Microsoft Chairman Bill Gates Accused of Anticompetitive Conduct

Strategic Insights -

Microsoft Corp. Chairman Bill Gates allegedly used his company's influence to pressure Intel Corp. not to develop competing software, according to testimony in the ongoing Microsoft antitrust trial. Intel vice president Steven McGeady claimed that Gates threatened to withhold support for Intel's next processor offering if the company didn't align with Microsoft on software issues. This assertion contradicts Gates' sworn deposition, in which he denied any concerns about Intel's Internet software work. The Justice Department and 20 states suing Microsoft have introduced documents showing increasing pressure on Intel not to compete against Microsoft, ultimately leading Intel to scrap its "native signal processing" technology.

Key Takeaways:

  • Intel executive Steven McGeady testified that Bill Gates made "vague threats" against Intel's emerging work on Internet software, claiming that Microsoft wouldn't support Intel's next processor offering if there wasn't alignment on software issues.
  • McGeady's testimony contradicts Gates' sworn deposition, in which he stated that Microsoft didn't express concern about Intel's Internet software work and was unaware of Intel's involvement.
  • The Justice Department and 20 states suing Microsoft introduced documents showing Intel and Microsoft's efforts to avoid competition, including a memo from Intel's McGeady asserting that Gates told Intel Chairman Andy Grove to shut down Intel's software laboratory in August 1995.
  • Gates allegedly complained to Grove in May 1995, stating that he didn't "understand why Intel funds a group that is against Windows 95," and two months later, told Grove that Microsoft "is the software company here and we will not have any kind of equal relationship with Intel on software."
  • According to McGeady, Microsoft attempted to gain control of the Internet by "cutting off the air supply" of Netscape Communications Corp., the leading maker of browsing technology.
  • The Justice Department alleges that Gates led a campaign to protect Microsoft's Windows monopoly and leverage it into new markets.

Statistics:

  • About 90 percent of new personal computers are loaded with Microsoft's Windows operating system.
  • Approximately 80 percent of those PCs run on Intel's computer chips, including the Pentium.
  • Gates has an estimated net worth of over $100 billion, making him the world's richest man at the time of the testimony.
  • Intel and Microsoft have a long-standing partnership, often referred to as the "Wintel" duo.

Sources:

  • "Intel executive says Gates 'twisted the knife' in antitrust suit." _The New York Times_
  • "Justice Department says Microsoft used 'putting a knife in' antitrust strategy." _Associated Press_