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Expert Testimony of Ronald Alepin in Comes v. Microsoft - Embrace, Extend, Extinguish - Updated
Monday, January 08 2007 @ 02:04 AM EST

[ Update: I am thrilled to tell you that plaintiffs got permission from the judge to post all the transcripts and the exhibits in this case. Enjoy the riches. [Note: Documents were retrieved from www.iowaconsumercase.com, which was removed on settlement of the litigation.] You might enjoy reading this ComputerWorld report by Eric Lai, on developers being "pawns" by a Microsoft executive in Friday's session.]

I have a treat for you, part of the expert testimony of Ronald Alepin on behalf of plaintiffs on January 5th in Comes v. Microsoft, the antitrust litigation going on right now in Iowa. It's the part where he explains to the jury how he understands the expression "embrace, extend, extinguish", using Microsoft's own words in emails and such. The day before, evidently Microsoft's lawyers claimed, before the jury, that Mr. Alepin made the phrase up, so his testimony picks up at that point, first thing the next day.

I thought you'd enjoy to see what expert testimony is like. Perhaps, like me, you will find yourself thinking about standards, how important they are, and about ODF, in particular, and about Microsoft's Open XML and the threat of proprietary extensions. Or, if you are in Europe, you may instead find yourself thinking of the EU Commission's struggle to get Microsoft to release API information to competitiors. For sure, you'll understand why APIs matter so much.

You'll hear some emails read aloud, one of Bill Gates's, an email from 1996 about Java, where he says he was losing sleep over how great Java was, and you'll see a strategy he suggested -- "fully supporting Java and extending it in a Windows/Microsoft way".

Alepin is asked what that phrase means:

Q. Okay. And now, again, for the Jury, what does embrace mean in this context as used by Microsoft employees?

A. It's used to indicate a strategy where Microsoft will embrace the standards or the specifications and interfaces of another company's software.

Q. Okay. And what does extend refer to?

A. Once the specifications have been embraced, then Microsoft will extend them and add additional interfaces proprietary to Microsoft.

Q. Okay. When you say add additional proprietary interfaces that are Microsoft's, what impact does that have technologically to other ISVs and OEMs?

A. Well, the result is or the impact is that what was once sort of community development property, the work of the industry and industry participants is appropriated essentially, is taken over by Microsoft.

And then Microsoft takes it and with its proprietary extensions, makes it essentially unavailable on a going-forward basis to the industry participants who were responsible for first developing the specifications and the standards.

Q. Okay. And when Microsoft makes those APIs unavailable to certain ISVs and OEMs, what's the impact to those ISVs and OEMs of their ability technologically to create products?

A. It reduces their ability to create products, especially products that will interoperate with Microsoft's products.

The Microsoft way of extending, according to the testimony, ends up costing customers more. The idea of Java was to write once, use anywhere, cross platform, and Alepin is asked to explain what that means to developers and end users, why it results in lower costs:

Q: What is the impact of cross-platform in relation to ISVs and OEMs as compared to single platform?

A: Well, there is a significant reduction in the cost of development of software. And this shows itself in several ways, but the first of which is that if you have a platform, a cross-platform application, you develop it once and you can run it anywhere. That was the tag line, if you will, of Sun's Java, is write once, run everywhere. The second reduction in cost for an independent software vendor is that the developers only have to learn one platform, one set of interfaces, one way in which to program in order to be able to write programs that run on a variety of platforms. So if you think of, let's say, a vendor like -- independent software vendor like Intuit, if it wanted to make an application that ran on Windows and ran on the Mac, it might have to have two teams of developers, each of which were knowledgeable in the interfaces and the design requirements for applications that run on the Mac and run on Windows, or if it was using cross-platform development tool kit and environment, it would only need to do that once.

Q: And what is the impact of cross-platform versus single platform on the common user, the end user, in relation to their ability to download these applets and utilize them?

A: Well, when applets are cross-platform, it expands the number of applications that are available to you so you can go to a website. And if you have a Linux computer or a Macintosh computer or a Windows 3.1 computer, you can get an application and it will run. You don't have to either select a specific application or hope that the independent software vendor or the website created the application for your platform. So it would increase the number of applications available to you.

