Microsoft, Google Both Claim Victory

By David A. Vise
Washington Post Staff Writer
Wednesday, September 14, 2005

A ferocious battle for the loyalty of computer users, pitting mighty Microsoft Corp. against search engine juggernaut Google Inc., is playing out in a court case that feels more like a barroom brawl than a staid conflict over one company hiring an executive away from the other.

The feud between the companies reaches the highest levels of the corporate suites and has burst into public view amid court proceedings laced with bitterness and foul language. As the heavyweight and incumbent, Microsoft is trying to defend itself against attacks involving recruiting, products and innovation from a scrappy rival that poses a threat to its preeminent position in personal computing.

Yesterday, a judge in Washington state ruled that a former Microsoft executive hired by Google can begin doing some, but not all, work for the search engine company in China, the latest twist in a battle that will play out into next year.

In a written opinion, King County Superior Court Judge Steven C. Gonzalez ruled that Kai-Fu Lee can start recruiting employees for Google, meeting with government and university officials, and establishing a headquarters for Google's new research center. But, pending a trial in January, the judge barred Lee from hiring anyone away from Microsoft, using confidential information he learned during his employment there, or working in computer search and other specified fields for Google.

Not surprisingly -- given the ongoing war of words prompted by anger over Google's hirings of dozens of Microsoft employees around the world -- both sides immediately declared victory.

Tom Burt, Microsoft's deputy general counsel for litigation, said the Redmond, Wash.-based software giant had succeeded in severely restricting Lee's activities and use of corporate secrets. He said Google was paying Lee $10 million to head its China operations even though he could actually do very little of substance in light of the ruling.

"Dr. Lee has been reduced to the highest-paid HR [human resources] manager in history," Burt said. "Even calling him an HR manager is overstating it because an HR manger has an idea what new jobs will be, and how employees will be managed. . . . I'm sure Google and Dr. Lee will portray this as a split decision. It is like a boxer who lost on a third-round knockout saying, 'Yeah, but I got a good jab in there, didn't I?' "

Nicole Wong, associate general counsel for Google, said Lee would immediately get rolling, hiring employees in China and establishing a new research center there. "We're thrilled, and he's excited to get right to work on several big things," Wang said in a written statement. "The bottom line is Dr. Lee is going to get busy."

Depositions filed in the case revealed that top Microsoft officials, including CEO Steven A. Ballmer, increasingly saw Google as a serious competitive threat, and alleged, that angry outbursts have occurred. Mark Lucovsky, a former Microsoft executive, alleged in an affidavit that he had a stormy meeting with Ballmer as he left the company in November last year.

"At some point in the conversation, Mr. Ballmer said, 'Just tell me it's not Google,' " Lucovsky stated. "I told him it was Google. At that point, Mr. Ballmer picked up a chair and threw it across the room, hitting a table in his office." After cursing about how he was going "to bury" Google chief executive Eric Schmidt, Lucovsky stated, Ballmer said: "I have done it before, and I will do it again. I'm going to [expletive] kill Google."

Ballmer also allegedly sought to persuade Lucovsky to stay at Microsoft during the meeting and in phone calls. Microsoft said Lucovsky's description exaggerated what occurred in his exit meeting and conversations with Ballmer.

In a separate affidavit, Lee said that before leaving Microsoft for Google last summer, he had a series of tense meetings with top Microsoft officials, including Chairman Bill Gates, Ballmer and others. They told the Chinese computer scientist, the highest-ranking employee snared by Google, that a lawsuit would be filed if he left for Google, Lee stated.

"You should not go. Things will be very unpleasant for you if you go," Microsoft senior vice president Rick Rashid allegedly told Lee.

"Kai-Fu, Steve is definitely going to sue you and Google over this," Gates allegedly warned Lee. "He has been looking for something just like this."

Lee said Ballmer told him: "When we do something, please don't take it personally. We like you. Your contributions to Microsoft have been immense. It's not you we are after, it is Google."

In his ruling yesterday, the judge found that Lee misled Microsoft about his plans to return to the company after a sabbatical and continued to have access to proprietary information. "Dr. Lee began assisting Google while he was still employed at Microsoft," Gonzalez wrote.

© 2005 The Washington Post Company