U.S. Department
of Justice
Defendant's Exhibit 2533
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| ----Original Message---- From: Bill Gates A lot of people have asked me about the AOL/Netscape merger, it's certainly paradoxical, given the DOJ case. The DOJ must be VERY dismayed at this merger. It will finally make people question why the DOJ is trying to raise the price of browsers above the competitive price, which is zero. It will finally make people Question why the DOJ is attacking the browser work we did that benefited consumers through integration and innovation. Like almost an browser software, AOL's access software has always been free. AOL will distribute Netscape browser software for free to Its 20 million instant messaging customers, and sooner or later to ad its online service customers too. Our work in browsers made the business more competitive and consumers dearly benefited as browsers became free as they should be (and as they used to be, before Netscape gained a big share). We decided a long time ago that Web browsing software should be part of a modem, well-designed operating system this approach benefits consumers by giving them a single, simple interface through which to access all types of information, and by making it easier to use the Web with other applications. We also decided that, just like the many other features that are now bu3t into Windows, there would be no extra charge for our browser technology. That makes business sense - one payoff for Microsoft comes through making Windows even more appealing to consumers. Just as consumers now prefer their car to come with an integrated, easy to use audio system, most want their PC operating system to include integrated, easy to use Web browsing technology. Why is Netscape worth $4 billion despite making Its browser available for free? The answer is that browsers - whether they come as part of an OS or standalone - generate so much advertising revenue that you maximize revenue by giving them away free to drive usage. Jim Clark remembers that I made this point and the point about integration in the Fall of 1994. before Netscape came out with their first product If there is competition the price will be zero. Browsers are like network TV. The traffic alone makes it a great business to make a popular browser even without charging users. There is nothing predatory about pricing a product at a profitable price. In fact, it's called the marketplace at work, and it helps consumers. Netscape and now AOL has an incredible ability to get its product into the market, including the use of the Internet itself. No one has "foreclosed" Netscape from distributing its software. Netscape's success is proof of how open the software industry is to new competition. In how many segments of the economy can a startup grow to a market valuation of $4 billion in only four years? Yet the claim that Netscape was "foreclosed" from distributing its software is not just the center of the DOJ case - it IS the DOJ case. The history here is very instructive. When we first included browser capabilities In Windows they did not gel much use. Netscape continued to have over 60% share and there was no pressure on its price. Only when our browser won the overwhelming majority of all reviews did our share move up and Netscape have to come back down to a competitive price. It took a great deal of innovative work for us to not only catch up but move ahead in the browser business and we can be vary proud of our contributions on behalf of consumers. Microsoft's inclusion of Internet standards in Windows was pro-competitive. Imagine how people would have reacted if we had NOT Included Internet standards like TCP/IP or HTML in Windows. Our old "help" format was proprietary and we got rid of it. Our track record of working with the standards group on HTML is the best of any company. The Ironies in this case are quite amazing. The DOJ meets with our competitors in their homes, and at dinners with all of our competitors present, and discusses what they can do against us. Perhaps these cozy relations will make it easier for AOL to get mergers such as Mirabilis, CompuServe and Netscape approved. THe DOJ hasn't seemed to notice that the #1 gateway to the Internet (AOL) bought the 02 gateway to the Internet (CompuServe), and raised prices immediately following government approval of the merger. The DOJ hasn't seemed to notice that our business is more competitive than ever with many strong attacks on the Windows business. The company that helped made sure consumers got a fair price for browsers has the OOJ attacking It on behalf of the company that did not. GOVERNMENT'S From: Brian Shafer (Intl Windows) FYI FDWS Deleted OTU if you want to forward to Yteam...note it is already public ----Original Message---- The following e-mail was sent to executive staff this morning from Billg. I have provided this to Ted Bridis of AP who has been working on a story about pricing and browsers. He even asked Boies about it today at the mid-day break. Ted became interested in the subject as a result of the interview he did with Bill during Comdex. So giving this to Ted was a followup to his interview and responsive to his story. Reporters will likely be upset that we just gave it to AP. Calls should go to Adamso. He will explain that it's an internal mail not intended for broad distribution, but he will give it to reporters if they ask for it and have some use for it. We don't need any talking points for the mail. It speaks for itself, thanks ----Original Message---- A lot of people have asked me about the AOL/Netscape merger. It's certainly paradoxical, given the DOJ case. The DOJ must be VERY dismayed at this merger. It will