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Gates prepares return to witness stand

Charles Cooper, CBS News | October 18, 2011 6:40 AM PDT

Summary

Some 13 years ago, a feisty, often condescending Bill Gates became the public face of a beleaguered Microsoft accused of breaking antitrust law.


Bill Gates testifying during his deposition on August 27, 1998 (Credit: Wikipedia)

The old adage about experience being a teacher is about to be put to the test. Some 13 years ago, a feisty, often condescending Bill Gates became the public face of a beleaguered Microsoft accused of breaking antitrust law.

Now an older — and presumably wiser — Gates will soon head to the witness stand in a new antitrust case where he will be expected to put on a better show when he takes the oath to testify.

The dispute centers around Novell's claim that it was the target of anti-competitive practices by Microsoft. Jury selection began on Monday in Salt Lake City, where the trial will be held. Gates is scheduled as one of the people who will testify.

These two companies shared a furious rivalry in the early 1990s when Novell, the one-time leader in the network operating system world, fell behind a hard-charging Microsoft. Novell, which also owned WordPerfect, similarly lost its lead in the software office applications business to Microsoft.

The opposing lawyers will battle mightily over whether this was the result of fair competition or Microsoft again stepping over the line. No doubt Novell will point to the questionable business tactics that were publicized during the famous antitrust lawsuit brought in 1998 when the US Justice Department and the attorneys general of 20 US states accused Microsoft of breaking the law.

Microsoft, which denied all the allegations, found itself on the PR defensive once the trial began. The prosecution played a series of explosive videotaped exchanges between Gates and the DOJ's lead attorney David Boies in which Microsoft's one-time CEO did neither himself nor his company any favors.

During the interviews, Gates repeatedly came off as peevish and seemingly bent on being obfuscating. At the time, Businessweek wrote that Gates so often responded to questions from Boies with an "I don't recall'" that even the presiding judge, Thomas Penfield Jackson, began to laugh.

Microsoft was ultimately found to have acted like a predatory monopolist. Even though an appellate court overturned many of the judge's harshest proposed remedies — which included breaking up the company into separate units — Microsoft has never again asserted the sort of dominance it once enjoyed. Faster-moving internet companies such as Google, Facebook and Twitter have grown to exploit the changes affecting the technology world.Novell's case

Novell has singled out a Microsoft email from 1994 as helping its case. The email quotes Gates telling company developers to "wait until we have a way to do a high level of integration that will be harder for [the] likes of Notes, WordPerfect to achieve, and which will give Office a real advantage", adding that "it did not come up in any competitive sense".

In a subsequent deposition, Gates said the issue was not about shutting out competitors but about fostering innovation. "The decision I was making in this memo is about: Is this an important thing? And I'm saying it's not," Gates said.

Microsoft responded by accusing Novell of looking for a scapegoat. "The law basically doesn't require people to design their products to the whim or demand of other companies. You get to design your own products," Microsoft attorney Steve Aeschbacher told the Deseret News. "There isn't any legal obligation for us to do what they wanted us to do."

A lot is riding on the outcome: Novell is demanding up to $1.2 billion in damages. Attachmate Group bought Novell in April for $2.2 billion.

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RE: Gates prepares return to witness stand
WindowWasher 28th Oct
Almost 20 years ago. Yawn...
Have there always been inferior word processors? Yes, just like there are a ton of inferior smartphones, MP3 players, and tablets. No monopoly there.

"The law basically doesn't require people to design their products to the whim or demand of other companies. You get to design your own products"

Apple doesn't need to let anyone into their iTunes ecosystem. The thought of demanding that Apple open up iTunes / iTMS access to others would infuriate many Apple fans.

"wait until we have a way to do a high level of integration that will be harder for [the] likes of Notes, WordPerfect to achieve, and which will give Office a real advantage"

Apple has done a fantastic job of leveraging their iTunes ecosystem to jump from iPods to iPhones to iPads. No one can compete because of this integration that gives Apple a real advantage.

Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
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@toddybottom
There is no evidence I am aware of that suggests that iTunes is a monopoly like Windows was/is. In fact most people who I've talked to use iTunes due to Apple devices rather than the other way around. As iTunes is only compatible with Apple devices, it's hard to show how it could be a monopoly as Apple devices themselves aren't monopolies. Thus Apple is no more required to allow compatibility to non-Apple devices than MS is required to allow Zune to non-MS devices.

