Bonum Certa Men Certa

Comes Antitrust: How Microsoft Schemed to Destroy Borland (Like It Did Yahoo!)

"Gates looks at everything as something that should be his. He acts in any way he can to make it his. It can be an idea, market share, or a contract. There is not an ounce of conscientiousness or compassion in him. The notion of fairness means nothing to him. The only thing he understands is leverage."

--Philippe Kahn, Founder and former CEO of Borland



Nuclear strike



Summary: Antitrust memo that Microsoft paid to bury shows how Microsoft's management decided to "drop the private neutron bombs" on Borland

LAST YEAR we looked back at several stories that relate to Borland and what Microsoft did to this company [1, 2]. Microsoft offered obscene amounts of money for key staff of Borland to abandon and subsequently pass control over development tools to Microsoft. It's a vicious long-term investment whose key strategy is destruction of competition, which in turn enables price-fixing.



Borland suffered from some other Microsoft abuses, which we shall properly revisit and cover in the future.

“It's a vicious long-term investment whose key strategy is destruction of competition, which in turn enables price-fixing.”Today's Comes vs Microsoft exhibit, Exhibit PX00743 [PDF], provides black-on-white proof that Microsoft's actions against Borland were very much deliberate. It also shows who was responsible. Not too surprisingly, we find correspondence with a familiar Microsoft bully, Brad Silverberg [1, 2]. There are other such bullies like Joachim Kempin, but Kempin is a lot more focused on just OEMs.

The key parts of today's exhibit are shown below for those who may lack patience to view the entire document, whose text Wallclimber has kindly provided for us to include at the bottom. There may be inaccuracies in her transcription, so one ought to view the original PDF for a higher precision/fidelity.

The correspondence begins with Brad Silverberg addressing Lawrence J. Magid. It might be this journalist, based on his followup where he speaks to David Cole (Microsoft senior who left 2 years ago after over 20 years at the company).

Here is part of the long message/summary which may explain why Microsoft was worried about Borland. It was not just about development tools but also about operating systems (OS/2 versus Windows):

One ISV said (politely) "it is obvious that MS is no longer considered a key strategic partner by IBM". This was reinforced by IBM announcing the Borland C++ deal on the 3rd day and flying Phillipe Kahn in on a red-eye to give an unscheduled talk.

While most ISVs did not walk away with a burning desire to write 32 bit apps, they all indicated that they expect to have to keep developing for Windows & OS/2 for a while, and that they found IBM’s strategy to be at least reasonable (some said compelling).


3 hours later, Brad Silverberg passed on to his colleagues this message which was sent to Bill Gates and Steve Ballmer an hour beforehand. It says:

In addition to the non-IBM stuff I recommended, I think we should stay super polite publically but drop the private neutron bombs. Let’s hire all their good guys (let me know if you want me to go after Brad Beitel -- I bet we could get him esp. if we let him stay in northern cafifornia - e.g. work for GBU). Let’s go visit all of their key corporate customers and disclose the details of how well NT OS/2 will run 16bit windows apps natively. Let’s visit Jack Kuchler and John Akers and explain to them how much money their PC Group is throwing at a losing proposition and how easy it would be for them to work with Microsoft if they weren’t on a path to take us out of our core business of desktop operating systems. And finally -- let’s give copies of the MS/IBM audit to each of the 25 most influencial ISVs. An maybe even corporate customers too if there are no legal issues.


So there we have it. Microsoft admits "drop[ping] the private neutron bombs" and poaching staff from Borland, obviously with chaos in mind. "Let’s hire all their good guys," it says. Does this happen to remind anyone of what Microsoft did to Yahoo (latest prominent example)? This modus operandi characterises other stories of Microsoft 'competing'.




Appendix: Comes vs. Microsoft - exhibit PX00743, as text










PLAINTIFF'S EXHIBIT 743

######################################## 112 From bradsi Fri May 24 18:05:45 1991 To: davidcol richab richt Subject: Life during wartime, part 2 Date: Fri May 24 18:05:41 1991

>From robg Fri May 24 17:25:16 1991 To: billg mikehal steveb Subject: Life during wartime, part 2 Cc: bradsi jonl paulma robg Date: Fri May 24, 17:25:06 1991

Any feedback on the memo I sent? Having just read the report on IBM’s developers’ conference last week (attached although I’m sure you all saw it) I say "pedal to the medal" on all fronts. In addition to the non-IBM stuff I recommended, I think we should stay super polite publically but drop the private neutron bombs. Let’s hire all their good guys (let me know if you want me to go after Brad Beitel -- I bet we could get him esp. if we let him stay in northern cafifornia - e.g. work for GBU). Let’s go visit all of their key corporate customers and disclose the details of how well NT OS/2 will run 16bit windows apps natively. Let’s visit Jack Kuchler and John Akers and explain to them how much money their PC Group is throwing at a losing proposition and how easy it would be for them to work with Microsoft if they weren’t on a path to take us out of our core business of desktop operating systems. And finally -- let’s give copies of the MS/IBM audit to each of the 25 most influencial ISVs. An maybe even corporate customers too if there are no legal issues.

it OS battle, as WinWorld showed this week. But IBM is out there saying that the real war is 32 bit OS’s. We shouldn’t buy into this paradigm but it does mean total war, sensibly and maturely fought (i.e. not in the press) but total war nonetheless.