When elephants fight, it's mice who suffer, and the grass under the elephants' feet, the fighting field. That's the point the plaintiffs are trying to make, that the tactics Microsoft employed made it worse for customers because inevitably there were problems from lack of interoperability and decreased functionality, and all of that ended up costing everyone more, everyone except for Microsoft.

Keep in mind that for anything official, you need to get a certified copy of the transcript from the court. This is just so we can follow along and know what is being said in that Iowa District Court in Polk County, Iowa. I know, like me, you wish you could be there.

I've cut out from the transcript the parts where the lawyers argue with each other before the judge, the parts the jury didn't hear, because the trial is not yet over, and I don't want to take a chance of them reading or hearing about anything they didn't already hear or aren't supposed to hear. That's the judge's job, to decide what they should and shouldn't hear, and I always respect decisions by the judge.

I know. Aw. And for sure some very interesting exchanges took place, some fine lawyering. When it's all over, we can enjoy it all.

I removed the line numbers from the transcript, because otherwise it's hard for those who rely on readers to follow along, but I have retained the pagination.

You'll also see the lawyer asking someone named Darin to show different things in a digital presentation. He could be the paralegal. We do such tasks at trial sometimes (yes, total fun), or he could be a techie guy on staff, making sure the jury can view the emails as the lawyer reads them.

With that, here's the transcript of this part of Mr. Alepin's testimony. Enjoy.

************************

IN THE IOWA DISTRICT COURT FOR POLK COUNTY
-----------------------------------------------
JOE COMES; RILEY PAINT,
INC., an Iowa Corporation;
SKEFFINGTON'S FORMAL
WEAR OF IOWA, INC., an
Iowa Corporation; and
PATRICIA ANNE LARSEN;

Plaintiffs,

vs.

MICROSOFT CORPORATION,
a Washington Corporation,

Defendant.

_________________________

NO. CL82311

TRANSCRIPT OF PROCEEDINGS
VOLUME XXV

_________________________

The above-entitled matter came on for trial before the Honorable Scott D. Rosenberg and a jury commencing at 8:30 a.m., January 5, 2007, in Room 302 of the Polk County Courthouse, Des Moines, Iowa.

HUNEY-VAUGHN COURT REPORTERS, LTD.
[address, phone]

A P P E A R A N C E S

Plaintiffs by:

ROXANNE BARTON CONLIN
Attorney at Law
Roxanne Conlin & Associates, PC
[address, phone]

RICHARD M. HAGSTROM
MICHAEL E. JACOBS
Attorneys at Law
Zelle, Hofmann, Voelbel,
Mason & Gette, LLP
[address, phones]

STEVEN A. LAMB
Attorney at Law
Zelle, Hofmann, Voelbel,
Mason & Gette, LLP
[address, phone]

KENT WILLIAMS
Attorney at Law
Williams Law Firm
[address, phone]

Defendant by:

DAVID B. TULCHIN
STEVEN L. HOLLEY
SHARON L. NELLES
Attorneys at Law
Sullivan & Cromwell, LLP
[address, phone]

ROBERT A. ROSENFELD
KIT A. PIERSON
Attorneys at Law
Heller Ehrman, LLP
[address, phone]

BRENT B. GREEN
Attorney at Law
Duncan, Green, Brown &
Langeness, PC
[address, phone]

STEVEN J. AESCHBACHER
Attorney at Law
Microsoft Corporation
[address]

(The following record was made in the presence of the jury at 8:47 a.m.)

THE COURT: Mr. Alepin. Sir, you are still under oath.

THE WITNESS: Thank you.

RONALD ALEPIN, called as a witness, having been previously duly sworn, testified as follows:

MR. LAMB: Would you put up slide 7, Darin?

6623

DIRECT EXAMINATION (CONT'D)

BY MR. LAMB:
Q. Okay. Good morning, Mr. Alepin.

A. Good morning.

Q. When we broke yesterday, you were in the middle of a discussion regarding an exhibit, Exhibit 5735.
MR. LAMB: Can you pull that up, Darin? Highlight the -- yeah, thank you.
Q. And you were explaining this phrase, clone their client technology early and often (full embrace strategy). Do you recall that, sir?

A. I do, yes.

Q. Okay. And at that point in time, you were challenged that you had just made that phrase up, embrace, extend, and extinguish. Do you recall that?