Xbox live probably has a bigger market share in its respective market than iTunes; but I'm estimating here.

The laws are pretty clear. As long as you don't have a monopoly, you are free to compete as you see fit. If you have a monopoly then you are required to not use it to gain dominance in other sectors. As long as the law is followed, it is applied fairly and evenly.

"No one can compete" We will see once Google/MS decide to use their cash hoard (around $40 billion) to try and build an advantage of their own. They should be able to with $40 billion, but to make money you have to spend money. Holding it in the bank isn't going to cut it. Of course the same can be said for Apple and I would strongly encourage them to invest in the enterprise to try and break Microsoft's dominance.
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@anono
Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
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@toddybottom
If the law is applied fairly and evenly then there's nothing for the court to decide. MS was allowed to use it's Windows ecosystem to give itself an advantage (and Windows was a monopoly, not simply dominant) so the same has to be allowed for Apple. Otherwise, all Windows code should be required to be written for Macs & Linux to negate the ecosystem advantage.

Despite the disadvantageous though, Apple still successfully competes in the PC market. They don't hire a troll on Zdnet to complain about how they have no shot at competing .
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Excellent quote from you
toddybottom Updated - 18th Oct
@anono
"Otherwise, all Windows code should be required to be written for Macs & Linux to negate the ecosystem advantage."

This happened.
http://news.cnet.com/8301-13580_3-9836784-39.html

Like I said, there have always been low quality alternatives to Windows (Linux, Mac OS, OS X) and Word (Open Office, Pages, Word Perfect, etc) just like there are low quality alternatives to iPods, iPhones, and iPads.

Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
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Another excellent quote from you
toddybottom 18th Oct
@anono
"Apple still successfully competes in the PC market"

But I thought Windows was a monopoly.

There have always been low quality alternatives to Windows. Mac OS is one of those low quality alternatives.

Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
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@toddybottom
I didn't even bother finishing the article because it's very obvious that it didn't happen. If you are really suggesting that all Windows code was written for Macs & Linux then how do I get MS Office for Linux. If i can't then due to ecosystem disadvantages, I can't use Linux if I need MS Office.
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@anono
http://losangeles-businessattorney.com/apple-ceo-steve-jobs-to-be-deposed-in-california-anti-trust-lawsuit/

This case started in 2008, had one of the original complaints dismissed but the judge found that there was enough evidence to allow the monopoly portion of the complaint to continue.

In 2011, Steve Jobs was asked to appear in court to defend Apple's predatory monopolistic behavior in regards to RealNetworks. Apple managed to delay that from happening just long enough.

Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
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Then you do yourself a disservice
toddybottom 18th Oct
@anono
"I didn't even bother finishing the article"

Well then you only prove your own ignorance and unwillingness to educate yourself.

What a shame.
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@anono
Where I live, it's innocent until proven guilty. It's a non-story until we have a ruling form the judge. Ultimately the ruling whether iTunes is a monopoly or not dependent on whether or not Jobs lived to give his testimony.

Once again, the courts have allowed MS to not write Office for Linux thus handing it an ecosystem disadvantage.

Then the law should be applied fairly and evenly.
@anono
"because it's very obvious that it didn't happen. If you are really suggesting that all Windows code was written for Macs & Linux then how do I get MS Office for Linux. If i can't then due to ecosystem disadvantages, I can't use Linux if I need MS Office."

And you didn't reply to the rest of my comment. Well then you only prove your own ignorance and unwillingness to educate yourself.

What a shame.
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@anono
"Apple still successfully competes in the PC market"

But I thought Windows was a monopoly.



That's the court's ruling not mine. I am saying Apple is succeeding due to profits. Also, while Apple is very competitive in the high end market (the only market in which it competes), the low end market is pretty much MS only. Maybe that's why the courts ruled them a monopoly.
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@anono
When Apple owns 91% of the high end PC market, that is very competitive.

When MS owns 90% of the low end PC market, that is monopoly.

Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
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@toddybottom
A monopoly is when you have no other alternatives. A regular customer could purchase a high-end Windows Laptop, but not a Low end non-Windows Laptop. The 91% share you are referring to is one study and that alone can hardly be considered decisive evidence. Anyways, I don't expect you to be swayed by my arguments. So I'll remind you once again that MS was a convicted monopolist and Apple was not.