finally make people question why the DOJ is trying to raise the price of browsers above the competitive price, which is zero. It will finally make people question why the DOJ is attacking the browser work we did that benefited consumers through integration and innovation. Like almost all browser software, AOL's access software has always been free. AOL will distribute Netscape browser software for free to its 20 million instant messaging customers, and sooner or later to all its online service customers too. Our work in browsers made the business more competitive and consumers clearly benefited as browsers became free as they should be (and as they used to be, before Netscape gained a big share). We decided a long time ago that Web browsing software should be part of a modern, well-designed operating system - this approach benefits consumers by giving them a single, simple interface through which to access all types of information, and by making it easier to use the Web with other applications. We also decided that, just like the many other features that are now built into Windows, there would be no extra charge for our browser technology. That makes business sense - one payoff for Microsoft comes through making Windows even more appealing to consumers. Just as consumers now prefer their car to come with an integrated, easy to use audio system, most want their PC operating system to include integrated, easy to use Web browsing technology. Why is Netscape worth $4 billion despite making its browser available for free? The answer is that browsers -whether they come as part of an OS or standalone - generate so much advertising revenue that you maximize revenue by giving them away free to drive usage. Jim Clark remembers that I made this point and the point about integration in the Fall of 1994, before Netscape came out with their first product. If there is competition the price will be zero. Browsers are like network TV. The traffic alone makes it a great business to make a popular browser even without charging users. There is nothing predatory about pricings product at a profitable price. In fact, it's called the marketplace at work, and it helps consumers. Netscape and now AOL has an incredible ability to get its product into the market, including the use of the Internet itself. No one has "foreclosed" Netscape from distributing its software. Netscape's success is proof of how open the software industry is to new competition. In how many segments of the economy can a startup grow to a market valuation of $4 billion in only four years? Yet the claim that Netscape was "foreclosed" from distributing its software is not just the center of the DOJ case - it IS the DOJ case. The history here is very instructive. When we first included browser capabilities in Windows they did not get much use. Netscape continued to have over 80% share and there was no pressure on its price. Only when our browser won the overwhelming majority of all reviews did our share move up and Netscape have to come back down to a competitive price. It took a great deal of innovative work for us to not only catch up but move ahead in the browser business and we can be very proud of our contributions on behalf of consumers. Microsoft's inclusion of Internet standards in Windows was pro-competitive. Imagine how people would have reacted if we had NOT included Internet standards like TCP/IP or HTML in Windows. Our old "help" format was proprietary and we got rid of it. Our track record of working with the standards group on HTML is the best of any company. The ironies in this case are quite amazing. The DOJ meets with our competitors in their homes, and at dinners with ail of our competitors present, and discusses what they can do against us. Perhaps these cozy relations will make it easier for AOL to get mergers such as Mirabilis, CompuServe and Netscape approved. THe DOJ hasn't seemed to notice that the #1 gateway to the Internet (AOL) bought the #2 gateway to the Internet (CompuServe), and raised prices immediately following government approval of the merger. The DOJ hasn't seemed to notice that our business is more competitive than ever with many strong attacks on the Windows business. The company that helped made sure consumers got a fair price for browsers has the DOJ attacking it on behalf of the company that did not. GOVERNMENT'S From: Greg Shaw (Corp. PR) I need to send you all of the coverage. It was the main focus of the The Washington Post story for the day, it was a sidebar in the NYT, It was the entire mid section of the WSJ story for the day and it appeared in all of the online news stories. I disagree that AP was not a good distribution channel. It served as a press release to everyone else and it is THE story that major metro papers run around the country and the world for that matter. It's a dilemma. If we give it to everyone it looks cooked and no one will cover it. If it appears as a breaking story everyone feels they have to cover it You should know that as soon as AP broke we got calls from most of the major news outlets to whom we provided a copy and they wrote it. Some were not interested but not many ----Original Message---- I am really surprised we restricted the distribution of this so much. My comments are the best tool we have to shift the dialog and get people to understand who gave consumers the fair price for browsing. Just putting in AP doesn't have much impact I don't think. At least we should give it to MAGAZINE people also. ----Original Message---- fyi Privileged Material ----Original Message---- A lot of people have asked me about the AOL/Netscape merger. It's certainly paradoxical, given the DOJ case. The DOJ must be VERY dismayed at