TEVANIAN CROSS EXAMINATION

Dr. Tevanian's direct testimony focused, as outlined in David's summary, on two main points: Apple's bundling of IE with its OS and a battle between Apple and Microsoft over dominance in the Internet Multimedia market. The main thrust of Microsoft's cross-examination was to chip away at the foundation of those two claims.

The main strategy here was to paint the episodes referenced in Tevanian's testimony as innocuous, ordinary business discussions, meetings and agreements, between competitors. The dominant strategy employed by MS attorney Edelman was to lay a strong foundation for suggesting that the sinister story painted by Tevanian in relaying the events was a product of an incomplete version of the events twisted by a company that had lost its edge in the software market and no longer had clout with developers or consumers.

A. MICROSOFT FORCED APPLE TO GIVE PREFERENTIAL TREATMENT TO INTERNET EXPLORER OVER NETSCAPE

Tevanian's claim was that Microsoft forced Apple to bundle IE rather than Netscape with Mac OS by threatening to cease further development of its Microsoft Office Suite on the Macintosh Platform. Microsoft challenged this claim on a variety of fronts:

- Microsoft stressed in cross-examination that demand for Office on the Macintosh platform is not based on any Macintosh OS monopoly. By threatening to cease R&D on future upgrades of the Office Suite, Microsoft, it would seem was not leveraging any monopoly. MS never threatened to cease sales of the current Office Suite on the Macintosh platform -- just to discontinue future upgrades.

- Apple's insistence on nearly universal consumer demand for Office on the Mac is curious -- if most Mac consumers want Office or nothing, then why does Apple bundle a different productivity suite with the iMac?

- The agreement that was signed regarding IE was part of a 6-part agreement which included provisions regarding alleged IP infringements by Microsoft against Apple. Apple has publicly described that collective agreement as beneficial to the company -- it includes cash investments by Microsoft, and a commitment towards future development of Office Suite products for the Macintosh.

- The agreement that Apple signed with MS does not prohibit Apple from including Netscape with Mac OS -- it simply prohibits Apple from being proactive in encouraging users to change their default browser to Netscape. And on cross, MS demonstrated how relatively simple it is to change the default browser in Mac OS -- a relatively intuitive process that can be accessed by typing "change default browser" into the help system. {Note that Apple's main response here -- the claim that the simplicity of the process belies the complexity involved for most users in getting Netscape installed from the CD is negated by Tevanian's later admission towards the end of his testimony that in later Mac OS 8.0 editions where the OS was preinstalled, Netscape was installed on the machine before the user ever got the computer}.

- Apple's claim that MS strong-armed them into agreement on IE by threatening to choke off the supply of Office for the Mac is somewhat weakened by the specter of Apple holding its potential multi-billion dollar infringement suit over Microsoft's head during the negotiations.

B. MICROSOFT'S ATTACK ON QUICKTIME

Tevanian claimed in direct that Microsoft, believing that QuickTime as a cross-platform application threatened the Windows monopoly, approached Apple with a cooperate or die ultimatum on the multimedia authoring/playback market. Microsoft mounted another multi-pronged defense:

- Tevanian's direct testimony asserted certain erroneous facts which he later corrected in a errata filing submitted to the Court after his testimony had already been made public. In this errata he admits that his claim that MS could not support streaming of HTML files over the internet was mistaken; in essence, that puts the MS multimedia product on a technologically equal plane to QuickTime in this respect -- weakening the claim that MS was trying to force Apple to adopt a clearly inferior product.

- One main focal point in this line of questioning: Tevanian had testified to certain incompatibilities between IE and quicktime that he implied were deliberately planned by MS to derail Quicktime. MS disputed this one claim in several ways: - When Apple first discovered an incompatibility, Tevanian sent an email to Gates outlining the problem; Gates actually fixed the specific problem referred to by the email. What happened then was that Apple assumed that all of the incompatibilities had been fixed at that point, and when they realized that there were other file types that still did not work, it was too close to Quicktime's 3.0's release date for them to enter into serious dialogue with MS as to how to fix it. - Apple was also set back in its ability to properly test compatibility with IE because it refused to sign MS's standard beta confidentiality agreement. - If IE did not work with popular Quicktime formats that should have been counterproductive to MS -- it would have induced people to switch to Netscape which did support the Quicktime plug-in without any glitches. - Apple claimed that its Quicktime plug-in worked with IE 3.0 and that MS deliberately introduced incompatibility in IE 4.0. MS demonstrated on cross, however, that certain error messages that are generated in IE 4.0 would also have arisen in IE 3.0 -- raising questions about the maliciousness ascribed to MS.

- The real dominant competitor in the multimedia player market is RealNetwork who has an 85% market share.

- MS emphasized on cross that Tevanian had no direct knowledge of any actual threats made by MS against Apple regarding Quicktime. MS introduced evidence that suggested that Apple actually threatened MS with a DOJ action during the negotiations.

- Tevanian had claimed that Compaq refused to bundle Quicktime out of fear of MS's response. MS introduced deposition testimony which suggested that the reason Compaq refused to bundle Quicktime was because Apple was insisting on charging royalties for each copy of the software -- while MS's software was free.

- MS had suggested that Apple could solve its incompatibility problems by making Quicktime into an ActiveX control that would fit better with IE. Apple has resisted trying this option both because it claims not to trust MS and because promoting ActiveX hurts its own business plan because ActiveX is more Windows-specific and cannot be translated directly to the Mac.

- Tevanian claims that MS used a pretext of negotiating with Apple over cross-licensing of codecs in order to strong-arm Apple in carving up the market, with Apple taking the server side and MS taking the Multimedia player side. That pretext, however, was relevant -- in that cross-licensing codecs might have made the two products more compatible, lessening the worries for Quicktime developers.

MISCELLANEOUS

- One piece of testimony which seemed interesting to the Judge, at least: Tevanian had testified in an earlier depo that Apple's new Sherlock program which permits searching the internet from a standard OS search box was bundled with Mac OS; now he claims it is built-in. He clarified his earlier testimony as imprecise, and now defines the difference between bundled and built-in as whether or not the component can be removed without damaging the functioning of the OS.

- Tevanian had highlighted the failure of the Rhapsody OS as an indication of the barriers to entry that MS's monopoly creates in the OS market. On cross, MS introduced evidence suggesting that Rhapsody failed in large part because it would have required Mac programmers to redesign existing Mac applications on a fairly large scale in order to take advantage the new features, and the Mac designers balked at such a move.

-- Anonymous, November 16, 1998