Rob ____

> From michaele Fri May 24 15:28:01 1991 To: RobG VictorC Subject: Multimedia on OS/2 Date: Fri May 24 15:27:09 1991

Maybe you’ve already seen this? If not at least check out the last paragraph

MS 5062749 CONFIDENTIAL




Trip report - StevoK IBM OS/2 2.0 Technical Briefing Summary May 14-17,1991, W.Palm Beach Fla.

About 125 ISVs attended, including Lotus, WordPerfect, Ventura, Aldus, Autodesk, Oracle, Sybase, Anderson, WhJteWater, Metaphor, Easel, Ashton Tare, Digitalk, Novell, Borland (Phillipe Kahn himself). Novell & Borland were speakers. All were given the video of Lee doing the 2.0 demo, a notebook with handouts of the talks presented (described in detail below, let me know if you want to borrow), a set of white papers positioning OS/2 2.0, Lan Server, Systems Performance Management, Database Mgr, & Comm. Mgr. They are supposedly also sending additional materials by mail.

This was pretty nmch the same stuff as NYC press briefings,"better DOS than DOS, better Windows than Windows, better OS/2 than OS/2", only supposedly with more details (I still thought they were pretty short on real content though).IBM is positioning 2.0 as "the promised land" - 32 bit, object oriented, client-server, completely compatible. They are lumping DOS, Windows, and OS/2 1.3 into the "old technology" bucket. The only reason that they ever bring up 1.3 is to "prove" that IBM can do Ì„ quality release on their own. But its 16-bit stuff, not worth discussing anymore. This makes it easier for them to trash DOS/Windows vs. 2.0. This will hurt our efforts to build interest in 1.3/Tiger as a server platform, as well as potentially hurting DOS/Windows sales. They are serious about putting their full "marketing muscle" behind 2.0, and they were constantly talking about the "new IBM" - committed, open, customer-driven, etc. This conference was offered as an example of this - direct interaction with the developers who "know everything there is to know about OS/2", high profile, no expenses spared, a "level playing field", a "new" openness about internals, product strategies, etc. IBMers were everywhere, promising, cajoling, helping ISVs with their business plans, etc (there was an ISV advocate assigned for every ISV in attendance) The entire 2.0 Boka team was there, all wearing the ’blue ninja’ tee-shirts that Lee reiswig wore at the ISV briefing in NYC (reflecting their "new killer strategy’). There was also a demo room where they showed much of their "new technology", ie workplace shell, CUA 91, unbundled EE on OEM platforms, REXX, etc.

> From talking with the ISVs it is clear that they left convinced that: 1)IBM is COMMITTED to making OS/2 successful. They will go all out, spend lots of money, make deals with new strategic partners etc. Also, it was mentioeed that all of the Boca O5/2 team is working mandatory 60 hour weeks. 2)IBM is CONFIDENT that they can make it work. They are absolutely strutting around talking about their "new" strategy, superior technology, product ownership, etc. They believe they are in

MS 5062750 CONFIDENTIAL




a war, and that they will win. 3)IBM is planning on making this happen without (in spite of?) MS. One ISV said (politely) "it is obvious that MS is no longer considered a key strategic partner by IBM". This was reinforced by IBM announcing the Borland C++ deal on the 3rd day and flying Phillipe Kahn in on a red-eye to give an unscheduled talk.

While most ISVs did not walk away with a burning desire to write 32 bit apps, they all indicated that they expect to have to keep developing for Windows & OS/2 for a while, and that they found IBM’s strategy to be at least reasonable (some said compelling). One also noted that IBM doesn’t need 32 bit OS/2 apps to make 2.0 successful, they just need to make the system do what they advertised. This is, of course, where people had the most concerns. For their part, IBM is indicating that 2.0 will become the predominant platform in the industry in the next few years. IBM doesn’t export all of the installed base to give up DOS/Windows, but they do believe that they can sell 2.0 onto EVERY new 32 bit capable box. Although they did not explicitly say it, several people concluded (I think correctly) that IBM would try to drive 2.0 sales by bundling it with their hardware.

More Details: The first morning they repeated the executive summary - Joe Gugliemi giving the overall strategy/positioning/marketing, Lee Reiswig doing the infamous 2.0 7-machine demo (1 new twist, they showed that they could run DR DOS as well MS DOS 4 & 5), the Jack Keuhler tape, and John Soyring talking about their Tech support programs. Then they promised to "put the meat on the bones" - in other words really go into the tech details behind what they demoed. The talks, speakers and highlights that followed:

Operating System Overview, Arnie Sanders, Boca 91 will be the year for 2.0, unbundling of EE (ES & LS), the beginnings of Netware interoperability. 92 will be 2.x, multimedia, further netware enhancements. 93 & beyond strategic platforms are Patriot Partners & DCE. They are looking at NT, further 2.x releases, PM on AIX, etc to achieve portability and better compatibility. IBM not changing strategy, "not interested in NT unless it fully preserves their customers investment in OS/2".

