MICROSOFT NOTES ON THE McGEADY TESTIMONY

Steven McGeady led several Intel groups associated with the Internet and Intel's programming efforts. Because of his position at Intel, he participated in Microsoft/Intel meetings, knew most of Intel's technological initiatives, and communicated with many major players across the industry.

DoJ Direct Examination

The DoJ advanced four major arguments in McGeady's testimony:

1. McGeady testified that Intel and its software development effort fell victim to Microsoft's bully tactics.

McGeady related the now familiar tale of Microsoft identifying potentially competitive software entering "its space" and using its market weight to it snuff out by chilling market acceptance and threatening support for future microprocessor development. McGeady accused Microsoft of snuffing out Intel's Native Signal Processing (NSP) effort. McGeady felt NSP threatened Microsoft's bottleneck position in software/hardware interface. Lying under the operating system, it would have presenting programmers with a more universal way to program than to Windows APIs. Microsoft chilled the acceptance of the technology and punished Intel by working with DEC. McGeady was adamant that NSP could have fostered innovation and improved the PC product for consumers. Microsoft suggested that Intel exit broader software applications and apply its software efforts to the server market.

2. Microsoft used Intel as a pawn in the Browser Wars.

McGeady related Microsoft's pressure tactics associated with destroying Netscape. Intel's internal use of Netscape was minimized and non-publicized. From his direct testimony, it appeared that McGeady attended several meetings where Microsoft officials discussed Netscape's "air supply," the strategy of "embrace, extend, extinguish," and the Microsoft two-pronged battle strategy. Microsoft attempted to convince Intel that Netscape should be considered a mutual enemy and a competitor for the "hearts and minds of the independent software developers." Microsoft desired that Intel program away from universal technologies that Netscape could use and toward Microsoft technologies.

3. McGeady performed as an expert witness on software standards, innovation and competition in the industry.

Generally, McGeady appeared as proponent of competition and an opponent the "monoculture around Microsoft" which had, in his opinion, slowed innovation and decreased consumer options.

4. McGeady felt Microsoft hampered Java development.

McGeady testified that Microsoft saw Java as a threat to their hold over software programmers and related Microsoft attempts to derail and proprietize Java technology. These tactics included additional bullying of Intel to avoid publicly supporting Java, to avoid programming its media components for an open Java environment, and to foster Microsoft's entrance into the Java environment by supporting its code. Microsoft also sought Intel's complicity in surreptitiously rewriting the Java Virtual Machine and demanded exclusive access to Intel technologies to the exclusion of Netscape and others.

Microsoft Analysis of McGeady's Direct Examination:

McGeady's direct testimony contained several pro-Microsoft threads. First, Intel practiced similar cross product subsidization, distributing free Intel Architecture Labs software funded by microprocessor revenues. Second, most strategic decisions seemed to be made between Gates and Groves, and depended on more than monopolistic practices, encompassing economics, business gambles, and egomaniacal emotions at both firms. Third, while labeled as the familiar bully tactics, Microsoft's influence over Intel and its microprocessors operated differently than the downstream software segment. To this end, McGeady's use of the term "support" is not synonymous with compatibility and is misleading. Intel feared that Microsoft would slow its technological (computational) advance, discontinuing the profitable cycle of new software requiring increased computing power. Intel always needed a market for its latest chips, Microsoft controlled the software programmers. Microsoft also had the power to turn to other microprocessor providers. This raises an interesting question, as an OS monopolist, is Microsoft forced to evolve its products in ways that support the efforts of its core supplier (to the benefit of its monopoly)? Could MS threaten not to develop that fast?

Cross Examination

Cross-examination of McGeady revealed conflicting interpretations of Microsoft/Intel and intra-Intel meetings, differing rationales for Intel's strategic decisions, and the strong personal anti-Microsoft biases of McGeady.

