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Deposition of Bill Gates
August 28, 1998, Part A, Page 2

On Wednesday, April 28, 1999, the official transcript of the
deposition of Microsoft Chairman Bill Gates was released.

	1		MR. HEINER:  Let's move on.
	2		MR. BOIES:  Mr. Heiner, I understand
	3	why you want to move on.  
	4		MR. HEINER:  Relax, relax.  There must
	5	be some way to break through.  
	6		MR. BOIES:  I think there must be.  
	7		MR. HEINER:  Let's try a different
	8	question.
	9		MR. BOIES:  I think there must be, but
10	part of what I want to do is I want to get on the
11	record the way this witness answers questions.  I
12	think I'm entitled to do that.  
13		MR. HEINER:  The witness already
14	testified that this appears to be an e-mail he sent,
15	but he doesn't recall sending it.  That's what you
16	need, that's what you have.  He's not familiar with
17	the discovery process of some paralegal.  That's the
18	testimony right now.  And that's not important.   
19		MR. BOIES:  Part of the testimony was
20	he had never seen the stamp before when he's seen it 
21	40 times in this deposition.  And I think that goes
22	to this witness's credibility and I think this
23	witness's credibility is an important issue in this
24	case.  
25		MR. HEINER:  You don't care about
	1	stamps.  
	2			MR. BOIES:  I don't care about stamps. 
	3	What I care about is credibility and whether the
	4	witness is being forthright in his answers and I
	5	think I'm entitled to test that when he says things
	6	that are as remarkable as the fact that he has never
	7	seen a document production stamp like this before in
	8	this case after how long the case has gone on.  
	9			MR. HEINER:  You're not going to stand
10	up in court and talk about stamps.
11			MR. BOIES:  You're probably right about
12	that.
13		Q.	Let me go back to the e-mail,
14	Mr. Gates.  What did you mean when you asked
15	Mr. Maritz whether or not, "We have a clear plan on
16	what we want Apple to do to undermine Sun"?
17		A.	I don't remember.
18		Q.	Did you personally participate in any
19	conversations with Apple in 1997 and 1998?
20		A.	Of any kind?
21		Q.	Let me be a little more specific.  Did
22	you participate in any conversations with Apple in
23	1997 or 1998 concerning what Apple would or would not
24	do that would affect Microsoft competitively?
25		A.	Well, there were some conversations
	1	with Steve Jobs about Microsoft Office and some --
	2	and a relationship we formed around that and some
	3	other issues.
	4		Q.	And did you participate in those
	5	conversations?
	6		A.	I talked to Steve Jobs on the phone 
	7	I think twice.
	8		Q.	And what was the nature of your
	9	conversations with Mr. Jobs?
10		A.	Well, Steve had -- Steve called me up
11	and said that he had become the CEO of Apple, sort
12	of, and that Gil Amelio wasn't the CEO of Apple.  And
13	he raised the question of was there some beneficial
14	agreement that we could enter into different than
15	we'd been discussing with Gil.  And it wasn't a very
16	long call and the conclusion was that Greg Maffei
17	would go see Steve.
18		Q.	What is Mr. Maffei's title?
19		A.	At that time?
20		Q.	What is his title today?
21		A.	His title today is CFO.
22		Q.	Of Microsoft?
23		A.	Uh-huh.
24		Q.	Chief financial officer?
25		A.	Uh-huh.
	1		Q.	And what was his title at the time?
	2		A.	I think treasurer.
	3		Q.	When did Mr. Maffei go to talk to
	4	Mr. Jobs?
	5		A.	I don't recall the date.
	6		Q.	Approximately?
	7		A.	Sometime in '97.
	8		Q.	This was after your conversation with
	9	Mr. Jobs?
10		A.	Yes.
11		Q.	Did you have any conversation with
12	Mr. Jobs or anyone else at Apple after your 1997
13	conversation with Mr. Jobs?
14		A.	I had a brief conversation with him
15	again in '97 the night before a Mac World speech that
16	he was giving where I appeared as part of that
17	speech.  But it was about my role in his speech.
18		Q.	I'm going to leave that aside.  
19		A.	Well, it all relates to the agreement
20	with Apple.
21		Q.	Okay, then I won't leave it aside. 
22	What did you say to him and what did he say to you
23	about the agreement with Apple?
