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Computing

The Microsoft File: The Secret Case Against Bill Gates

Author Wendy Goldman Rohm releases the source notes for her controversial book on Microsoft. Part 1: Chapters 1-8.

October 27, 1998
Web posted at: 11:45 AM EDT

by Wendy Goldman Rohm

From...

(IDG) -- Wendy Goldman Rohm's best-selling book The Microsoft File: The Secret Case Against Bill Gates has garnered plenty of attention since hitting the shelves in late August. In particular, readers have been riveted by Rohm's detailed and sometimes controversial accounts of meetings, conversations, email and other correspondence that paint a picture of how the software giant, its CEO Bill Gates, and other executives conduct business and wield influence on the high-tech industry.

In deciding to remove Rohm's end notes to the book at publication time Random House, the publisher, aimed to protect the book's numerous anonymous sources and their identities. However, this week Random House reversed its decision to omit source notes -- sparked by a multitude of reader requests -- and is releasing a modified version of Rohm's original end notes in narrative form. These source notes will be included in future printings of the book, as well as posted on Random House's Web site.

Rohm provided InfoWorld Electric a copy of her end notes, which are posted below, preceded by a note from the publisher.

-- Carolyn April, InfoWorld Deputy News Editor

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A note from the publisher:

In order to protect the confidentiality of the author's sources, Times Books reluctantly decided in the final stages of the publication process not to include the author's end notes. Given Microsoft's unjustified criticism of the book, however, the author and publisher have worked up a version of those notes that respects the sources' confidentiality but also responds to the criticisms leveled by the company at the book.

Wendy Goldman Rohm was not only attempting to tell the story of Microsoft's business practices but also provide the reader with insight into the character and personality of the main participants in the story. More than any other reporter, Ms. Rohm, after a decade of examining Microsoft's business practices, was in a position to assess not only the business practices of Microsoft but also what was driving Gates and his colleagues in their efforts to control a larger and larger span of the information industry. These insights were based on hundreds of interviews with people in a position to know about both the personal and professional activities of the main characters. Many of these sources requested anonymity, and it has always been the intention of both the author and publisher to respect those requests.

The notes that follow are an effort to provide an overview of the range of sources that Ms. Rohm used to develop the story told in The Microsoft File. While in some cases they may lack the specificity that some readers may hope for, they nonetheless convey the wide range of people and documents on which this book is based. The notes have been prepared as a narrative rather than the standard non-fiction format of page number followed by specific source because in many cases the source could not be directly named. However, we believe that the cumulative effect of this narrative rendition will answer the concerns that have been raised about the factual basis of the book.


A note from the author:

My goal in The Microsoft File has been to tell the uncensored story of Microsoft and its business practices. To do so, I have relied on thousands of hours of interviews with hundreds of sources within the computer industry, including insiders at the very highest levels of Microsoft management, and within the federal and state agencies that have been investigating Microsoft's business practices over the years. Like all investigative works, this book relied in many cases on sources directly involved in the story, or intimate confidants of those directly involved. These sources needed to be protected and still need to be protected. In addition, many scenes in the book are based on my own observation of events where I was physically present, including cocktail parties where Bill Gates was present, restaurants where federal officials were also meeting, conferences, trial proceedings, press conferences, and hotels where Microsoft executives were also present.


Chapter 1

The details of the Hay Adams Hotel, in Washington, D.C., where Microsoft chief counsel William Neukom stayed when in D.C., including the lobby scene on the night of January 19, 1995, were based on my personal observations there. I was a guest at the hotel the same night as Neukom -- in Washington to cover the federal antitrust hearing in which he would participate the next day, in proceedings overseen by Judge Stanley Sporkin.

While I was not, of course, present in Neukom's hotel room, I did confirm with hotel employees that he was in his room and spent the night there. The details, down to the strange and dramatic weather (a thunderstorm in January, and banks of fog covering the city), are all based on my personal observations and reporting.

During the course of my reporting about Microsoft over the past ten years, I have come to know many Microsoft employees, as well as friends and colleagues of Bill Gates, Bill Neukom, and other senior officials at Microsoft. The personal and business details in this chapter about Neukom and Gates are all based on extensive confidential interviews given to me by personal and professional acquaintances of the two men.