1. Microsoft defended its attempts to coordinate strategy and tried to dispel the bully image.

Microsoft attempted to suggest that coordination, especially between two key players like Intel and Microsoft avoids redundant of efforts and confusion across the industry. (10am25-28) While McGeady proved generally resistant to this line of questioning, Microsoft created a complex, multi-faceted image of Wintel involving a mix of collaboration, competition, and reciprocal pressure. Contrary to McGeady testimony, Microsoft suggested that it supported Intel and its microprocessor technologies. While Intel was not receiving complete support because it failed to disclose its technology and worked toward its own proprietary standards, Microsoft was still designing compatible 64-bit Windows programs. (12am12)

2. Microsoft presented many reasons for NSPs evolution and discontinuation.

Microsoft presented documents and depositions of Intel superiors that contradicted McGeady and created plausible alternative rationale for why NSP was effective cancelled. Microsoft suggested: Gates and Grove actually worked out an agreeable NSP compromise (10pm11); Microsoft was always receptive to the hardware portions of NSP (10pm20); and the technology appeared in other products. (10pm77,80) While some of Microsoft's technological concerns with NSP appeared questionable, apprehension surrounding NSP's memory utilization and functional redundancy carried more weight. McGeady admitted that Intel made a major mistake designing NSP for Windows 3.1, and not Windows95. (10pm22) Microsoft suggested additional business reasons for NSP's failure: it had been created without notifying Microsoft, it was being promoted midst the hype surrounding the release of Windows 95, and it had not been tested for widespread consumer roll-out. (10pm52) Microsoft painted McGeady and Intel's software developers as oblivious to consumer perception issues, and suggested that NSP compatibility failures would be interpreted as Windows problems, damaging Microsoft's reputation.(10pm53) Microsoft also viewed NSP as an Intel move to suppress competition by driving the microprocessor market toward an unshared proprietary technology. (10pm71)

3. Microsoft highlighted Intel practices that resemble Microsoft's alleged anti-competitive behavior.

Intel's business practices included: incorporating functionality into its host CPUs, killing the market for separate co-processors and hardware (10pm 18-19, 10pm64); denying development kits as a form of punishment (10pm47); maintaining proprietary control of technology to stunt competition (10pm66-67); selectively withholding proprietary micro-processor instructions (10pm93), engaging in vapor-hardware. (12am10), and designing software with hundreds of engineers to be distributed free (12am34). At one point, McGeady was caught suggesting that Microsoft was correct to worry that Intel had enough clout with OEMs to distribute software against Microsoft's wished Intel had a superior product. (10pm60) McGeady also found himself defending Intel's collaboration with HP on the P7/Merced processor as a superior alternative to the would-be competitors working independently.

4. Microsoft defended its attempts to improve Java and defend Wintel with Intel's help.

Microsoft placed its anti-Java comments to Intel in the context of their relationship, where Microsoft gives lots of unheeded advice, and in the context of a larger industry competition, were Sun stands as a killer competitor to the Wintel platform. Microsoft noted Intel still supported Java development (although not as much as McGeady felt it should have). Similarly, Intel still had hundreds of engineers working on software.

5. Microsoft aggressively attacked McGeady to discredit him as a witness.

McGeady's notes suggested that portions of his testimony could be considered embellishments or stories heard in other contexts. McGeady was frequently forced to suggest that he had a recollection of meetings and conversations superior to that of other Intel officials, as well as Netscape officers. (12am75) Microsoft revealed Intel documents that painted McGeady as a maverick who received negative reviews, was criticized for his department's belligerence toward Microsoft (12am25) and was placed on sabbatical at MIT as a form of punishment.

Additionally, McGeady's actions suggested that he considered himself above Intel policy and an extra-corporate defender of truth and justice in the Internet world. He suggested that Intel's open interference with Microsoft's software development and promotion would aid the industry. (10pm48) He leaked confidential memos to the press and embellished the information he gave. He corresponded and met with Netscape's Jim Clark to keep Netscape from being complacent. Not only envisioning entrapping Microsoft in an anti-trust suit, he then indirectly volunteered to testify against the company he considered to be the Devil.

6. McGeady comments supported other Microsoft arguments.

McGeady suggested that IE was integrated into the Windows operating system. He also attended a Netscape conference where Netscape apologized for its failure to adequately support software developers. (12am96)

-- Anonymous, November 28, 1998