24		A.	I said, "It's not signed yet.  What are
25	we going to do about this presentation if it doesn't
	1	get signed?"  And he said he hoped it would be
	2	signed.  And then we talked about the logistics of
	3	appearing by video conference in the middle of his
	4	speech.
	5		Q.	Have you completed your answer?
	6		A.	Yes.
	7		Q.	Other than the two telephone -- or I
	8	guess one telephone conversation and one in person --
	9	was the brief conversation you've just recounted the
10	one in person?
11		A.	No, that was on the phone.  He was in
12	Boston, I was in Seattle.  That's why I had to do a
13	video conference to be in his speech.  
14		Q.	So both of your conversations with
15	Mr. Jobs in 1997 were by telephone; is that correct?
16		A.	There may have also been some e-mail
17	between Steve and I.  I don't think there were any
18	more phone calls, but the two I described were both
19	phone calls.  There were no face-to-face meetings
20	that I remember.
21		Q.	Other than the two telephone calls and
22	leaving e-mail aside, did you have any conversations
23	either by telephone or in person with any
24	representative of Microsoft in 1997 or 1998?
25		A.	Yes.
	1			MR. HOUCK:  You misspoke.  You said
	2	Microsoft and I think you meant Apple.
	3		Q.	BY MR. BOIES:  Other than the two
	4	telephone conversations with Mr. Jobs that you have
	5	already identified, during 1997 or 1998 did you have
	6	any conversations by telephone or in person with any
	7	representative of Apple?
	8		A.	I'm trying to think when Heidi Roizen
	9	quit Apple.  I think she quit by '97, but I'm not
10	sure.  Yeah, I'm pretty sure she quit by then, so no,
11	I don't think so.
12		Q.	Do I take it from that answer that you
13	had a conversation with Heidi Roizen?
14		A.	At some point in time that I can't
15	remember, yes.
16		Q.	And do I also take it that at some
17	point Heidi Roizen left Apple?
18		A.	That's right.
19		Q.	And that your conversation with Heidi
20	Roizen was while she was at Apple?
21		A.	Not all of my conversations with her,
22	but the ones that I thought would be responsive to
23	your questions related to the time of her employ at
24	Apple.  I've had other conversations with Heidi
25	Roizen both before she worked at Apple and after she
	1	worked at Apple.
	2		Q.	Where does she now work?
	3		A.	She doesn't have a job at this point.  
	4		Q.	Other than your possible conversations
	5	during the period with Heidi Roizen and the two
	6	telephone conversations in 1997 with Mr. Jobs, did
	7	you have any other conversations either by telephone
	8	or in person with any representative of Apple in 1997
	9	or 1998?
10		A.	No, I don't think so.
11		Q.	To your knowledge, did any
12	representative of Microsoft have any meetings or
13	telephonic discussions --
14		A.	Certainly.
15		Q.	-- with any representatives of Apple -- 
16		A.	Certainly.
17		Q.	-- in 1998 concerning competitive
18	issues?
19		A.	I don't know what you mean by
20	"competitive issues," but there is an ongoing contact
21	with Apple.  We're the largest developer of software
22	for the Apple Macintosh and so there is constant
23	discussion with Apple.
24		Q.	And as the largest developer of
25	software for the Macintosh, is what you do important
	1	to Apple?
	2		A.	Sometimes it doesn't seem like it.  We
	3	always think of it as important, but sometimes they
	4	don't treat it that way, sometimes they do.
	5		Q.	You mentioned discussions with respect
	6	to Office.  Would you explain for the record what
	7	you're talking about there.  
	8		A.	Microsoft Office.
	9		Q.	Microsoft Office for Macintosh?
10		A.	Yes.
11		Q.	And was it your understanding that
12	Microsoft Office for Macintosh was believed by Apple
13	to be very important to them?
14		A.	I really have a hard time testifying
15	about the belief of a corporation.  I really don't
16	know what that means.
17		Q.	Well, sir, in making the decisions as
18	to what you would ask of Apple, did you believe that
19	what you were offering Apple with respect to
20	Microsoft Office for Macintosh was important enough
21	to Apple so that they ought to give you something for
22	it?
23		A.	I have no idea what you're talking
24	about when you say "ask."