On page 5, Neukom's description of Kempin as "the elephant ... and I have to go shovel it up" came from highly reliable Microsoft sources who were present when Neukom said this.

Government officials in Washington filled me in on the government's intent to put "the fear of Sherman" into Gates. Antitrust chief Anne Bingaman stated as much to her colleagues. I also conducted on-the-record, one-on-one interviews with Bingaman, in her Justice Department office and by phone, on many occasions.

While I did not travel to Australia to cover Gates' visit, described in the second half of Chapter 1, I did speak with several people who were present when Gates was there, and also at the Ramada Renaissance in Sydney on the day Gates wandered into the lobby. Newspaper accounts in Sydney also confirmed Gates' speech schedule there and the presence of the Pope. I was one of the many recipients of the fake press release that circulated on the Internet stating that Microsoft had merged with the Catholic Church. Details of the lunch between Gates and Rupert Murdoch were revealed to me by those with direct knowledge and also those who were around Microsoft's offices just prior to the lunch.

Several of my sources allowed me to review hundreds of internal company documents in their possession, on which much material in the book is based. It is clear to the reader when I quote directly from documents that my source material was actual documents. However, other information from these documents is used in the book, though not directly quoted. The comment, for example, on page 9 about Gates' "obsessive awareness" regarding competitors doing things better than Microsoft is one example of information gleaned from these documents. Brief summaries of historical information about Gates' relationship with IBM and acquisition of Q-DOS, such as on pages 11 and 12, are based on numerous public documents and long-standing reports, including briefs filed with the FTC, the DOJ, and the European Union. This history is also backed up by accounts published in the biographies Gates, by Stephen Manes and Paul Andrews, and Hard Drive, by James Wallace and James Erickson.

During interviews I conducted with CEOs and senior executives of several companies in the computer and software industries, they spoke of Gates' apparent disingenuousness and his dishonest deal-making. They used the metaphor of being "raped" by Gates. One prominent CEO, who asked to remain unnamed, compared doing business with Gates to being on a date with Mike Tyson. The reference to Steven Spielberg on page 12, in disguise as "Steve Esser," is based on my own presence in Las Vegas at the electronics conference Spielberg and Gates were attending. I walked the corridors of the Las Vegas hotel where part of the conference was taking place with Spielberg and his young son at my side. Other sources told me of the cementing of the partnership between Dreamworks SKG and Microsoft.

On page 15, where I note that "Murdoch had felt the same way when his archcompetitor Robert Maxwell fell off his boat," my sources were high level News Corp. executives who were confidants of Murdoch's.

Further accounts of Gates in the hotel lobby, as mentioned on page 15, were from sources who were present.


Chapter 2

Chapter 2 is based on extensive interviews with government officials at both the FTC and the DOJ, as well as antitrust experts in Washington, D.C., and former government officials.

The Dan Oliver quote on page 16, "I've tried to do everything President Reagan would want a chairman to do -- and less," appeared in an article in The Washington Post on April 27, 1987. Oliver had made the comment publicly in front of a group of antitrust lawyers. Discussion of Oliver's speech-giving habits and political agenda, as mentioned on page 18, was also covered by the Post in the same article, which also quoted Oliver as shown on page 21: "What does a deregulator put on his resume -- all the cases he didn't bring?" Members of the D.C. antitrust bar and Oliver's colleagues often recited these memorable statements of Oliver's in interviews with me.


Chapter 3

In Chapter 3, the events involving IBM on pages 22-30 are based on extensive interviews I conducted with current and former IBM executives who were directly involved. Bugs were discovered, as I report, in the hotel room of Jim Cannavino just before his strategic meeting with Gates. I have had this confirmed by several sources who were present. I also point out that the detective involved did not find any fingerprints, and so could not ever pin down who had placed them in the room.

The section of the chapter based in Washington D.C., specifically pages 30-36, were based on extensive personal interviews with the commissioners themselves, numerous other federal officials, and attorneys and economists who worked closely with those described.