A. Yes, I do.

MR. LAMB: Okay. I'd like to call up Exhibit 2403, please. Can you go on 2403 to the heading?

Q. Can you tell the Jury who those people are?

A. There are John Ludwig, Brad

6624

Silverberg, Ben Slivka, Thomas Reardon, Darrell Reuben, Paul Maritz, Chris Jones. I forget who Victor S. is, but that's the names of executives within the Microsoft organization including the head of Windows desktop operating system, Brad Silverberg and his superior Paul Maritz.

Q. Okay. And what's the subject of this particular memo, sir?

A. The subject is a response to anti-Java strategy memo.

Q. Okay.

A. Or reply.

Q. And this is dated September 4th, 1995; right?

A. Yes.

MR. LAMB: Can you highlight the first sentence, Darin, some additional thoughts?

Q. Okay. Can you read that for us?

A. Some additional thoughts. These are all based on my conclusion that Java is already here, and we need to move down the embrace/extend path.

Q. Okay. And now, again, for the Jury, what does embrace mean in this context as used

6625

by Microsoft employees?

A. It's used to indicate a strategy where Microsoft will embrace the standards or the specifications and interfaces of another company's software.

Q. Okay. And what does extend refer to?

A. Once the specifications have been embraced, then Microsoft will extend them and add additional interfaces proprietary to Microsoft.

Q. Okay. When you say add additional proprietary interfaces that are Microsoft's, what impact does that have technologically to other ISVs and OEMs?

A. Well, the result is or the impact is that what was once sort of community development property, the work of the industry and industry participants is appropriated essentially, is taken over by Microsoft.

And then Microsoft takes it and with its proprietary extensions, makes it essentially unavailable on a going-forward basis to the industry participants who were responsible for first developing the specifications and the standards.

6626

Q. Okay. And when Microsoft makes those APIs unavailable to certain ISVs and OEMs, what's the impact to those ISVs and OEMs of their ability technologically to create products?

A. It reduces their ability to create products, especially products that will interoperate with Microsoft's products.

Q. Okay. Thank you, sir.

MR. LAMB: Darin, could you go right above paragraph 2 and highlight that for us? Okay. Do you see the section there, sir, where it says there are a bunch of options, but the answer really revolves around our company strategy. Given that we don't think Java is going to be around or that we don't want to encourage it, we should figure out a way to have our browser sniff the applet tag in HTML (Java object) then prompt the user to fetch the runtime from Sun. Do you see that, sir?

A. I do.

Q. Can you tell that jury, what does that mean? When it references our browser, what is that referring to?

6627

A. Our browser is the Microsoft Internet Explorer.

Q. Okay. And when it says sniff the applet tag in HTML, tell the Jury what that means.

A. Well, what that means is to identify a particular markup language identifier that would indicate that this is a Java applet.

Q. Okay. And then where it says then prompt the user to fetch the runtime from Sun, what does that mean?

A. That means that the user would be asked if he wanted to go and get the Java runtime software, the Java Virtual Machine from Sun and install it on the user's computer.

MR. LAMB: Okay. Go down to the bottom paragraph, Darin. Very bottom paragraph.

And then if you can highlight the second page and add paragraph 3 underneath that.

Can't do that on the same screen? Okay.

All right, it can be done. We have the technology.

6628

Q. All right. Do you see there where it says one strategy is to jump on the Java bandwagon and try to take control of the class libraries and runtime? What are class libraries?

A. Well, I mentioned before in yesterday's conversation that there were these subroutines. Sometimes they were referred to as DLLs. I think I used the term distributed link libraries.

Another manifestation of the same idea, another way of approaching the same idea of taking subroutines and making them available is something called the runtime and class libraries. They are the equivalent, if you will, of subroutines in the Java world.

Q. Okay. Is that something you could diagram for the Jury so they can see what a Java Virtual Machine does?

A. Sure, I can do that. MR. LAMB: Permission of the Court?

THE COURT: You may.

MR. LAMB: Does this matter whether it's on white board? I don't know what the Court's preference.

6629

THE COURT: Why don't you use the easel. Can you use the easel, please?

THE WITNESS: I'll try. I have a tendency to slide down the easels.

THE COURT: Slide?

THE WITNESS: Slide. My handwriting goes, you know, like this.

MR. LAMB: There's some markers in the back there.