25		Q.	Well, let me show you a document that
	1	has been previously marked as Government Exhibit 366. 
	2	This is a document bearing Microsoft document
	3	production stamps MS98 0110952 through 53.  
	4			(The document referred to was marked
	5	by the court reporter as Government Exhibit 366 for
	6	identification and is attached hereto.) 
	7		Q.	BY MR. BOIES:  The first part of this
	8	purports to be a copy of an e-mail from Don Bradford
	9	to Ben Waldman with a copy to you, Mr. Maritz and
10	others on the subject of "Java on Macintosh/IE
11	Control."  
12			Did you receive a copy of this e-mail
13	on or about February 13, 1998?
14		A.	I don't know.
15		Q.	Do you have any reason to doubt that
16	you received a copy of this e-mail?
17		A.	No.
18		Q.	The first paragraph reads, "Apple wants
19	to keep both Netscape and Microsoft developing
20	browsers for Mac -- believing if one drops out, the
21	other will lose interest (and also not really wanting
22	to pick up the development burden.)  Getting Apple to
23	do anything that significantly/materially  
24	disadvantages Netscape will be tough.  Do agree that
25	Apple should be meeting the spirit of our cross
	1	license agreement and that MacOffice is the perfect
	2	club to use on them."  
	3			Do you have an understanding of what
	4	Mr. Bradford means when he refers to MacOffice as
	5	"the perfect club to use on Apple"?
	6		A.	No.
	7		Q.	The second sentence of that paragraph,
	8	the one that reads, "Getting Apple to do anything
	9	that significantly/materially disadvantages Netscape
10	will be tough."  Was it your understanding in
11	February of 1998 that Microsoft was trying to get
12	Apple to do something to disadvantage Netscape?
13		A.	No.
14		Q.	Do you know why Mr. Bradford would have
15	written this in February of 1998 and sent a copy to
16	you?
17		A.	I'm not sure.
18		Q.	Did you ever say to Mr. Bradford in
19	words or substance in February of 1998 or thereafter,
20	"Mr. Bradford, you've got it wrong, we're not out to
21	significantly or materially disadvantage Netscape
22	through Apple"?
23		A.	No.
24		Q.	Did you ever tell Mr. Bradford or
25	anyone else in February, 1998 or thereafter, that
	1	they should not be trying to get Apple to do things
	2	that would significantly or materially disadvantage
	3	Netscape?
	4		A.	No.
	5		Q.	What was Mr. Bradford's position in
	6	February of 1998?
	7		A.	I think he had a small group in
	8	California that worked -- I'm not sure who he worked
	9	for.  He probably worked for somebody who worked for
10	Silverberg or -- no.  No, I'm not sure who he worked
11	for.
12		Q.	Let's begin with what company he worked
13	for.  He clearly worked for Microsoft; correct, sir?
14		A.	That's right.
15		Q.	Do you know what his title was?
16		A.	No.
17		Q.	Do you know who Mr. Waldman is?
18		A.	Yes.
19		Q.	What was his title in February of 1998?
20		A.	I don't know.
21		Q.	What were his responsibilities in
22	February of 1998?
23		A.	He was -- he ran a group that was doing
24	Macintosh software.  
25			Neither of these guys have a title like
	1	vice-president.  That I can say for sure.  They have
	2	a title like engineer or software engineer, software
	3	engineer manager, but I don't know their titles. 
	4	They're not executives.
	5		Q.	In addition to you and Mr. Maritz,
	6	copies of this go to David Cole, Dave Reed, Charles
	7	Fitzgerald and Jon DeVaan.  Do you know what
	8	Mr. Cole's position was in 1998?
	9		A.	Yes.
10		Q.	What was it?
11		A.	He was the VP -- actually, I don't know
12	VP of what, but he was a VP working for -- I don't
13	know if we reorganized by then.  He was in Maritz's
14	organization somewhere.
15		Q.	What was Mr. Reed's position at that
16	time?
17		A.	I have no familiarity with Mr. Reed.
18		Q.	Do you have any familiarity with
19	Mr. Fitzgerald and Mr. DeVaan?
20		A.	Yes.
21		Q.	What were their positions?
22		A.	Charles Fitzgerald was in the
23	evangelism group working for Todd Nielson.