Also, Windows doesn't control 90% of the low end market. That's probably their total market share. If I had to guess they own 99% of the low end market share. Again, you can refer to the court ruling for more details if you like.
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@anono
Also, you conclude that OSX is a low quality alternative yet go on to say they have 91% of the high end market. If your one study that you have to back this is in fact correct then we know what the low quality alternative is.

Let me remind you again, the courts have decided.
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Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
  • Flagged
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@toddybottom
Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether MS building an ecosystem to give their products an advantage is something we want to encourage or discourage.

Then the law should be applied fairly and evenly.
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@anono

You have to remember that in the "high-end PC market" - Apple may have the highest percentage of prebuilt computers, but then it's really competing not so much with companies like HP, Dell, etc, whose high-end PCs are really only used in business scenarios (dual and quad-socket workstations, etc.) as with companies such as Falcon Northwest and the boutique sellers. Of course, the smaller sellers are going to move far less volume. Most PCs used at home in that range are custom-builds, which aren't actually counted as it's hard to know exactly how much they cost.

Other than that, the Apple tax allows Apple to claim that more of their range is high-end, without the high-end specs that similarly-priced PCs have.
@spacespeed
So you are in agreement that Apple's supposed monopoly that toddybottom is trying to imply is BS. Spec for spec you can definitely do better than a Mac. I won't get into the value debate though because it's pointless since it depends on your needs. I will say though even a lot of techies are starting to see value in Macs in recent years.
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Ultimately, the court will have to decide once again whether low quality alternatives "count" and whether building an ecosystem to give your products an advantage is something we want to encourage or discourage.

That's not what this article is about and you know it. I didn't see Apple mentioned once yet you try to obscure the issue at hand between Novell and Microsoft. You need to be called on it, troll.

Then the law should be applied fairly and evenly.

Keep repeating that until you turn blue in the face, k?
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Let me ask you this..
lenohere 18th Oct
@anono
Can you use any other service if you do NOT want to use itunes on the Ipad, Iphone or Itouch? Such as Amazon music or something similar? I dont think so because they have it locked out in their enviroment. Sound like predatory practive to me..
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@toddybottom duplicate
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@toddybottom You obviously never used WordPerfect or Novell. They were in fact superior products to Word and Windows NT server and were available and widely used (successfully) long before the MS products came out. MS even blatantly copied Novell's Directory Services to come up with Active Directory. This was never a case of low quality alternatives.
@toddybottom "he thought of demanding that Apple open up iTunes / iTMS access to others would infuriate many Apple fans."

Why would it "infuriate" them? "It's ours...and you can't have it!" ????

You do understand that competition is better for the consumer, right?
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Not sure I get your point ...
jscott69 18th Oct
@toddybottom ... Apple allows you to copy MP3 files to iPods, iPhones, iPads, and Macs. There are alternatives MP3 players for the Mac (I can't think of any off the top of my head ... but I remember using some). And there's nothing that says that Apple has to allow anyone to install different music-playing software on any of its devices, because there are TONS of devices on the market that can also play MP3s. If someone wants to play MP3s, they can get a Zune or a Sony device or one from just about any other consumer electronics company. True, they might not do all the other stuff that iPods do, but those are different issues.

Apple doesn't force anyone to buy any of its devices. If it somehow coerced iPhone buyers to have a Mac that would be one thing. But they don't you can use it -- and any other iDevice -- with a Windows PC or a Mac.

And Apple doesn't preclude Windows users from accessing the iTMS -- it provides iTunes for Windows for free just to ensure that Windows users can access the iTMS.

Even in the tablet world, where Apple holds a significant marketshare lead, Android devices -- and soon Windows 8 devices -- are quite numerous and they come from big-name companies like Samsung, Motorola, HP, Amazon and others. Hard to argue that they have a monopoly when up against those folks -- especially when you read all the posts from Fandroids on here about how Android is so much better and "kicking iPad's butt".