THE WITNESS: Thank you.

A. All right. So before we talked about an operating system and we had applications in it and we might have had middleware in here, and these would be tied to a particular platform.

So this would be -- for example, this application would be linked to -- and I believe I used the term locked into the Windows platform.

In 1993 and 1994, the folks at Sun Microsystem came up with this idea of putting between the operating system and the applications a virtual machine. So these.

In Sun's Java world, these applications were known as applets. And the

6630

idea was that you would download them from the Internet and you would make them so they could run on your machine.

But they would run inside something called a virtual machine that would insulate the application from any dependencies on the operating system.

So essentially you could take --

Q. Hold on a second there. When you say insulate the applications from the operating system, technologically, what's the impact of that?

A. That meant that the applications were portable and that the same application could be downloaded from a website and run on a Macintosh computer or on a Windows computer or on a Linux computer without any change.

Q. So the operating system didn't matter?

A. The operating system didn't matter, that's correct.

Q. Go ahead, sir.

A. So the Java Virtual Machine was responsible for maintaining all of the local information, information about the operating system that their JVM -- that's a shorthand

6631

word for Java Virtual Machine -- that the JVM was responsible for managing all of the local interfaces to the operating system, but the application used only the interfaces available from the Java Virtual Machine.

Those same interfaces were available on every system that Java Virtual Machine would run on. And there were, I believe, more than 30 different computer platforms that the Java Virtual Machine software could run on.

And that meant that you could download an application from a website, Java application, and could run on 34 different computers without you having to recode the application or -- a term that I used yesterday -- without you having to port the application by changing the APIs and making other changes.

Q. Okay. You can go ahead and take your seat again, sir. It goes in the back.

Sir, referring again to the exhibit, Exhibit 2403, paragraph 3 there, it says, we should consider support for Java as a platform. As a company, we have two options for embracing and extending Java.

6632

Do you see that phrase, again, embracing and extending; right?

A. I do.

Q. And does it mean the same thing that it meant earlier, in your mind?

A. Yes.

Q. Okay.

MR. HOLLEY: Your Honor, objection. On November 9th of 2006, the Court issued a ruling on motions in limine where the Court said no witness --

MR. LAMB: Your Honor, this is a speaking objection.

MR. HOLLEY: Your Honor, I just need to state the basis of my objection.

THE COURT: Let's take it outside the presence of the jury ....

[PJ: discussion with lawyers and judge out of earshot of jury ensued, redacted.]

(The following record was made in the presence of the jury at 9:08 a.m.)

THE COURT: Please rephrase the question.

BY MR. LAMB:
Q. Again, Mr. Alepin, that phrase embracing and extending Java in paragraph 3 of this exhibit, what did that mean to you?

A. That meant that Microsoft would adopt Java. That is to say, adopt the interfaces. And then it would add extensions proprietary to Microsoft.

Q. Okay. And what is the impact on other developers of the addition of those extensions? Would you explain that to the Jury?

A. Well, the use of those proprietary extensions, those proprietary Microsoft extensions to the Java Virtual Machine APIs would lock the application or the applet to the

6640

Windows computer. Meaning that those applets would only run on or with a Windows computer.

Q. Okay. With the Court's permission, could you get down and show on the diagram that you have what the impact of the addition of those applications would have?

A. Excuse me, the addition of those applications programming interfaces?

Q. Yes, APIs.

THE COURT: Speak loudly, please.

THE WITNESS: I'm sorry.

A. Okay. So here is our Java Virtual Machine. Here are the interfaces between the applet or the application and the Java Virtual Machine interfaces including -- just, for example, allocate memory for me, get input from the keyboard, those kinds of operations.

And what Microsoft extensions would do would be to add additional interfaces. Would add some additional interfaces not available on the other virtual machines that were on other platforms.

When the application developer used those APIs, that meant that the applet would only run on the Windows platform. Those kinds

6641

of functions would be unique to Windows and would lock the applet into the Windows platform.

Q. Okay. Thank you, sir. This e-mail, Exhibit 2403, then goes on to say that there's a couple options. One, we take control of it and add Windows specific classes. Do you see that, sir?

A. Yes.

Q. And explain to the Jury what that would entail, that option.

A. That's the description of what I was just saying.

Q. Okay.

A. So adding the Windows specific classes -- classes are subroutines or the equivalent of subroutines. They're application programming interfaces, which would be specific to the Windows platform.