24		Q.	And Mr. DeVaan?
25		A.	Mr. DeVaan was managing the overall
	1	Office development.
	2		Q.	Did you have any conversations with
	3	anyone within Microsoft as to what position Microsoft
	4	should take with Apple in terms of what Microsoft
	5	should ask Apple for in return for Microsoft
	6	developing Mac Office?
	7		A.	What time frame are you in?
	8		Q.	1997 or 1998.
	9		A.	Well, it actually makes a big
10	difference.  We reached an agreement with Apple in
11	1997 and there's no -- I'm not aware of any agreement
12	other than the 1997 one.
13			MR. BOIES:  Could I have the question
14	read back.
15			(The record was read as follows:  
16			"Q.  Did you have any conversations
17		with anyone within Microsoft as to what
18		position Microsoft should take with Apple in
19		terms of what Microsoft should ask Apple for
20		in return for Microsoft developing Mac
21		Office?")
22			THE WITNESS:  I'm not sure what you're
23	saying about Mac Office.  We developed Mac Office
24	because it's a profitable business for us.
25		Q.	BY MR. BOIES:  Well, you threatened to
	1	cancel Mac Office, did you not, sir?
	2		A.	No.
	3		Q.	You never threatened Apple that you
	4	were going to cancel Mac Office; is that your
	5	testimony?
	6		A.	That's right.
	7		Q.	Did you ever discuss within Microsoft
	8	threatening Apple that you were going to cancel Mac
	9	Office?
10		A.	You wouldn't cancel -- no.
11		Q.	Let me show you a copy of a document
12	that we are marking as Government Exhibit 367.  This
13	is another document bearing document production
14	numbers from the Microsoft document production.  
15			The second item on the first page
16	purports to be an e-mail message from Ben Waldman to
17	you --
18		A.	No.
19		Q.	-- dated June 27, 1997.
20		A.	It's not to me.
21			(The document referred to was marked
22	by the court reporter as Government Exhibit 367 for
23	identification and is attached hereto.)
24		Q.	BY MR. BOIES:  Well, the one I'm
25	looking at says from Ben Waldman, sent February 27,
	1	1997, 1:56 a.m. to Bill Gates, cc John DeVaan.  
	2		A.	I must be on the wrong page.
	3		Q.	Very first page, second item.  
	4			MR. HEINER:  We have something
	5	different.
	6			MR. NEUKOM:  There is some confusion.
	7			MR. BOIES:  Okay.  Let me try to be
	8	sure we have the right document.  I will refer to it
	9	by document production numbers so that we're clear.  
10			Let me mark as Government Exhibit 368 
11	a document that bears document production stamp 
12	98 0113394 through 97.  
13			(The document referred to was marked
14	by the court reporter as Government Exhibit 368 for
15	identification and is attached hereto.) 
16		Q.	BY MR. BOIES:  Now, let me direct your
17	attention to the second item on the first page of
18	this exhibit.  And this purports to be an e-mail from
19	Mr. Waldman to you dated June 27, 1997; is that
20	correct, sir?
21		A.	The second one, uh-huh.
22		Q.	You have to answer audibly yes or no,
23	Mr. Gates.
24		A.	Yes, the second one.
25		Q.	Now, in the second paragraph of this
	1	e-mail to you, the second sentence reads, "The threat
	2	to cancel Mac Office 97 is certainly the strongest
	3	bargaining point we have, as doing so will do a great
	4	deal of harm to Apple immediately."  
	5			Do you see that, sir?
	6		A.	Uh-huh.
	7		Q.	Do you recall receiving this e-mail in
	8	June of 1997?
	9		A.	Not specifically.
10		Q.	Do you have any doubt that you received
11	this e-mail in June of 1997?
12		A.	No.
13		Q.	Do you know why Mr. Waldman wrote you
14	in June of 1997 that, "The threat to cancel Mac
15	Office 97 is certainly the strongest bargaining point
16	we have, as doing so will do a great deal of harm to
17	Apple immediately"?
18		A.	Well, Mr. Waldman was in charge of this
19	update.  And the Mac Office product had been shipping
20	for over a decade by now.  And there was a financial
21	question of whether to do this update and he felt it
22	made good business sense to do it.  Other people,
23	irrespective of the relationship with Apple, had said
24	that it didn't make sense to do the update.  And so
25	there was some mail from Ben, including this one,
	1	where he was saying he thought we should go ahead and
	2	finish the product.  I'm not sure what he means about
	3	the negotiations with Apple.  I'm not sure what we
	4	were negotiating with Apple at this point.
