DOJ : Let me show you a document that has been previously marked as government exhibit 366. This is a document bearing Microsoft document production stamp MS-980110952 through 53. The first part of this purports to be an email from Don Bradford to Ben Waldman with a copy to you, Mr. Maritz, and others, on the subject of "Java on Macintosh; IE control." Did you receive a copy of this email on or about Feb 13, 1998?
Gates: I don't know.
DOJ : Do you have any reason to doubt that you received a copy of this email?
Gates: No.
DOJ : The first paragraph reads, "Apple wants to keep both Netscape and Microsoft developing browsers for Mac, believing that if one drops out the other will lose interest, and also not really wanting to pick up the development burden. Getting Apple to do anything that significantly materially disadvantages Netscape will be tough. Do you agree that Apple should be meeting the spirit of our cross-license agreement, and that Mac Office is the perfect club to use on them?" Do you have an understanding of what Mr. Bradford means when he refers to Mac Office as "the perfect club to use on" Apple?
Gates: No.
DOJ : The second sentence of that paragraph, the one that says "Getting Apple to do anything that significantly materially disadvantages Netscape will be tough." Was it your understanding in Feb 1998 that Microsoft was trying to get Apple to do something that would disadvantage Netscape?
Gates: No.
DOJ : Do you know why Mr. Bradford would have written this in Feb 1998 and sent a copy to you?
Gates: I'm not sure.
DOJ : Did you ever to say to Mr. Bradford, in words or in substance, in Feb 1998, or thereafter, "Mr. Bradford, you got it wrong, we're not out to significantly or materially disadvantage Netscape through Apple?"
DOJ : No.
DOJ : Did you ever tell Mr. Bradford or anyone else, in Feb 1998 or thereafter, that they should not be trying to get Apple to do things that would significantly or materially disadvantage Netscape?
Gates: No.
..
DOJ : Did you have any conversations with anyone within Microsoft as to what position Microsoft should take with Apple in terms of what Microsoft should ask Apple for in return for Microsoft developing Mac Office?
Gates: What time frame are you in?
DOJ : 1997 or 1998.
Gates: It actually makes a big difference. We reached an agreement with Apple in 1997, and there's no... I'm not aware of any agreement other than the 1997 one.
DOJ : Can I have the question read back?
[question repeated by another person]
Gates: I'm not sure what you're saying about Mac Office. We develop Mac Office because it's a profitable business for us.
DOJ : Well, you threatened to cancel Mac Office, did you not sir?
Gates: No.
DOJ : You never threatened Apple that you were going to cancel Mac Office, is that your testimony?
Gates: That's right.
DOJ : Did you ever discuss within Microsoft threatening Apple that you were going to cancel Mac Office?
Gates: No.
..
DOJ: Let me direct your attention to the second item on the first page. And this purports to be an email from Mr. [Ben] Waldman [head of MacOS development] to you, dated June 27, 1997. Is that correct sir?
Gates: The second one.
DOJ : You have to answer audibly, yes or no, Mr. Gates.
Gates: Yes, the second one.
DOJ : OK. Now, in the second paragraph of this email to you, the second sentence reads, "the threat to cancel Mac Office 97 is certainly the strongest bargaining point we have, as doing so will do a great deal of harm to Apple immediately." Do you see that sir?
Gates: Mmm-hmm.
DOJ : Do you recall receiving this email in June 1997?
Gates: Not specifically.
DOJ : Do you have any doubt that you received this email in June 1997?
Gates: No.
DOJ : Do you know why Mr. Waldman wrote you, in June of 1997, that "the threat to cancel Mac Office 97 is certainly the strongest bargaining point we have, as doing so will do a great deal of harm to Apple immediately"?
Gates: Well, Mr. Waldman was in charge of this update, and the Mac Office product had been shipping for over a decade by now, and there was a financial question of whether to do this update, and he thought it made good business sense to do it. Other people, irrespective of their relationship with Apple, had said that it didn't make sense to do the update, and so there was some mail from Ben, including this one, where he said he thought we should got ahead and finish the product. I'm not sure what he means about the negotiations with Apple; I'm not sure we were negotiating with Apple at this point.
DOJ : Was this the time you were negotiating with Apple to try to find out what you could get Apple to do to undermine Sun?
Gates: The only email, the only thing you've show me, is that that term was used after we reached a Mac Office agreement with Apple.
DOJ : You're referring to your email, dated August 8, 1997?
Gates: That's right.
DOJ : It's clear from your August 1997 email that you were still trying to get Apple to do additional things, is it not sir?
Gates: No.
DOJ : Well, sir, let's read it. It's only two lines. You write, "I want to get as much mileage as possible out of our browser and Java relationship here." When you talk about 'here' you're talking about Apple, are you not sir?
Gates: I'm not sure.
DOJ : Well, the subject of this is "Fw: post-agreement", correct sir?
Gates: Yes, that's what makes me think this was post-agreement.
DOJ : Post agreement with Apple, right?
Gates: Yes.
DOJ : Ok. So the subject is "Post-agreement with Apple" and the very first sentence says "I want to get as much mileage as possible out of our browser and Java relationship here." The second sentence says, "In other words, a real advantage against Sun and Netscape." Third line says, "Who should Avie be working with? Do we have a clear plan what on we want Apple to do to undermine Sun?" Now do you have any doubts that when you talk about "I want to get as much mileage as possible out of our browser and Java relationship here", you're talking about Apple?
Gates: That's what it appears.
DOJ : Ok. Do you have any recollection of any discussions about the subject matter of this email on or about August 1997?
DOJ : If the question is confusing I'd be happy to rephrase it Mr. Gates.
Gates: Go ahead.
DOJ : Did you send this email?
Gates: It appears I did.
DOJ : Did you discuss the email with anyone?
Gates: I don't remember that.
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DOJ : The next sentence in Mr. Waldman's email begins, "I also believe that Apple is taking this threat pretty seriously." Did someone tell you in or about June 1997 that Apple was taking Microsoft's threat to cancel Mac Office 97 seriously?
Gates: Maritz had taken the position that it didn't make business sense to finish this upgrade, and it's possible Apple had heard Maritz's opinion there, and therefore been worried that we business-wise didn't see a reason to complete the upgrade, and that they would have the older Mac Office as opposed to this new work that we were partway along on.
DOJ : Mr. Gates, my question is not what position Mr. Maritz did or did not take. My question is whether anyone told you, in or about June of 1997, that Apple was taking pretty seriously Microsoft's threat to cancel Mac Office 97.
Gates: Apple may have known that senior executives at Microsoft, Maritz in particular, that it didn't make business sense to that upgrade.
DOJ : Mr. Gates, I'm not asking you what Apple may have known or may not have known. What I am asking is whether anyone told you, in or about June of 1997, that Apple was taking pretty seriously Microsoft's threat to cancel Mac Office 97.
Gates: I think I recall hearing that Apple had heard about Maritz's view that it didn't make sense to continue the upgrade, and that they wanted us to continue the upgrade, but I don't remember and of it being phrased they way you're phrasing it.
DOJ : Well, the way I'm phrasing it is the way Mr. Waldman phrased it to you in his email of June 27, 1997, correct sir?
Gates: In reading it, I see those words, yes.
..
DOJ : Mr. Gates, Mr. Waldman--on June 27, 1997--sends you an email that says, "The threat to cancel Mac Office 97 is certainly the strongest bargaining point we have, as doing so will do a great deal of harm to Apple immediately. I also believe that Apple is taking this threat pretty seriously." Do you recall anyone telling you what I have just quoted, in words or in substance, in or about June of 1997?
Gates: No.