Q. Okay. And then the second object is we, quote, sandbox, end quote, it, slow it down, and restrict it to a particular domain, betting that we can bring our technology to bear quickly enough to minimize the impact.

6642

Technologically, what does that mean sandbox it, slow it down, restrict it to a particular domain?

A. It means, as a technical matter, relegating Java's applicability to a specific type of environment or purpose so that it would, for example, be not a general purpose solution for the development of applications.

Q. Okay. And then it goes on to say while I would like to pick two, my personal feeling is that we should strongly consider one; namely, fully supporting Java and extending it in a Windows/Microsoft way. Do you see that?

A. I do.

Q. And, again, extending it in a Windows/Microsoft way, does that have the same meaning, in your mind, as it did the way you've testified earlier?

A. It does.

Q. Okay. And is that something that you've seen in a number of Microsoft documents used by a number of Microsoft employees?

A. Yes.

MR. LAMB: Would you pull up Exhibit

6643

5803, please? Okay. If you could go to the from/to line.

Q. Who's this from?

A. This is from Bill Gates.

Q. And who's Bill Gates, sir?

A. He's the CEO, founder of Microsoft.

Q. And who is it to?

A. I think was the CEO and still is the founder of Microsoft.

Q. Okay. Who is this e-mail to?

A. It's to Nathan Myhrvold.

Q. Okay. And, again, this is dated September 30th, 1996.

The subject, what is the subject, sir?

A. The subject is Java runtime becomes the operating system.

Q. Who is Mr. Mhryvold?

A. Nathan Mhryvold was one of the most senior executives at Microsoft.

Q. Okay. Why don't we go to the very first paragraph. And this is Mr. Gates saying I am worry a lot about how great Java/Javabeans and all the runtime work they are doing is and how much excitement this is generating. I am

6644

literally losing sleep over this issue since together with a move to more server based applications, it seems like it could make it easy for people to do competitive operating systems. Do you see that, sir?

A. I do.

Q. Okay. What does the phrase more server based applications mean?

A. Well, one of the great potentials for the Internet is that you can create applications that run on a server computer, like a web server or run partially on a web server and partially on your desktop so that there is a cooperative application that can provide some of the nice responsiveness of a local based application with some of the larger capacity features of servers.

Q. And is this one of the many e-mails that you reviewed in order to help form your opinions here?

A. One of the many.

Q. Okay. Now, as you read this in order to form your opinions, do you see where it says I am worry a lot?

6645

A. I do, yes.

Q. Okay. And does that tell you that Mr. Gates is conveying, at least as you review it, a concern?

A. Well, this is a concern that was widespread among Microsoft employees.

Q. Okay. And can you tell the Jury, in your opinion, what you view Mr. Gates is conveying the concern to be?

A. Well, the concern that Microsoft documents, Microsoft employees discusses the potential that Java had as a technology or as a platform, in particular, to become an operating system and to make it possible to replace the current operating system, the current Windows operating system.

Q. It technologically threatened the Windows operating system platform?

A. That's correct, yes.

Q. Okay.

MR. LAMB: Darin, if you could go down about midway in this document where it says I think that the risk of Sun.

Q. Sir, that says, I think, that the risk of Sun really taking the OS franchise away from

6646

us is much lower than the risk that they cheapen the entire business. They are so hell bent to give things away, and there is so much cross-platform fervor, that it will be hard for them or others to harness this energy toward a single platform.

In the limit, they can make the web totally OS agnostic, but there will still be other things that motivate one platform versus another.

And, again, what is Sun?

A. Sun is Sun Microsystems. They started off as a workstation and had a server company. They had an operating system that -- and still do -- that was based on Unix. Unix was one of the operating systems I put up on the quadrant yesterday.

Q. Okay. Mr. Alepin, the term the OS franchise, what does that mean?

A. The OS franchise is the Windows -- well, the OS franchise is the operating system platform.

Q. You understand Mr. Gates to be referring to Windows?

6647

A. The Windows, of course, yes.

Q. Okay. And, again, Sun created Java; right?

A. Uh-huh. Yes.

Q. Okay. Now there's another phrase -- and I believe you said what it meant yesterday, but if you could go over it again, I would appreciate it -- cross-platform. Do you see where it says there is so much cross-platform fervor?

