Microsoft: Palm Pushed for Deal

Microsoft kept up its courtroom attack against key rivals by pressuring a Palm executive with claims that Palm tried to strike deals with Microsoft competitors to the detriment of the software giant.

WASHINGTON—Microsoft Corp. kept up its courtroom attack against key rivals Thursday, pressuring a Palm Inc. executive with claims that Palm tried to strike deals with Microsoft competitors to the detriment of the software giant and even to make a deal with Microsoft for a cash payment that would help Palm reverse-engineer Microsoft technology.

Microsoft attorney Bruce Braun asked Palm executive Michael Mace, a witness for the non-settling states in the remedy trial for Microsofts antitrust violations, whether a cash payment Palm sought as part of an agreement with Microsoft would be used to try to reverse-engineer Microsofts Visual Studio development environment so developers could write applications for Palms operating system.

Citing an e-mail dated Oct. 15, 2001, from Mace to a Palm executive named Doug Solomon, Braun said Palm tried to extract $50 million to reach a deal for Palm to support Microsofts .Net and Microsoft to throw its weight behind Palm.

"Yet you accuse Microsoft of dramatic restrictions to the deal?" Braun asked.

Mace said Solomons feeling was that Microsoft "had paid a more substantial sum to Apple [a $150 million investment]. We felt wed be doing a public endorsement of the .Net technology and wed be somewhat vulnerable to what Microsoft could do to us after."

Braun plowed in. "This is almost to the day that Phil Shoemaker [another Palm employee] told you it would cost $1 million to reverse-engineer Visual Studio? So Palm is demanding $50 million from Microsoft at the exact same time it needs money to reverse-engineer?"

"The timing is right, but the linkage youre making is not right," Mace said.

"So you could use the funds to reverse-engineer?" Braun asked.

"No, sir," Mace responded. "Because if wed reached an agreement with Microsoft, we wouldnt need to reverse-engineer. … Microsoft is creating substantial barriers for us to compete with Windows."

In an earlier exchange, Braun displayed e-mails from as far back as 2000 from Mace including commentary by Chris Dunphy, then director of competitive analysis at Palm, that said Microsofts Pocket Internet Explorer was a weak WAP application and too fat for the Palm. Dunphy also wrote that working with Microsoft could enable the software giant to claim interoperability, but could allow Microsoft to marginalize Palm "as just a dumb terminal." Mace said he disagreed with Dunphys accounts.

Braun also attacked Maces testimony that Internet Explorer is the only viable browser for many developers by displaying a press release dated March 13, 2002, touting the virtues of a new Palm Web browser.

Mace said the release was done by the Palm hardware company and not by the PalmOS company and he disagreed with its claims regarding the browser.

At the end of the day, U.S. District Judge Colleen Kollar-Kotelly closed the court to the public and the press so that Microsoft could cross-examine Mace about issues Palm considered proprietary.

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