	5		Q.	Was this the time that you were
	6	negotiating with Apple to try to find out what you
	7	could get Apple to do to undermine Sun?
	8		A.	Well, the only e-mail -- the only thing
	9	you've shown me where that term was used is after we
10	reached a Mac Office agreement with Apple.
11		Q.	You're referring to your e-mail dated
12	August 8, 1997; is that correct?
13		A.	That's right.
14		Q.	That has been marked as Exhibit 365; is
15	that correct?
16		A.	That's right.  That's after.
17		Q.	That's August 8, 1997?
18		A.	That's right.
19		Q.	And it is clear from your August 8,
20	1997 memo that you are still attempting to get Apple
21	to do additional things, is it not, sir?
22		A.	No.
23		Q.	Well, sir, let's read it.  It's only
24	three lines.  You write, "I want to get as much
25	mileage as possible out of our browser and Java
	1	relationship here."  
	2			And when you talk about "here," you're
	3	talking about with Apple, are you not, sir?
	4		A.	I'm not sure.
	5		Q.	Well, the subject of this is "FW: 
	6	Post-agreement"; correct, sir?
	7		A.	Yeah.  That's what makes me think this
	8	was probably post-agreement.
	9		Q.	Post-agreement with Apple; right?
10		A.	Yes.
11		Q.	So the subject is post-agreement with
12	Apple, and the very first sentence is, "I want to get
13	as much mileage as possible out of our browser and
14	Java relationship here."  Second sentence says, "In
15	other words, a real advantage against Sun and
16	Netscape."  Third line says, "Who should Avie be
17	working with?  Do we have a clear plan on what we
18	want Apple to do to undermine Sun?"  
19			Now, do you have any doubt that when
20	you talk about, "I want to get as much mileage as
21	possible out of our browser and Java relationship
22	here," you're talking about Apple?
23		A.	That's what it appears.
24		Q.	Do you have any recollection of any
25	discussions about the subject matter of this e-mail
	1	in or about August of 1997?  
	2			If the question is confusing, I'd be
	3	happy to rephrase it, Mr. Gates.  
	4		A.	Go ahead.
	5		Q.	Did you send this e-mail?
	6		A.	It appears I did.
	7		Q.	Did you discuss this e-mail with
	8	anyone?
	9		A.	I don't remember that.
10		Q.	Let me go back to Exhibit 368, which is
11	the June 27, 1997 e-mail from Mr. Waldman to you.  Do
12	you recall -- and I know you've said you don't recall
13	receiving this e-mail, but do you recall anyone
14	describing the threat to cancel Mac Office 97 as a
15	bargaining point that you had in dealing with Apple
16	in or about June of 1997?
17		A.	I remember going to meetings where Paul
18	Maritz took the position that we shouldn't do the
19	update, the Mac Office 97 update.  And the main
20	negotiation we had with Apple at that point was a
21	discussion about a patent cross license.  And so I
22	said to Paul I wanted to understand better where we
23	were on the patent cross license and understand the
24	state of the Mac Office development.  And then it
25	appears that this is an e-mail that is coming after
	1	that meeting.  I don't remember somebody using those
	2	exact words.
	3		Q.	Whether you remember somebody using the
	4	exact words that Mr. Waldman uses in his June 27,
	5	1997 e-mail to you, do you remember people telling
	6	you in substance that the threat to cancel Mac Office
	7	97 was a strong bargaining point that you had against
	8	Apple and that cancelling Mac Office 97 would do a
	9	great deal of harm to Apple immediately?
10		A.	I know there was the internal debate
11	about whether to do the update.  And I know there was
12	the patent discussion going on.  And I said that
13	maybe even if it didn't make business sense to do the
14	update, maybe as part of an overall relationship with
15	the patent cross license, that we should go ahead and
16	do it.  And so a commitment to do the upgrade was one
17	of the things that we told Apple we might commit to
18	as part of the patent cross license relationship.