A. I do.

Q. What does cross-platform mean?

A. Cross-platform is -- refers to the ability of applications to run on different platforms without any effort. This was something that emerged as a result of looking at the potential for the Internet and looking at applications like Netscape's browser and Sun's Java. It created the potential for users to -- an independent software vendors to start thinking in terms of one application across all of the hardware and software platforms out there.

Q. And, Mr. Alepin, technologically

6648

speaking, cross-platform versus single platform is more beneficial for ISVs and OEMs; correct?

MR. HOLLEY: Objection, Your Honor. Leading.

THE COURT: Sustained.

Q. What is the impact of cross-platform in relation to ISVs and OEMs as compared to single platform?

A. Well, there is a significant reduction in the cost of development of software. And this shows itself in several ways, but the first of which is that if you have a platform, a cross-platform application, you develop it once and you can run it anywhere.

That was the tag line, if you will, of Sun's Java, is write once, run everywhere.

The second reduction in cost for an independent software vendor is that the developers only have to learn one platform, one set of interfaces, one way in which to program in order to be able to write programs that run on a variety of platforms.

So if you think of, let's say, a vendor like -- independent software vendor like Intuit, if it wanted to make an application

6649

that ran on Windows and ran on the Mac, it might have to have two teams of developers, each of which were knowledgeable in the interfaces and the design requirements for applications that run on the Mac and run on Windows, or if it was using cross-platform development tool kit and environment, it would only need to do that once.

Q. And what is the impact of cross-platform versus single platform on the common user, the end user, in relation to their ability to download these applets and utilize them?

A. Well, when applets are cross-platform, it expands the number of applications that are available to you so you can go to a website.

And if you have a Linux computer or a Macintosh computer or a Windows 3.1 computer, you can get an application and it will run.

You don't have to either select a specific application or hope that the independent software vendor or the website created the application for your platform. So it would increase the number of applications available to you.

6650

MR. LAMB: Darin, if you could go down to the last two paragraphs and highlight those. No, the one below that.

Q. Mr. Alepin, Mr. Gates goes on to say, this is not to say that Java is unimportant. It is very, all caps, important, paren, just don't lose sleep, exclamation point, close parens.

I think that you are focusing on the wrong, quote, kind, end quote, of threat. We are in danger of losing a new market, which will grow at a pace which is very rapid indeed.

This would be a tragedy to have happen to us, but it is different than a direct assault on our core asset. And our response must also be different. The obvious things to do are, colon.

Now, when Mr. Gates refers to the core asset, what piece of technology, in your mind, is he referring to?

A. Well, the core asset is the operating system. It's the Windows -- at this time it's the Windows operating system.

Q. Okay.

MR. LAMB: Darin, could you go to the

6651

second page under the top paragraph 1? It goes down a couple lines.

Q. Do you see there where it says, one, provide our own means of dramatically improving web pages. Continue to, quote, embrace and extend, end quote, both at the level of new Java tools, like J plus plus, and our broader browser strategy. Do you see that, sir?

A. Yes.

Q. Okay. And based on your experience in the industry and based on your review of all the documents, what is your understanding of the meaning to you of the phrase, quote, embrace and extend, end quote, as Mr. Gates uses it here?

A. It's to copy and adopt the interfaces from others and to extend them in proprietary and unique ways.

MR. LAMB: Could I have Exhibit 5906? Can we do the to/from line.

Q. This is from Aaron Contorer. Do you see that?

A. Yes, I do.

Q. Do you know who that was or is?

6652

A. I believe he was in the developer tools organization.

Q. Okay. You need to speak up, sir. I apologize. I'm really loud. You're really quiet. Okay.

A. Yes.

Q. We're getting there.

A. All right.

Q. Okay. And it's to who?

A. It's to Bill Gates.

Q. Okay. Now, again, if we could go to the first paragraph where it says, the first two paragraphs that starts with today.

It says, today we face the largest threat Microsoft has faced since the success of Windows. For the first time there is a really credible threat to our position as the leading platform for ISVs to write to. Windows faces challenges in satisfying end users and IT organizations, but we have a lot of smart work underway to address these problems.

