TEVANIAN DIRECT TESTIMONY

BACKGROUND Tevanian is the Senior VP of Software Engineering for Apple, responsible for nearly all software products developed there. He was at NeXT before it was acquired by Apple.

His basic argument is that Microsoft has leveraged it OS monopoly to control emerging markets for software that allows one to send, create, receive, and display multimedia technologies.

For instance, when Apple bought NeXT, Apple attempted to utilize this new knowledge to create a new OS, Rhapsody. Application developers wouldn't go for it, though, because of Microsoft's dominance.

BROWSER & PATENT DISPUTES Apple currently bundles IE, Netscape, and AOL with its OS. Apple allows resellers to reconfigure the computers to not include any of these. Obviously, none are "integrated" into the OS.

In early 1997, Apple and Microsoft got involved in two arguments: * Patent infringement (unclear precisely what this was over) * Mac OS included both Netscape and IE, but Netscape was the "default".

Microsoft threatened to withdraw application support (most notably, Microsoft Office) from Mac OS unless Apple agreed to Microsoft's terms to settle these arguments.

In response to this very serious threat, Apple agreed to: make IE the default browser, put IE on the desktop, and only actively protmote IE (though it could still include Netscape, within a folder). In a concurrent agreement, Apple settled the patent dispute, for $150 million and some cross-licensing agreemnts. Apple feels that its customers generally do not change this default arrangment, meaning that IE's placement virtually guarantees it primary usage among Apple users. Apple also argues that it would have never settled these arguments this way were it not for the threats Microsoft made concerning the application markets.

In return, Microsoft agreed to: continue developing Office for five years and continue giving Apple IE for free for five years.

MULTIMEDIA: QUICKTIME I will assume familiarity with what, precisely, Quicktime is; check pgs. 20-24 of the testimony for more details.

The popularity of a cross-platform media application like Quicktime threatens the symbiotic relationship between OS and applications that Microsoft depends upon (much like Netscape threatens Microsoft's OS monopoly). ActiveX and NetShow are the competing products Microsoft claims are part of the OS.

In response to the threat Quicktime poses, Microsoft used its power to attempt to defeat QT in a number of ways: * Attempted to convince Apple to get out of multi-media playback market, and only focus on the content-creation end of the market (evidence of several meetings to this effect is presented). * Impeded growth of QT by writing OS to sabotage QT & present misleading error messages (for instance, streaming playback doesn't work).

OEM's (like Compaq) and ISV's (like AVID) are unwilling to side with Apple for fear of reprisals from Microsoft.

So, in summary, Tevanian's argument is that Microsoft used both its OS monopoly and its near-monopoly over the applications market to force Apple to grant IE prime placement within the Mac OS and to impede the growth of Quicktime.

-- Anonymous, November 15, 1998