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Sunday, November 07, 2004

Wired Article on Microsoft dealing with Legal Cases and Bill

After a long time, read and enjoyed this piece. Its really a wonderful article and it caught my attention to the detail.

Few excerpts ...

Even so, I was unready for what occurred when we met on a chill December afternoon in San Francisco, where Ballmer had come to deliver a speech to some customers. Sitting in a windowless conference room at the Westin St. Francis hotel, I asked Ballmer about an internal Microsoft document concerning Microsoft's licensing of Java, which had come to light in the DOJ's investigation. In it, PaulMaritz stated that the company's goal was to "get control of" and "neutralize" Java, whose cross-platform raison d'être was seen as posing a threat to Windows. Scott McNealy had told me he considered the document prima facie evidence that Microsoft had signed its contract in bad faith. I asked Ballmer if McNealy was right.

"Sun is just a very dumb company," Ballmer began.

"We always honored our license. We always intended to. We always have." His voice quickly rising, Ballmer continued, "Sun wasn't confused. We weren't coming in there saying, Hallelujah, brother! We love you, Sun! We said, We don't like you as a company - nice people; I like Scott - and you don't like us! We said, Hey Sun, you want to get on the back of us and ride, baby, ride You want on? OK, here's the terms!"

Ballmer's face was beet-red now, and he was screaming so loudly that, had there been any windowshades, they would have been rattling. Up on his feet, leaning across the table so that his face was no more than 6 inches from mine, pounding his meaty fists on the tabletop so hard that my tape recorder leapt and skittered, he roared, "Nobody was ever one little teeny tiny bit confused that we and Sun had this wonderful dovetailing of strategic interests! Those sub-50-IQ people who work at Sun who believe that are either uninformed, crazy, or sleeping!"

I took this as a Yes.


Extending a long middle finger to the government and your competitors is not conventional behavior among the top executives of most blue-chip companies. But, of course, Microsoft was different - self-consciously so. Populated by an army of young men (mainly), most of them unusually bright, many of them abnormally wealthy, working endless hours and pulling frequent all-nighters, Microsoft has always retained the air of a fraternity - a fraternity of rich eggheads, but a fraternity nonetheless. For years, Softies were wont to sport buttons that read FYIFV: Fuck You, I'm Fully Vested. Another favorite acronym, meant to suggest how far the company would go, in Ballmer's words, to "get the business, get the business, get the business," was BOGU: Bend Over, Grease Up.


Gates inspires this intense following without being, in any conventional sense, a charismatic or especially winning figure. What he is, is very smart, and in the Microsoft culture that he himself has engendered, smartness is valued above all. "There are probably more smart people per square foot right here than anywhere else in the world," the former Microsoft executive Mike Maples has said. "But Bill is just smarter."

The slavish fealty accorded Gates at Microsoft draws gales of derision from critics and competitors. Netscape's former counsel, Roberta Katz, says it was the "blind obedience, the willingness to suspend all judgment and follow the party line, all this zombielike devotion to the Maximum Leader" that led Microsoft inexorably to its fate in the courts. "It's the whole voice-of-God thing," says Bill Joy, Sun's chief scientist. "They're always asking, What would Bill think? As if Bill's the oracle. As if Bill knows best. It's hard to be creative in that kind of environment, and it's very hard to do clean-sheet work, because all the old stuff is the oracle's stuff, and who's going to tear that up to start fresh? It's why they can't innovate no matter how many smart people they hire." Gates, says Joy, is "the low priest of a low cult."


In private, though, when the man who ran Microsoft let down his guard, he betrayed no confusion about what he and his company had become. A close friend of Gates' recalls a dinner with him and his then-fiancée (now wife) Melinda French back in 1993. "We were talking about Clinton, who'd just been elected, and Bill was saying blah, blah, blah about whatever the issue was," this friend remembers. "Then Bill stopped and said, 'Of course, I have as much power as the president has.' And Melinda's eyes got wide, and she kicked him under the table, so then he tried to play it off as a joke. But it was too late; the truth was there. If Bill ever thought of himself as a scrappy little guy, he didn't anymore."