19		Q.	And did you believe in 1997 that
20	cancelling Mac Office 97 would do a great deal of
21	harm to Apple, as Mr. Waldman writes it would?
22		A.	There was a question about whether to
23	do the upgrade and whether it made business sense.  I
24	can't really say how much impact it would have on
25	Apple of us doing the upgrade or not.  Certainly Ben,
	1	as the person in charge of the upgrade, was very
	2	passionate about its importance and its dramatic
	3	nature.
	4		Q.	My question to you now, sir, is whether
	5	you believed that cancelling Mac Office 97 would do a
	6	great deal of harm to Apple?
	7		A.	Well, I know that Apple would prefer
	8	that we have a more updated version of Mac Office,
	9	that that would be a positive thing for them, and so
10	that's why it was part of the negotiation relative to
11	the patent cross license.
12		Q.	And did you believe that cancelling Mac
13	Office 97 would do a great deal of harm to Apple?
14		A.	I told you I think it would be better
15	for Apple to have everybody doing major upgrades like
16	this.  I doubt -- I can't characterize the level of
17	benefit of the upgrade to Apple, but certainly it's
18	something they wanted us to complete.
19		Q.	The next sentence in Mr. Waldman's 
20	June 27, 1997 e-mail to you begins, "I also believe
21	that Apple is taking this threat pretty seriously." 
22			Did someone tell you in or about June
23	of 1997 that Apple was taking Microsoft's threat to
24	cancel Mac Office 97 seriously or pretty seriously?
25		A.	Well, Maritz had taken the position
	1	that it didn't make business sense to finish this
	2	upgrade.  And it's very possible Apple might have
	3	heard about Maritz's opinion there and therefore been
	4	worried that we, businesswise, didn't see a reason to
	5	complete the upgrade and that they would have the
	6	older Mac Office as opposed to this new work that we
	7	were part way along on.
	8		Q.	Mr. Gates, my question is not what
	9	position Mr. Maritz did or did not take.  My question
10	is whether anyone told you in or about June of 1997
11	that Apple was taking pretty seriously Microsoft's
12	threat to cancel Mac Office 97?
13		A.	Apple may have known that senior
14	executives at Microsoft, Maritz in particular,
15	thought that it didn't make business sense to
16	complete that upgrade.
17		Q.	Mr. Gates, I'm not asking you what
18	Apple may have known or may not have known.  What I'm
19	asking you is whether anybody told you in or about
20	June of 1997 that Apple was taking pretty seriously
21	Microsoft's threat to cancel Mac Office 97?
22		A.	Those particular words?
23		Q.	Told you that in words or in substance.  
24		A.	I think I remember hearing that Apple
25	had heard about Maritz's view that it didn't make
	1	sense to continue the upgrade, but -- and that, you
	2	know, they wanted us to continue the upgrade.  But 
	3	I -- I don't remember any of the -- it being phrased
	4	at all the way you're phrasing it.
	5		Q.	Well, the way I'm phrasing it is the
	6	way that Mr. Waldman phrased it to you in his e-mail
	7	of June 27, 1997; correct, sir?
	8		A.	Well, in reading it, I see those words,
	9	yes.
10		Q.	And you don't have any doubt that you
11	received this e-mail, do you, sir?
12		A.	I have no reason to doubt it.  I don't
13	remember receiving it.  I do remember in general
14	sending an e-mail like the one that's at the top
15	there.
16		Q.	Do you recall anyone telling you in
17	words or in substance in or about June of 1997 what
18	Mr. Waldman is writing here in this e-mail?  
19			MR. HEINER:  Objection.
20			THE WITNESS:  This is a very long piece
21	of e-mail.  Have you read the whole e-mail yourself?  
22			MR. BOIES:  I think my question was
23	imprecise.  I was trying to avoid quoting something
24	for yet another time, but I accept your counsel's
25	view that the question was probably defective.  I
	1	thought it was clear what portion of the e-mail we
	2	were talking about, but I will make it clear.  
	3		Q.	Mr. Gates, Mr. Waldman on June 27,
	4	1997, sends you an e-mail that says, "The threat to
	5	cancel Mac Office 97 is certainly the strongest
	6	bargaining point we have, as doing so will do a great
	7	deal of harm to Apple immediately.  I also believe
	8	that Apple is taking this threat pretty seriously."  