Oh, and someone asked about being able to uninstall Safari from Macs. You can. Just trash it. As for Safari on iOS, yes, it's the default browser and it can't be deleted (without jailbreaking). But Apple doesn't have a monopoly in any market in which iOS competes, so it isn't relevant, legally. Not yet, anyway. And, again, the Android army vows Android will conquer all, so we'll never have to worry about Apple getting slapped with an anti-trust suit.
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Ridiculous. Okay, put this way of thinking, my 1929 printing company could go after Microsoft as well. Why? Up until Windows 98 hit our town, everyone -- everyone -- needed to go to a printing company for business cards, envelopes, columnar pads, banks had loan applications printed by the thousands, and accountants had numerous, often hundreds of worksheets printed each year. Although previous versions of software prior to Windows 98 were capable of desktop publishing, the USB plug and play feature in Win 98 (more than just one device as in Win 95) made everyone and their brother a printer. Get real, folks. We're talking 1929 business being hammered compared to a company that was, what, started in 1979? Do you see me going after Microsoft? No. The PCs and Macs have made printing easier -- even though their presence kicked my hind end.
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@Kevin Schafer
wait until we have a way to do a high level of integration that will be harder for [the] likes of Notes, WordPerfect to achieve, and which will give Office a real advantage"

That sounds exactly like what many comapnies do - they take on the leader in a field once they have a product that will leapfrog them, to the point where it's a must have product that the competition will have to work at matching.

Here's let rewrite it a bit - "wait until we have a way to do a high level of integration that will be harder for [the] likes of Symbian, Windows Mobile to achieve, and which will give iPhone a real advantage",

Makes sense now.
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@William Farrell
Here was me in 1996 standing in my cramped printing company: "Wait until I get that 29" offset press home from St. Paul. I'll have the biggest press in town and 'average joe's printing' will lose the school calendar jobs -- they're farming them out for production, and we'll do them right here."

I appreciate the exchange, and I just want to understand what Gates meant when he said it. If WordPerfect loaded on a Windows machine and worked, all is fair.
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@William Farrell
Gates' only mistake in his comment is "a way to do a high level of integration." He was already there.

Gates and Ford are not much alike. Why? Gates ships -- and ships now. Ford's accountant once found a $20,000 check on his boss' desk. The company was basically busted, yet Ford couldn't let go and send out the product -- his cars. Jobs was like Ford. The additions of application after application held up the launches of Apple platforms.
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M$ must face the music!
The Linux Geek 18th Oct
M$ and Gate$, its top corporate criminal leader must be made and example and given the maximum sentence!
ALL Windows based PC in the World run Internet Explorer.
It can NOT Be un-installed.
Not matter what Browser you run or what ISP you use,
If you run a Windows based PC
Microsoft has ACCESS TO IT.
LVKen7@Gmail.com
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@LVKen7

Just like how you can't uninstall Safari from OS X? Does that mean Apple has access to every computer running OS X? That's a far more scary thought....
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@spacespeed

Once again, it's 9% vs. 90%

Marketshare makes all the difference in the world.
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RE: Gates prepares return to witness stand
kyron.gustafson@... 18th Oct
@ScorpioBlue... Actually No, it's not marketshare - it's business practice.

The two legal elements of monopolization are (1) the power to fix prices and exclude competitors within the relevant market. (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen or historical accident.

Hard to see where Microsoft Office Suite (which is what we are talking about - not Windows) would fall under the legal definitions.
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If that were true, @kyron.gustafson@...
ScorpioBlue Updated - 18th Oct
...then Apple would have been on the Justice Department's radar a long time ago. Apple has been bundling their software and hardware since 1977 so I think they would have made a case for it by now.

The lack of uninstalling Safari from OSX is just a whiny red herring NBMers like to throw out there. Nothing more.
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RE: Gates prepares return to witness stand
kyron.gustafson@... 18th Oct
@ScorpioBlue... Apple's Safari does not meet any test for monopolization. So I fail to see why the Justice Department would go after Apple (at least for Safari).

My issue with your previous statement was stating Marketshare makes the difference.

Windows has the largest marketshare of any OS out there and the only time it has come under fire for monopolization is when applications are bundled with it.

With Novell the original lawsuit argued that Wordperfect couldn't compete with trial versions of Microsoft Word that were bundled with Windows. Since Word was a trial version they didn't win that argument.
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@ScorpioBlue... Apple's Safari does not meet any test for monopolization. So I fail to see why the Justice Department would go after Apple (at least for Safari).