this merger. It will finally make people question why the DOJ is trying to raise the price of browsers above the competitive price, which is zero. It will finally make people question why the DOJ is attacking the browser work we did that benefited consumers through integration and innovation. Like almost all browser software, AOL's access software has always been free. AOL will distribute Netscape browser software for free to its 20 million instant messaging customers, and sooner or later to all its online service customers too. Our work in browsers made the business more competitive and consumers clearly benefited as browsers became free as they should be (and as they used to be, before Netscape gained a big share). We decided a long time ago that Web browsing software should be part of a modern, well-designed operating system - this approach benefits consumers by giving them a single, simple interface through which to access all types of information, and by making it easier to use the Web with other applications. We also decided that, just like the many other features that are now built into Windows, there would be no extra charge for our browser technology. That makes business sense - one payoff for Microsoft comes through making Windows even more appealing to consumers. Just as consumers now prefer their car to come with an integrated, easy to use audio system, most want their PC operating system to include integrated, easy to use Web browsing technology. Why is Netscape worth $4 billion despite making its browser available for free? The answer is that browsers - whether they come as part of an OS or standalone - generate so much advertising revenue that you maximize revenue by giving them away free to drive usage. Jim Clark remembers that I made this point and the point about integration in the Fall of 1994, before Netscape came out with their first product. If there is competition the price will be zero. Browsers are like network TV. The traffic alone makes it a great business to make a popular browser even without charging users. There is nothing predatory about pricing a product at a profitable price. In fact, it's called the marketplace at work, and it helps consumers. Netscape and now AOL has an incredible ability to get its product into the market, including the use of the Internet itself. No one has "foreclosed" Netscape from distributing its software. Netscape's success is proof of how open the software industry is to new competition. In how many segments of the economy can a startup grow to a market valuation of $4 billion in only four years? Yet the claim that Netscape was "foreclosed" from distributing its software is not just the center of the DOJ case - it IS the DOJ case. The history here is very instructive. When we first included browser capabilities in Windows they did not get much use. Netscape continued to have over 80% share and there was no pressure on its price. Only when our browser won the overwhelming majority of all reviews did our share move up and Netscape have to come back down to a competitive price. It took a great deal of innovative work for us to not only catch up but move ahead in the browser business and we can be very proud of our contributions on behalf of consumers. Microsoft's inclusion of Internet standards in Windows was pro-competitive. Imagine how people would have reacted if we had NOT included Internet standards like TCP/IP or HTML in Windows. Our old "help" format was proprietary and we got rid of it. Our track record of working with the standards group on HTML is the best of any company. The ironies in this case are quite amazing. The DOJ meets with our competitors in their homes, and at dinners with all of our competitors present, and discusses what they can do against us. Perhaps these cozy relations will make it easier for AOL to get mergers such as Mirabilis, CompuServe and Netscape approved. THe DOJ hasn't seemed to notice that the #1 gateway to the Internet (AOL) bought the #2 gateway to the Internet (CompuServe), and raised prices immediately following government approval of the merger. The DOJ hasn't seemed to notice that our business is more competitive than ever with many strong attacks on the Windows business. The company that helped made sure consumers got a fair price for browsers has the DOJ attacking it on behalf of the company that did not. AO 88 (Rev. 11/91) Subpoena in a Civil Action United States District Court
o YOU ARE COMMANDED to appear in the United States District Court at the place, date, and time specified below to testify at the taking of a deposition in the above case
PROOF OF SERVICE
DECLARATION OF SERVER I declare under penalty of perjury under the laws of the United States of America that the foregoing information contained in the Proof of Service is true and correct.
DEFINITIONS
INSTRUCTIONS
SCHEDULE OF DOCUMENTS
EXHIBIT B
John Warden, Esq. Re: United States v. Microsoft Corp. Dear Mr. Warden: One of the trial exhibits Microsoft used yesterday, document numbered MS98 0241166, contains a message from Greg Shaw, a Microsoft public relations person, to several Microsoft executives, none of whom are lawyers, which has been redacted on the grounds of privilege. Please fax us an unredacted copy of this document today at (202)307-1454. This prompts me to raise a related issue. The plaintiffs have not received a privilege log for documents withheld or redacted on the grounds of privilege for any of Microsoft's document productions in response to the plaintiffs' trial subpoenas. Please provide us with a privilege log for any subpoenaed documents withheld on the grounds of privilege and not previously listed in a privilege log by COB today.
cc: Stephen Houck, Esq.