By contrast, we are not executing on a strategy that lets us maintain our leadership

6653

position as the people who define the platform for ISVs.

Owning this platform is the Microsoft asset. It is the difference between growing to twice our current size in the future, or shrinking to much less than the role we enjoy today. Do you see that, sir?

A. I do.

Q. Okay. And when Mr. Contorer refers to owning this platform is the Microsoft asset, when he refers to the Microsoft asset and the platform, what is your understanding of that terminology?

A. Well, it's the -- as I referred to yesterday, the platform that we speak of is the set of programming interfaces that in this particular case here would be Windows.

Q. Okay.

MR. LAMB: If you could go to the next two paragraphs, Darin.

Q. This memo goes on to Mr. Gates to say, there are three possible ways to address the threat of the Java platform.

One is to do nothing and gradually die

6654

as others innovate around us.

The second is to join the parade of people who are saying, quote, let's kill Microsoft and share their market among us, end quote. Good for everyone else, but reducing us to the much smaller role of a common software company like Lotus or Borland, or even Symantec.

That's a great way to make all our stock options worth zero, even if we would not technically be out of business.

The third choice is to make major innovations to our platform so people still prefer to write to us instead of some tepid cross-platform Java layer. This is our only real option.

Okay. Again, the platform, what's the reference to, as you understand it?

A. The Windows platform.

Q. Okay. And of those three options, based on your review of all the evidence, what option do you believe Microsoft took?

A. It took the embrace and extend option.

Q. Okay. It goes on to say, for over half a year, I have been upset that some people

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at Microsoft are apparently working hard on plan two to destroy the value of the Windows API. Do you see that?

A. Yes.

Q. Okay. What does that mean, the value of the Windows API from a technology point of view?

A. Well, the ability to own and to extend the application programming interface and keep the applications that independent software vendors have developed locked into the Windows platform is the thing of considerable value.

MR. LAMB: If you could go to the next page, Darin. And if you could highlight the last two lines of the first paragraph under switching costs to the end of the paragraph that starts extend. Right there. All right. Thank you, sir.

Q. Okay. Do you see there, it says there is a name for this, colon, it is called, in caps, embrace, and, again in caps, extend. Do you see that, sir?

A. I do.

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Q. Okay. And when you read that based on all your training and experience in the industry and based on all the documents that you've reviewed, what do you understand the phrase embrace and extend to mean?

A. It means to adopt the interfaces and standards and other specifications of another platform or software product. And extend means to add interfaces or specifications to that platform and have those extensions be unique and proprietary to the Windows platform.

Q. Okay. And the next paragraph says, embrace means we are compatible with what's out there so you can switch to our platform without a lot of obstacles and rework. You can switch from someone else's Java compiler to ours; from someone else's web server to ours, et cetera. Customers love when we do this (as long as we don't spend our energy embracing extra standards no one really cares about). Our competitors are not so sure they like it because they prefer us to screw up. In there, what does that mean

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embracing extra standards no one really cares about?

A. Well, some standards can run into the thousands of pages and deal with exotic environments and exotic conditions, and there's a -- one needs to be careful that one doesn't spend a lot of time doing a lot of work for special circumstances that are unlikely to arise in the normal course of running some software.

So you don't want to copy everything. The idea is to copy the most specifications that represent the most cases.

Q. And then the next paragraph says, extend means we provide tremendous value that nobody else does.

So, A, you really want to switch to our software, and B, once you try our software, you would never want to go back to some inferior junk from our competitors. Customers usually like when we do this, since, by definition, it's only an extension if it adds value. Competitors hate when we do this because, by adding new value, we make our

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products much harder to clone. This is the difference between innovation and just being a commodity like dot com where suppliers compete on price alone. Nobody builds or sustains a business as successful as Microsoft by producing trivial products that are easy to clone. That would be a strategy for failure. Do you see that, sir?

A. I do. But I think it's like corn.

Q. Like what?

A. Like corn.

Q. Oh, like corn?

A. A commodity like corn.

Q. You're right. We're in Iowa. I should see that. I apologize. Okay.

A. I'm sorry.

Q. No. That's all right. From a technological point of view, what is it you understand he is saying?

A. He's saying that extend means that you add additional functionality that would draw developers to the platform, the extended platform.

Q. But that additional functionality, how

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does that adversely impact other ISVs, OEMs, and other end users?

