’s hard for me to relate to the concept. I don’t understand the words, said Gates. Boies persisted, but Gates continued to plead ignorance and the clip ended with Boies asking Gates, Do you have any idea what they mean by that? to which Gates replied, No it’s confusing to me. Harris said that at the final meeting between the two companies, held at San Francisco airport in April 1997, Poole told Harris that two things were not negotiable. First that the deal could be for a maximum of one year; and second that in order to be a platinum partner, Intuit had to agree not to do any other marketing deals with other browser manufacturers. Those conditions were not specific just to Intuit, but to all platinum partners, which included AOL and Disney. Outside the court Microsoft’s Mark Murray claimed the Intuit deal was a standard cross-promotion agreement while Boies said that even it was, it shouldn’t be in a monopoly situation where one company controls such a large proportion of the operating systems market, as Microsoft does. He acknowledged reporters that pointed out that Coca-Cola and Pepsi insist certain restaurant chains only carry their drinks, but reminded them that neither Coke or Pepsi is a monopoly provider.