VIA FACSIMILE (202) 293-6330 Michael Lacovara, Esq. Re: United States v. Microsoft Corp. Dear Michael: This letter is to confirm the request that I made in our telephone conversation today regarding my earlier letter to John Warden. You indicated that you did not believe that Microsoft had sufficient time to prepare the privilege log called for by the trial subpoenas, and that you would have someone in Redmond call me to discuss the logistics. You also indicated that you believed that MS98 0241166 was properly redacted on the grounds of attorney-client privilege because Mr. Shaw was forwarding an email written by a lawyer, and that you were not willing to provide us with an unredacted copy. I indicated that I was willing to discuss the logistics of the production of a complete privilege log, but requested that you provide a written claim of privilege, which should include all the information relating to the claim of privilege called for by the subpoena, for the material redacted in MS98 0241166 by COB today, and also that you bring an unredacted copy of MS98 024116 to court tomorrow, in the event that the parties determined that this was a dispute that needed to be resolved by the court. You suggested that you were not willing to do so in the absence of a motion. I request that you reconsider your position. It is clearly not an undue burden to prepare a written claim of privilege for a single document by COB today. This is not unreasonable since, as you know, MS98 0241166-67 is a variation on Defendant Exhibit 2533, which Microsoft attempted to introduce yesterday, and may well shed light on the questions that Mr. Warden asked about how Mr. Gates' email came to be in AOL's files. Once we receive the information called for by the subpoena relating to the claim of privilege for this one document, we will decide whether a motion is warranted. In light of the short time remaining in the trial, we may make any motion orally tomorrow morning so that we can resolve all the outstanding issues relating to Mr Colburn's testimony at that time. Having the unredacted email available will not prejudice your client's substantive rights and will expedite the resolution of any unresolved issues.
cc: Stephen Houck, Esq.
VIA FACSIMILE John F. Cove, Jr., Esq., Re: United States v. Microsoft Dear John: Let me begin my response to your second letter of today by correcting one of its more obvious errors. I did not say that Microsoft had not "had sufficient time to prepare [a] privilege log." What I said was that it was unreasonable for you to wait more than two months after the documents had been produced to demand a privilege log, to do so in the middle of the trial (and with about a week until its conclusion), and to demand production by "COB today." I also said that I would refer your request to the lawyers in Redmond who handle such matters and would have them call you. That I have done and you should expect a call. Your asserted justification for asking me more formally to articulate a basis for the privilege claim is thin, given that there is no document in evidence. I suspect that what you are doing is attempting to manufacture a record so that you may make something of this in the morning. I think this entire matter is, to coin a phrase, nothing more than a trial stunt, and I shall not facilitate it. Lest there be any lack of clarity in my position, here it is: 1. The document about which you inquire is not in evidence and was not offered in evidence. 2. The questions Mr. Warden asked about how a different document (although one embedded, in a different form, in the document about which you now inquire) came to be in AOL's files were prompted by a foundation objection from your colleague, Mr, Boies. Mr. Warden was well within appropriate bounds of advocacy and the principles of evidence in seeking to ascertain whether the witness could assist in providing foundation for the document. He could not, and the document was not admitted. 3. I have stated our basis for asserting a privilege claim as to parts of the document, and you admitted when we spoke (a) that you may well have misread or misunderstood the document when you sent your initial letter this morning, and (b) that you had no basis to challenge my explanation as to the privileged nature of the redacted portions of the document Your more recent letter does not alter the situation in any material respect. 4. To the extent that it implies that Mr. Warden had any knowledge as to the way in which DX 2533 came to be in AOL's files, your letter is unfounded and offensive. If you have some knowledge on that subject, please share it with me. I shall be candid, John. I think you are fishing, and the sense of urgency reflected in your letters is a contrivance. If you believe you have any credible basis for challenging the privilege designations, proceed as you have done before - file a motion, give Microsoft the opportunity to respond and we shall let the Court decide.
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