	9			Do you recall anyone --
10		A.	Do you want to finish the sentence or
11	not?  
12		Q.	You can if you think it is necessary to
13	answer the question.  
14			Do you recall anyone telling you what I
15	have just quoted in words or in substance in or about
16	June, 1997?
17		A.	No.
18			MR. HEINER:  It's just about 10:00 now. 
19	Can we take a break?
20			MR. BOIES:  If you wish.  
21			MR. HEINER:  Yes, thanks.  
22			VIDEOTAPE OPERATOR:  The time is 9:57. 
23	We're going off the record.  
24			(Recess.)  
25			VIDEOTAPE OPERATOR:  The time is 10:21. 
	1	We are going back on the record.  
	2		Q.	BY MR. BOIES:  What were the primary
	3	goals that you personally had, Mr. Gates, in terms of
	4	getting Apple to agree to things?  
	5			MR. HEINER:  Objection.  Can you be
	6	just a bit more specific on that?
	7			MR. BOIES:  Sure.  
	8		Q.	In the period of 1996 forward, after
	9	you concluded that Java, or as you put it, Java
10	runtime threat and Netscape were competitive threats
11	to Microsoft, what were your goals in terms of
12	dealing with Apple?  What were you trying to get
13	Apple to agree to do for Microsoft?
14		A.	Well, the main reasons we were having
15	discussions with Apple in this '97 period was that
16	they had asserted that various patents that they had
17	applied to various Microsoft products, and so our
18	primary focus in discussing an agreement with them
19	was to conclude a patent cross license of some kind.
20		Q.	I want to be sure that the question and
21	answer are meeting.  I asked for a period of 1996 to
22	the present and you answered about 1997.  Were your
23	goals in 1996 or after 1997 any different than the
24	goals that you've just described in dealing with
25	Apple?
	1		A.	There's only one agreement with Apple,
	2	so I don't know what you're talking about.
	3		Q.	Okay.  Do you understand the word goals
	4	or objectives?
	5		A.	You talked about agreeing with Apple --
	6	there's only one agreement with Apple that I know
	7	about that we're discussing and that was one that was
	8	concluded in I think late July or early August, 1997
	9	and there's no other agreement that I know was even
10	discussed or considered.
11		Q.	Okay.  Let me ask you to look at a
12	document previously marked as Government Exhibit 369. 
13	The second item on the first page of this exhibit
14	purports to be an e-mail from you dated June 23, 1996
15	to Paul Maritz and Brad Silverberg with copies to
16	Messrs. Higgins, Bradford, Waldman and Ludwig on the
17	subject of "Apple meeting."  
18			(The document referred to was marked by
19	the court reporter as Government Exhibit 369 for
20	identification and is attached hereto.)  
21		Q.	BY MR. BOIES:  Did you send this
22	e-mail, Mr. Gates, on or about June 23, 1996?
23		A.	I don't remember it specifically, but I
24	don't have any reason to doubt that I did.
25		Q.	In the second paragraph you say, "I
	1	have 2 key goals in investing in the Apple
	2	relationship - 1) Maintain our applications share on
	3	the platform and 2) See if we can get them to embrace
	4	Internet Explorer in some way."  
	5			Do you see that?
	6		A.	Yeah.
	7		Q.	Does that refresh your recollection as
	8	to what your two key goals were in connection with
	9	Apple in June of 1996?
10		A.	First of all, June of 1996 is not in
11	the time frame that your previous question related
12	to.  And certainly in the e-mail to this group I'm
13	not talking about the patent thing, but believe me,
14	it was our top goal in thinking about Apple for many,
15	many years because of their assertions.
16		Q.	My time frame in my question, sir, was
17	a time frame beginning in 1996 when you began to view
18	Netscape or the Java runtime threat as a competitive
19	threat to Microsoft.
20		A.	And that was after June of 1996.
21		Q.	Is it your testimony that in June of
22	1996 you did not consider Netscape to be a
23	competitive threat to Microsoft?
24		A.	Netscape was a competitor, but in terms
25	of Java and all the runtime related issues, we didn't
	1	have a clear view of that at all.