Chapter 4

In Chapter 4, the events portrayed on pages 48-55 are based on confidential interviews with Microsoft sources and confidants of Gates interviewed over the course of several years. The lawsuit described on page 39 was filed against a Microsoft executive and the documents in the case were publicly available.

On page 39, the meetings between Neukom, Maritz, Pope, and FTC officials were reported by me based on in-depth interviews with government officials in a position to know.

On page 40, my reports of Ballmer's e-mail from Gates in which he expressed his paranoia about DR-DOS, and subsequent paragraphs regarding Gates' concerns about the competitor are based on internal Microsoft documents that I was able to review. The history of DRI and CP/M, as detailed on page 41, was based my review of documents and briefs privately filed with the FTC and with the EU.

Starting on page 41, my discussion of licensing policy as spelled out in OEM manuals is based on my review of Microsoft "secret" documents. On page 42, I quote Gates as saying "The approach we take to system software licensing is not unique at all." Gates wrote this to me in one of many e-mail messages he sent during the creation of this book, in response to questions I had sent to him by e-mail. Neukom's comment, "Microsoft believes that its licensing practices are entirely legal and in no sense anticompetitive," is from a document sent to me via e-mail by Microsoft, containing Neukom's answers to my questions.

The history of the development of the FTC case, as revealed on pages 43-46, is based on my extensive interviews with numerous federal officials who were closely involved.

The review of Lotus Development's antitrust concerns, on pages 46-48, were based on extensive interviews with Lotus officials who asked to remain unnamed, and on my review of documents provided by Lotus under subpoena to the government. The detailed account I provide about Novell's Ray Noorda and his meetings with Gates and Ballmer are based on extensive interviews with Novell officials and Novell documents and transcripts subpoenaed by the government, which I was able to review. These included handwritten notes taken by Noorda, before, after, and during the meetings with Gates and other Microsoft executives.

Noorda's encounters with Philippe Kahn of Borland were based on detailed interviews with high-ranking Novell and Borland officials, who asked to remain unnamed. The e-mail communication between Borland's Kohn and Gene Wang was buried in reams of evidence collected during the criminal raid of Wang's office and home, and which were reviewed by me.

The tongue-in-cheek poems written by Ray Noorda to Gates -- one handwritten on the back of an envelope to his Mormon church, and one typewritten -- are in my possession.


Chapter 5

The account in Chapter 5 of the deal-making that went on in Microsoft's Munich office and in restaurants in London, as well as the Microsoft board meeting that took place at London's Hotel Clivedon, are based on extensive interviews I conducted with Microsoft officials who asked that their identities be protected. These interviews included those who were present or who worked closely with those present, as well as thorough documentation of the meetings involved as recorded in Microsoft internal communications that I was able to review.

The anecdote about George Rice that appears on page 70 is described in Ida Tarbell's great book, The History of the Standard Oil Company, as well as the details of Rockefeller's practices at the turn of the century. The quote from Microsoft's documents on page 70, "Your mission is to get Microsoft system software on every personal computer," is from my review of these secret documents.

Details of Microsoft's deal-making with Vobis, including memos and e-mail messages quoted, are based on my review of these internal documents as well as extensive interviews with Microsoft and Vobis employees.

I conducted some of my research for this chapter in Munich, Germany. Other interviews were conducted by phone and in person in the U.S.

The meetings between Microsoft executives and others at Banner's Restaurant in Seattle were reported by me based on extensive interviews with Microsoft sources as well as documents that described the meetings in detail, which I reviewed.


Chapter 6

The accounts at the beginning of the chapter concerning Lotus' antitrust concerns are based on extensive interviews I conducted with Lotus officials.

The events and internal Microsoft documents cited on pages 83-85 are described by me based on extensive interviews with Microsoft sources as well as my review of the documents.

The information presented about Lotus on page 86 and 87 is based on extensive interviews I conducted with Lotus officials, as well as a review of confidential documents turned over to the feds by Lotus.

The confidential Microsoft documents described on pages 87-91 and the events described are based on my interviews with Microsoft sources as well as based on my review of the documents in question.


