How MS-AOL deal resulted in 90 per cent share for IE

And how, when the contract ends, the position could easily be reversed


MS on Trial It seems pretty clear that Microsoft witness Cameron Myhrvold was instructed by his boss Brad Chase to defer questions about the Microsoft-AOL relationship to him -- but Chase did not set the rules for the court. Myhrvold began a retreat into an I'm-just-a-salesman role, and therefore ignorant and don't know about AOL. So far as he was concerned, Microsoft had "won" the choice of browser for AOL, but then he well and truly put his foot in it: David Boies, for the DoJ: Mr Myhrvold, you know perfectly well that AOL and everyone else using the online services folder has to commit that 85 percent of the browsers they ship to customers would be IE? Myhrvold: That's absolutely wrong. Boies: I'm interested in the very short e-mail from you dated May 2, 1996, at the very top of the page in which you write: "that you can talk to somebody about adding them to the Internet/ISP folder and also potentially the online services folder, but the requirements for this are high and they will have to commit that 85 per cent of the browsers they ship to their customers will be IE." Myhrvold evidently forgot that he was not debating on a street corner, and that a record was being kept of every word in his cross-examination. He claimed that Boies had asked him about the referral server, and not the online services folder. Boies pointed out: "The record will show because, again, we've got a stenographer taking it all down, just like your deposition." To rub it in, Boies repeated the question and received the same answer. When asked about a memo that showed how in Q3 1997, AOL "force fed the [IE] browser to subscriber base", Myhrvold's response was that it was not a memo, but "a piece of email" and tried to deflect questions to Brad Chase who was following him on the stand. Win32 IE usage was shown increasing from 1,169,471 users in Q2 1997 to 4,500,000 in the next quarter. It is also amusing that Unix servers are described as "proprietary", and Netscape enterprise servers as "competing". Apache is called "Share Ware" [sic], but IIS is not regarded as proprietary. An email from Mauricio Gonzalez de la Fuente on 7 January 1998 referred to AOL: "They force feed the upgrade to users at log off. You are correct, the typical AOL user is an Internet novice. These users, as soon as they attempt to log off the AOL server, will determine if they have the latest versions of the client, browser and any patches. If the user does not have the latest version, the system will automatically force-feed the upgrade. Joe Peterson in Chris Jones' group understands this process and has been exploring facilitating upgrades through phone wires." Isn't that spooky? The emails showed that the IE share of AOL in January 1998 had passed 90 percent, according to David Gang, svp at AOL, and was greeted by "Wow!" and "Phenomenal!!!" by those in the email chain. The 90 percent applied to active users, although inactive users would be force-fed in the same way when they next signed on. There was some concern that there was no independent verification of the numbers. Could it be that AOL was leading Microsoft up the garden path, and may continue to do so, especially in view of the Netscape deal? The force-feeding story suggests that AOL might have relatively little difficulty converting users to Netscape in 2001, when the new contract between AOL and Microsoft expires. AOL distinguished three kinds of force feeding, depending on the importance. At sign-on, updates would be for things like security patches; during use, there were conditional patches, with updates of what the user needed for access; and sign-off updates, which to Gonzalez de la Fuente was "the preferred method since it doesn't get in the way of the user's online experience". Microsoft had managed to get its mid-year review for the half-year ending 31 December 1997, and written around 23 January 1998, filed under seal, but Boies gave some information. Myhrvold noted that the "AOL upgrade program -now 92 percent IE." But Myhrvold claimed he was "not actually sure" what the 92 percent figure meant. Myhrvold appeared to be very concerned that he should not elaborate on this, and deferred to Brad Chase, Microsoft's next witness, but was tempted into some unfortunate comments: Boies: What you're saying is that the purpose behind these shipment restrictions and percentages we've been talking about was because you were worried that presenting Internet Explorer and Netscape Navigator side-by-side would result in your losing out to Netscape because Netscape had higher market share, higher mind share, and higher presence in the market? Myhrvold: Yes. They had very high usage share. We were nowhere. We were the johnny-come-lately to the Internet, and we were concerned that that would not really help our distribution and share. Boies: Well, it was more than that it would not help your distribution and share. You were concerned that if you presented the consumer with a choice of the two browsers side-by-side, they would, for the reasons that you've identified, pick Netscape rather than yours, right? Myhrvold: Yes. That's right. Boies: And these percentage specifications or restrictions in the ISP contracts were designed to be sure that the ISPs shipped your browser without Netscape's, correct? Myhrvold: Yes. Judge Jackson became tired of Myhrvold's weasel words during the hapless Holley's redirect examination, so when AOL's contract was being discussed, the judge intervened he said that he AOL contract "requests" AOL made IE its preferred browser. Myhrvold had to admit that the licence was, in the judge's words, "conditioned on its being preferred". ® Complete Register trial coverage


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