	2		Q.	So that -- I want to be sure I've got
	3	your testimony accurately.  It is your testimony that
	4	in June of 1996 you considered Netscape to be a
	5	competitive threat but you did not consider Java or
	6	Java runtime to be a competitive threat; is that your
	7	testimony?
	8		A.	We considered Netscape to be a
	9	competitor and I told you earlier that until late '96
10	we were unclear about our position on various Java
11	runtime things and what other companies were doing
12	and what that meant for us competitively.
13		Q.	Do you agree that in June of 1996 the
14	two key goals that you had in terms of the Apple
15	relationship were, one, maintain your applications
16	share on the platform, and two, see if you could get
17	Apple to embrace Internet Explorer in some way?
18		A.	No.
19		Q.	Do you have any explanation for why you
20	would have written to Mr. Maritz and Mr. Silverberg
21	on June 23, 1996 that those were your two key goals
22	in the Apple relationship?
23		A.	They weren't involved in the patent
24	issue at all.  So when I write to them, I'm focused
25	on the issues that relate to them.  I do mention
	1	patents in here, but that certainly was the primary
	2	goal at this time and in subsequent times.
	3		Q.	Let me be clear.  When you write to
	4	Mr. Maritz and Mr. Silverberg, you talk about
	5	patents, do you not, sir?
	6		A.	Where do you see that?  
	7		Q.	Well, did you talk about patents?
	8		A.	Do you want me to read the entire mail?  
	9		Q.	Have you read it enough to know whether
10	you talk about patents?  
11		A.	I saw the word "patent" in one place. 
12	If I read the whole thing, I can find out if it's in
13	other places as well.  
14		Q.	You do talk about patent cross license,
15	do you not, in this memo?  And if you want to look at
16	the last page, five lines from the bottom.
17		A.	Yeah.  They weren't involved in the
18	patent issues at all, so it looks like in this mail I
19	just mention that in a summary part, but it was our
20	top goal in our discussions with Apple.   
21		Q.	When you write to Mr. Maritz and 
22	Mr. Silverberg, you don't describe that as your top
23	goal, in fact, you don't even describe it as one of
24	your two or three key goals; correct, sir?
25		A.	This piece of e-mail doesn't talk about
	1	the patent goal as the top goal.  It's most likely
	2	that's because the people copied on the mail don't
	3	have a thing to do with it and I wouldn't distract
	4	them with it.
	5		Q.	I want to be sure I have your testimony
	6	correct.  In June of 1996, what was Paul Maritz's
	7	title?
	8		A.	He was involved in product development
	9	activities.
10		Q.	He was involved in product development
11	activities.  What was his title?
12		A.	I don't know.  Systems.
13		Q.	Systems?
14		A.	Uh-huh.
15		Q.	Did he have a title that went with
16	that?
17		A.	Senior vice-president systems.  I don't
18	know.
19		Q.	Senior vice-president systems, I see.  
20			Did Mr. Silverberg have a position in
21	June of 1996?
22		A.	He worked for Mr. Maritz.
23		Q.	Did he have a title?
24		A.	I don't know what his title was at the
25	time.  He would have been an officer of some kind.
	1		Q.	An officer of some kind.  
	2			So you're writing a memo to Paul
	3	Maritz, a senior vice-president, and Brad Silverberg,
	4	an officer of some kind, and you're sending copies to
	5	four other people on the subject of the Apple
	6	meeting, and you say, "I have 2 key goals in
	7	investing in the Apple relationship."
	8		A.	That's quite distinct than any goals I
	9	might have for a deal with Apple.  It says, "I have 2
10	key goals in investing in the Apple relationship,"
11	not "I have 2 key goals for a deal with Apple."
12		Q.	Well, sir, at the bottom you say what
13	you propose in terms of a deal and you talk about
14	what Apple will get out of the deal and what
15	Microsoft will get out of the deal; correct, sir?
16		A.	Do you want me to read you the e-mail? 
17	I mean I don't know anything more than just what it
18	says in the e-mail.  I'm glad to read it to you.
19		Q.	Well, sir, does it say at the bottom of
20	the e-mail that you are proposing something with
21	Apple and you are identifying what Apple would get
22	under your proposed deal and what Microsoft would get
23	under your proposed deal?
24		A.	Yeah, that's at the bottom of the
25	e-mail.

Continued on page 3 of 4

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