Yeah but if you'll notice, it was @spacespeed that was arguing that point. Not me. Of course I know the Justice Department didn't have a case there.

My issue with your previous statement was stating Marketshare makes the difference.

And it does. Who do you go after? The bigger pie or the smaller one? After all, we're talking about the people's tax dollars here ya know.

Windows has the largest marketshare of any OS out there and the only time it has come under fire for monopolization is when applications are bundled with it.

That's right. There was the situation where IE5 and IE6 were bundled with the OS right around the same time the JD lawsuit took place, part of which was over the IE browser being included.

With Novell the original lawsuit argued that Wordperfect couldn't compete with trial versions of Microsoft Word that were bundled with Windows. Since Word was a trial version they didn't win that argument.

Well they're going back to court, now aren't they? There are still some issues that haven't been clearned up yet and this is a new anti-trust case as the article up above has stipulated. The original lawsuit with WordPerfect was only mentioned in passing.
@LVKen7

If you designed an operating system and you had your own media player, web browser etc would you not bundle those with your OS? or would you use a 3rd party (non controllable, unreliable) just for the sake of it?
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RE: Gates prepares return to witness stand
LoverockDavidson_-24231404894599612871915491754222 18th Oct
Novell will lose this case fair and square. Microsoft became dominant because they had the better software (mostly). Novell Netware was really nice and rock solid. But installing that stupid netware client onto each PC just to log into it was pain. That's where Microsoft had the advantage, integrate the networking into Windows and just log right in, it was no hassle. Office Word and WordPerfect can kind of go along the same lines too, Office was easier to use and from a well trusted name such as Microsoft. This is one case Novell/Attachmate needs to let go.
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Integration
kyron.gustafson@... 18th Oct
@LoverockDavidson_ ... The integration Gates was refering to in his email was regarding Microsoft Office apps being integrated with each other - not with Windows. All office application suites were trying to achieve tighter integration at the time.
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MS should have bought Novell
JonSawyer 18th Oct
I think that Microsoft should have just bought Novell. It would have gotten patents and Mono.
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RE: Gates prepares return to witness stand
TheFilipinoFlash 18th Oct
@JonSawyer ah! MONO! sad
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Is Microsoft not allowed to hang back on their product so that it has a competitive advantage by using later, more advanced integration technologies?
I really don't see what that e-mail Novell picked out is "exposing" on Microsoft. This looks more like a cash grab job than anything else.
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I remember this being a HUGE issue in the early '90s. Novell did have the dominant network OS. And WordPerfect had been the dominant word processor. And while it's true that MS (or any company) should have the right to try to make products to compete with the market leader (which, again, for networking and word processing had been Novell), the suit isn't really about the technical merits. Novell alleges that MS knowingly tweaked Windows to put WordPerfect at a disadvantage -- to make it less stable, less fast, and less functional -- to Word/Office. In addition, Novell alleges that MS withheld technical information that would have enabled WP to address those problems. And -- and here's the real kicker -- Novell alleges that MS applied pressure to its network of PC licensees to prevent them from including WordPerfect on systems from the factory -- a similar claim to Netscape's original claim that kicked off the antitrust lawsuit in the mid-90s.

When viewed with those historical footnotes, it starts to look more clear that Novell really couldn't compete with MS because MS had stacked the deck against Novell -- MS supposedly wasn't willing to play fair and let Novell have access to the tech info it needed, MS supposedly altered its product to damage its competitor's product, and MS supposedly pressured Windows licensees to avoid Novell products.

This isn't just about who builds a better mousetrap.
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RE: Gates prepares return to witness stand
toddybottom Updated - 18th Oct
@jscott69
" Novell alleges that MS knowingly tweaked Windows to put WordPerfect at a disadvantage "

I'm running the Kindle app on my iPad. Where is the link in the Kindle app to the Amazon store so I can buy books from some place other than Apple's book store?

Same problem with Audible.

Same problem with Kobo.

I sure hope it doesn't turn out that Apple crippled those apps to make them less functional than iBooks because that would be a shame.
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Gates would love to lose this case
jabailo1 Updated - 18th Oct
Now that Novell has been acquired and taken private by Attachmate, and investors were given almost nothing for their stock.
@jabailo1

This is reminding me of the Oracle / Google case, previous owners were fine, new owners want a new revenue.
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Almost 20 years ago. Yawn...

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