By the middle of the 1990s, Gates may have been as powerful as the president in some ways, yet he remained as paranoid as a speed freak at the end of a very long binge. The proximate cause of his paranoia was Netscape. In May 1995, in a now-famous memo titled "The Internet Tidal Wave," Gates argued that the startup's browser held the potential to "commoditize the underlying operating system" - Windows. What worried him, Gates told me, wasn't merely the threat posed by the browser or other forms of middleware but the sudden momentum Netscape had gained in the industry. "Lightning struck," Gates said. "There was a belief that they were the exciting thing, they were the coming company. You'd go to their developer conferences, go to Marc Andreessen's press conferences, read the article about what flavor of pizza he ordered. That phenomenon was getting developers to pay a lot of attention to the Netscape browser." He added, "Expectations are a form of first-class truth: If people believe it, it's true." And people were believing in Netscape.

As was Microsoft, in a sense. When Andreessen and his colleagues first started talking about turning their lean little browser into a full-blown platform, the idea struck Gates and Ballmer as perfectly plausible - not surprisingly, since Microsoft had pulled off the same trick in the course of ten years with Windows, which was originally nothing more than an application running on top of DOS.

The only thing that surprised Microsoft about Netscape's strategy was the brazenness with which the upstarts shouted it to the world. Nathan Myhrvold told me, "There's a good analogy to bicycle racing. In bicycle racing, you don't want to be first until the end. What you want to do is draft the guy in front of you. And then, in the last minute, you dart out. The middleware gambit is about drafting the leader." Yet here was Andreessen publicly proclaiming in the summer of 1995 that Netscape's plan was to reduce Windows to "a poorly debugged set of device drivers." "They didn't save it up," Myhrvold said. "They fucking pulled up alongside us and said, 'Hey, sorry, that guy's already history.'"

The tactic drove Redmond into a rage. The day after Andreessen's quote appeared in the press, John Doerr, the prominent venture capitalist and Netscape board member, received a chilling email from Jon Lazarus, one of Gates' key advisers. In its entirety, it read: "Boy waves large red flag in front of herd of charging bulls and is then surprised to wake up gored."


Looking haggard, as though he hadn't slept in days, Gates plunged into an extended and emotional tirade, railing at the DOJ, castigating the judge, bemoaning the sheer irrationality of what had befallen his company. Everyone in the room was familiar with Gates' outbursts, which were, after all, a signature of his leadership style. But this was a different brand of diatribe - more stream-of-consciousness than usual, and far more personal. His voice quavered; his body quaked. And where Gates in full lather was normally condescending and sometimes cruel, now he was seized by unbridled self-pity. The DOJ was demonizing him. The press hated him. His rivals were conspiring to take him down. The political establishment was ganging up on him. His enemies were legion; his defenders, mute.

How had this happened? What could he do?

Gates' eyes reddened. "The whole thing is crashing in on me," he said. "It's all crashing in."

And with that, the richest man in the world fell silent, and began to cry.


McNealy, by contrast, seemed a touch nervous. He also committed a thumping faux pas by getting up abruptly in the middle of the hearing and heading for a business meeting in New York. Before he left, however, McNealy snapped off a winner of his own, quipping that "the only thing I'd rather own than Windows is English ... because then I could charge you $249 [for the] right to speak English, and I could charge you an upgrade fee when I add new letters like N and T."


At the end of Day Two, although Boies hadn't yet covered all the ground he intended to, he was so delighted with the material he'd already garnered that he seriously considered ending the deposition right there. Gates was headed off for a long weekend on an Alaskan cruise hosted by Paul Allen, and Boies, already perplexed that Gates' lawyers hadn't stepped in to curb his behavior, assumed his quarry would return in greater command of himself. But Boies decided to risk it. On Day Three, his reward - among others - was one of the deposition's genuinely priceless exchanges. Handing Gates an email he'd written, Boies offhandedly remarked that at the top of the message Gates had typed "Importance: High."

"No," Gates said curtly.


"No, I didn't type that."

Then who did?

"A computer."


Some months after his testimony, Dick Schmalensee would tell a fellow economist privately, "The lawyers are not in charge. All the shots are being called by Gates."

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