A. Well, it makes it harder for them, especially if the interface information isn't disclosed or it is very closely tied to other Microsoft proprietary technology.

It makes it very difficult for the rest of the independent software community to take those extensions and make them available to users on other platforms.

Q. And is it necessary, in your opinion, technologically for Microsoft to add this innovation and not disclose the APIs?

MR. HOLLEY: Objection, Your Honor.

THE COURT: Overruled. You may answer.

A. No.

Q. Why not?

A. It's not necessary to -- not to disclose interfaces. There's not -- there's not a technical reason for not disclosing interfaces.

Q. Okay. Thank you, sir. Now, in developing your opinions here yesterday and today, you've reviewed a lot of

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documents; right?

A. I have, yes.

Q. And you've reviewed depositions; right?

A. Yes.

Q. And you've reviewed trial testimony; correct?

A. Yes.

Q. And you've relied on them; correct?

A. Yes.

Q. Okay. And, in part, in relation to your opinions here yesterday and today, you reviewed the testimony of a Steven McGeady, an Intel executive; correct?

A. Yes, I did.

Q. McGeady, I'm sorry. M-c-G-e-a-d-y. I'm sorry. I apologize.

A. Yes.

Q. I'd like to read some of that testimony. It's March 31st, 2004. And it starts:

Question: Let me ask you about the November 7th, 1995, Oregon meeting. First, is there any reason that that meeting, in particular, stands out in your

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head, in your mind or your head?

Answer: Well, at that particular meeting --

MR. HOLLEY: Your Honor, I'm sorry to interrupt Mr. Lamb, but this is a subject that I think we need to address at the sidebar for the reasons that I explained earlier.

THE COURT: Very well....

[PJ: Discussion ensued between the lawyers and the judge, redacted, outside of the jurors' hearing.]

THE COURT: You may continue.

MR. LAMB: Thank you, Your Honor. Before I read the testimony, I want to just get a couple things straight in terms of people. Stephen McGeady, who was he?

A. He was an employee of Intel Corporation.

Q. Okay. And Paul Maritz, who is he?

A. Paul Maritz was the head of Microsoft's -- I believe the head of Microsoft's development organizations.

Q. And, again, you've got to speak up a little bit because you make me sound like I'm yelling.

A. I put the microphone out of harm's way

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during the sidebar.

Q. Okay. Thank you. Now, this is from the transcript.

Question: Let me ask you about the November 7th, Oregon meeting. First, is there any reason that that meeting in particular stands out in your head, in your mind or your head?

Answer: Well, at that particular meeting where Paul Maritz was in attendance, we had a very frank discussion about the Internet, about Microsoft's strategy and their strategy in particular toward Netscape and some other competition.

And Paul and some of the other attendees made some colorful statements that stick out in my memory.

Question: What did Mr. Maritz say that stands out in your memory?

Answer: Well, it was a long meeting. There were two phrases that are easy to remember.

One was that it was Microsoft's plan to cut off Netscape's air supply. Keep them by by giving away free browsers, Microsoft was

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going to keep Netscape from getting off the ground.

And the other phrase, quote, cut off air supply, end quote, is one perhaps that really sticks out clearly in my memory.

And the other phrase that sticks out clearly in my memory was the rather -- well, I won't characterize it, but the description of Microsoft strategy as, quote, embrace, extend, extinguish, end quote.

It was kind of a plan their public strategy of love and embrace and extend, the notion that they would embrace Internet standards, extend them presumably in compatible ways that others wouldn't follow and thereby extinguish the competition.

And, again, Mr. Alepin, is that testimony in part what you relied on yesterday when you made the comment about embrace, extend, and extinguish?

A. Yes.

MR. LAMB: Your Honor, I think it's probably break time. Am I right or wrong?

THE COURT: Well, I'll agree with you.

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....

MR. LAMB: The next slide, Darin. Okay.

Q. Before I do this, though, sir, in relation to Microsoft's employment of Java and use of Java, when you testified about Microsoft's Java interface extensions --

A. Yes.

Q. -- do those interface extensions tie the applets or applications to the Windows operating system?

A. They tie them. Another phrase is they bind the applications or they lock them into the Windows platform. That's correct.

Q. Okay. Thank you, sir.

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