Microsoft threatened Apple over Netscape

Microsoft threatened to abandon its support for Apple Computer unless the personal computer pioneer joined Microsoft's battle against Netscape Communications, a court heard yesterday.

The threats by Microsoft formed part of a wider deal which included a $150 million (£100 million) investment in Apple and a cross-licensing agreement between the two formerly bitter rivals in August 1997.

The evidence - in hand-written notes by Mr Fred Anderson, Apple's chief financial officer - surfaced on the sixth day of the US government's landmark antitrust trial of Microsoft. Microsoft, the world's largest software company, is accused of abusing its monopoly power to crush Netscape, its Internet software rival, in a series of deals with the wider computer industry.

According to the notes of a conversation with Mr Jim Barksdale, Netscape's chief executive, Apple feared that Microsoft would cancel the development of Office, the best-selling package of business software, for its Macintosh computers. Mr Anderson wrote: "Apple needed to ensure that Microsoft would continue to provide Office for Mac or we were dead. They were threatening to abandon Mac."

Microsoft would continue to support Apple only if it agreed to place its own Internet software as its default or preferred software, instead of Netscape's product.

Netscape yesterday accused Microsoft of seeking to "cripple" it as part of an agreement to carve up the market in Internet software in 1995. The market division would have left Netscape with business which was `of least commercial interest", the company claimed.

In video-taped testimony played in court, Mr Marc Andreessen, Netscape's founder, said: "It is my understanding that Microsoft was proposing a broad range of specific point partnerships around sharing of knowledge or preferential marketing assistance or preferential treatment in the marketplace in the areas where they allowed Netscape to be a competitor to themselves or to others."

When Netscape refused to take part, Microsoft allegedly withheld vital technical information which it was releasing to other software developers at the same time. In particular, Microsoft delayed handing over telephone dialling components in spite of repeated requests from Netscape executives. The delays meant that Netscape failed to introduce its latest Internet software in time for Microsoft's flagship launch of its Windows 95 operating software.

In his fifth day on the witness stand, Mr Barksdale accused Microsoft of abusing its power over this technical information, out of a misplaced fear Netscape would pose a threat to Windows.

He said: "If you get on their wrong side, they have the ability and have demonstrated the will to absolutely stop a progressive and aggressive hard-hitting team trying to build these products by not giving you some of these things. That is a serious problem in our industry.

"On the other hand, because Microsoft is an 800-pound gorilla you have to circle and sniff and be a good guy and get this stuff out of them."

The trial continues with the video-taped testimony of Mr Bill Gates, chief executive and founder of Microsoft, who is accused of masterminding the strategy to crush Netscape.