OS/2 Development Process, Joe Tano, Boca They did not used to do development right, and their metrics sucked, but now they have a better process in place, small teams, etc. Trust them. I think this scared some people.

PM enhancements, David Kerr (subbing for Colin Powell, Boca Highlighted changes to shell (lan-enabled, object-oriented), window manager (background bitmaps, new controls, standard dialogs), graphics engine (32 bit), GPI (palette mgr, fast polygons, disjoint polylines), drag/drop. Not much meat.

OS/2 Internals, Jack Boyce, Boca Hardware exploitation - 32 bit flat memory, paging vs swapping,

MS 5062751 CONFIDENTIAL




new 32 bit interfaces, semaphores, thunks, increased system limits.

Tips & Techniques, Ginny Roarabaugh, Boca They were careful not to call these "guidelines". Ranged from the incredibly obvious (avoid repeating identical logic) to the mildly useful (memory management for large objects, proper use of threads). Mostly basic stuff. Our ISV evangelists might want to seewhat they said just for grins.

Performance, Ken Christopher, Boca Stated goals and showed most recent test cases confirming that they are on the right path, showed 2.0 performing better than or as good as 1.3 in most scenarios. 5-15% improvement by recompiling C apps, 10-20% with simple memory mgmt changes to take advantage of flat 32 bit model, 20-45% for 32 bit rewrite.

CUA, Cliff Reeves, Boca Balanced view (UI/architecture, enabling systems, tools). Focus changing from merely consistency & graphical to object oriented, interoperability, and advanced media. Workplace shell first step in that direction, IBM leading edge.

Code Dev. Tools, Jay Tunkel, OS/2 the development platform of choice, better performance, productivity, system integrity. IBM will offer 32 bit "workbench" which will include configurable/replaceable tools such as editor, make & lib tools, interfac tools. Also will offer 32 bit C compiler (not MS technology).

At this point they announced the Borland C++ deal and brought in Phillipe Kahn. He gave a brief talk (featuring DOS and Windows as the "old mountain", OS/2 & OOP as the "new mountain", and Borland as the company to get you from the old mountain across the "valley of death", to the new mountain. Very cute but no substance.

New Migration Tools, David Kerr, Boca WLO vs. SMK vs native PM. Recommendations, write new apps to 32 bit PM, port existing apps to 2.0, use SMK for Windows. Also talked about PM driver kit. Betas for both in 8-91, GA Q-1-92. Hard to port Win16 apps to 32 bit anything (native), but about the same for 32 bit PM and Win 32. Easy to port 16 bit OS/2 to 32bit OS/2.

Lan Server, Mac McCauley, Austin Support mixed operating environments, OEM hardware, exploit new technologies. Lan Server/Netware interoperability phased implementation.

Novell Lan on OS/2, Jack Blount, Novell Executive Director Reviewed Feb. announcement with IBM for product licensing, distribution, and services. Novell's OS/2 support plans. Cross product support plans. Open desktop strategy.

Systems Management, Rich Lechner, Boca Centralized/distributed management, reduced support staffing requirements, strategy.

Database, Dr. Phil Chang, Austin Price/performance, interoperability, distributes access, SQL, parallelism, front ends & tools available. Need OS/2 on the CLIENT as well as server.

MS 5062752 CONFIDENTIAL




- Comm Manager, Don Haile, Raleigh Requires 05/2. Direction/strategy towards distributed apps, cooperative preocessing.

Distributed Systems, Rob Shook, Austin Technology, not product. Benefits of DCE, OSF, provides open systems solutions across OS/2, AIX, DOS, MVS, etc.

Multimedia on OS/2, Mark Templemeyer, Boca MS MPC standard (286, CD ROM) deficient, need OS/2 for real multimedia. OS/2 multimedia ,xtea~sioas superior to MS. IBM investing aad enabling for this technology across their product line. Signed up Beta ISVs after talk. Also, Jim Ricer (IBM Boca) briefly talked about and demoed Digital Video Interactive (DVI).

If you need more detail on any of the above email me to get copies of the slides.

Steve

######################################## 113 From bradsi Fri May 24 18:1~:06 1991 To: davidcol Cc: philba Subject: Date.: Fri May 24 18:13:05 1991

Larry magid, a writer who’s working on a review of dos5 for the la times and prodigy, has some questions about SHARE. I want to double-check on the answers.

- SHARE is needed for all sysmms pre-5.0 for volumes > 32MB, evea if not a network. [Answer: SHARE is used with dos4.0 for > 32MB].

- are there any problems with SHARE aad Windows or other multitasking environments for noa-networked systems.

######################################## 114 From bradsi Fri May 24 18:16:16 1991 To: meimail?TO:_Lawrence_J._Magid#__EMS:_MCI_MAIL#__MBX:_00O1006797 Subject: Re: SHARE Dale: Fri May 24 18:16:15 1991

Hi Larry,

MS 5062753 CONFIDENTIAL


Credit: wallclimber

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