Chapter 7

The accounts of Go Corp.'s interaction with the FTC were based on extensive interviews with Go officials as well as government officials closely involved.

The July 8,1988, nondisclosure agreement signed by Bill Gates, cited on page 93, is in my possession, as is the February 13, 1989, agreement signed by Microsoft's Jeff Raikes.

My statement on page 93 that Microsoft "copied from Go everything it could," is based on my review of Go's documents, including detailed explanations and symbols that it had created for the handwritten gestures that would be interpreted by the new pen-based computer, compared with Microsoft's subsequent handwritten gestures it had "created" for use with its own pen operating system. These documents are in my possession and were also turned over to the Federal Trade Commission by Go Corp.

The details of Go's meetings with Microsoft and subsequent events are based on thorough documentation of meetings, in handwritten notes taken by numerous Go officials. These documents were also turned over to the FTC by Go, and are in my possession.

The account of Micrografx's bad experience with Microsoft, on pages 97-100, was based on extensive interviews with Micrografx officials as well as Microsoft executives. These interviews included on-the-record interviews with Paul Grayson, who was president of Micrografx at the time; and Microsoft's Cameron Myhrvold, manager of developer relations at the time.

The account of the discovery of the AARD code was based on extensive interviews with Andrew Schulman. Back in 1993, I had been tipped off by a source that Microsoft had planted sabotaging code inside of Windows to create the appearance of errors for rival products. I found it hard to believe that this could be true. Since I am not a programmer, I called technical expert Schulman, along with another programmer, to see if they could find this "sneaky" code, if it indeed existed. I told Schulman where to look for it, based on what my source had told me. Schulman also could not believe it possible that such code existed. I got a call back from Schulman a day or two later. He explained to me in detail what he had found. I first reported this in July 1993 -- but at the time did not yet have internal Microsoft documents, that also are presented in this book, that showed executives to be deliberately creating the sabotaging code as described on pages 102-104.

Schulman a month later published his own technical account of the strange code in Dr. Dobb's Journal, a computer publication, and also cited me in his subsequent articles as well as one of his technical books on Windows as being the reporter who had alerted him to the code.

Further reporting eventually led me to the actual internal Microsoft documents (see pages 88-90), which confirmed that Microsoft had intentionally programmed this code in an effort to damage competitors. (This information now is also at the heart of the private antitrust lawsuit filed by Caldera Inc. against Microsoft. )

The account of Zenith Data Systems' attempt to free itself from Microsoft's stranglehold, on pages 104-108, was based on extensive interviews with a Zenith executive directly involved, as well as Novell officials involved including then-chairman Ray Noorda. I also reported on this in the Financial Times.


Chapter 8

The account of the lunch scene at the 701 restaurant in Washington D.C. on May 27, 1993, was based on my direct observations. I was present at the restaurant that day when commissioners Yao and Owen showed up, along with Ann Bingaman, and former FTC Commissioner Pat Bailey, who was hired by Microsoft to lobby the FTC. Art Amolsch was having lunch with me. I spoke briefly with Yao and also with Bingaman, and interviewed both more extensively in one-on-one interviews. Amolsch also provided me with historical background on the FTC, as he was the former press representative for the agency.

My accounts of Bill Gates doing high fives in the corridors of the FTC after leaving Commissioner Owen's office is based on extensive interviews with government officials who witnessed this.

Details about the commissioners, including Starek's reason for being recused, were based on extensive interviews with FTC sources as well as D.C. antitrust attorneys who worked closely with the agency.

My account of the subsequent development of the case, on page 112 through the end of the chapter, is based on numerous in-depth interviews with government officials.

For historical information, I also interviewed four of the five commissioners: Starek, Owen, Azcuenaga, and Yao, as well as aides of Janet Steiger.

The Microsoft documents quoted on pages 116-117 were reviewed by me and analyzed for me by confidential Microsoft sources who were intimately familiar with the way the company operated. I also interviewed persons who were circulated copies of the internal Microsoft e-mail.


Copyright, Times Business/Random House 1998

See Part 2 for the remainder of the author's notes from Chapters 9-17.

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