Microsoft, Apple Get Testy Gates Hotly Denies Accusations Made By Apple In Antitrust Investigation

The antitrust investigation against Microsoft Corp. escalated Thursday into an emotional exchange involving two of the nation’s most influential high-tech companies.

Microsoft Corp. chief executive Bill Gates sharply rejected charges by Apple Computer Inc. that his company has engaged in bullying tactics and threats against Apple.

In a letter to Apple chief executive Michael Spindler, Gates said he is disappointed by the “lack of candor and honesty Apple has shown in dealing with Microsoft during the last several months.”

The letter followed news earlier in the day that Apple had made accusations about Microsoft to the judge overseeing Microsoft’s antitrust case.

Apple’s allegations raise the stakes in the investigation by putting a powerful name behind the allegations against the Redmond-based company.

Apple sent a letter to U.S. District Judge Stanley Sporkin on Feb. 13 that said Microsoft executives, including Gates, threatened to withhold software from Apple unless it dropped lawsuits and quit developing a competing product.

In doing so, Apple, the world’s second-largest maker of personal computers, became the first major company to publicly accuse Microsoft of impropriety.

While companies often tangle in lawsuits - as Apple and Microsoft have done on several occasions - they usually speak diplomatically about each other in public forums. That certainly wasn’t the tone of Apple’s letter, nor Gates’ reply.

Apple’s complaint added to the controversy over last July’s antitrust settlement between Microsoft and the Justice Department, which Sporkin rejected last week as not in the public interest.

The government and Microsoft asked for a speedy review of that ruling and the U.S. Circuit Court of Appeals for the District of Columbia said Thursday they would get one. The court asked for briefs by March 7 and oral arguments on April 24.

Gates’ strongly-worded response questioned Apple’s view of several details in their dispute. But he also said Microsoft is committed to Apple’s core Macintosh computer line.

“I think the Macintosh has a bright future,” Gates said in the letter, which Microsoft provided to news organizations Thursday evening.

Apple is the only maker of personal computers run by its own operating software rather than Microsoft’s. The company relies on Microsoft for word processing, spreadsheet and other application programs that work with its machines.

The allegations by Apple, which were first reported by The Wall Street Journal and the San Jose Mercury News, sent a shudder through the community of people and companies that use Apple computers.

Some fear that Microsoft and Gates aren’t satisfied making the core software for 85 percent of all personal computers but also want the 15 percent that Apple controls.

“It’s kind of a gnawing thought in the back of my head,” said Peter French, who owns a desktop publishing and networking business in Dayton, Ohio, that uses Apple computers. “Their reaction is `You do it our way or we’ll take our football and go home.”’

In the letter to Sporkin, Apple general counsel Edward Stead outlined recent actions by Microsoft he said demonstrate it will not adhere to the antitrust settlement unless a court watches them.

The letter also detailed the intervention of Assistant U.S. Attorney General Anne Bingaman in the dispute between the two companies. Bingaman, hoping the fight would not disrupt the settlement’s chance of being approved by Sporkin, earlier this month asked Microsoft to provide Apple the software it wanted.

But Gates, in his letter to Spindler, said, “It’s simply not true to say the Department of Justice asked us to release (the software) or to suggest they were the reason for that decision.”

Microsoft sent Apple the software it wanted on Feb. 8, a few days after Bingaman intervened.

Apple informed Sporkin of the dispute the day before he rejected the antitrust settlement. But the judge later said he had not considered it in forming his ruling.

At the center of Apple’s complaint is the length of time it took Microsoft to provide it with a copy of Windows 95, an operating system Microsoft hopes to sell this summer.

Apple wanted a test version of the software to proceed with development of a computer that can run programs based on both its operating software and Microsoft’s. Many other manufacturers have been given test versions of the software.

Apple’s letter to Sporkin also said that during a meeting Jan. 13, Gates threatened that Microsoft might quit creating application software for Macintosh if Apple continues developing a product called OpenDoc.

Apple is one of several companies, including IBM and Lotus, working on OpenDoc, a way to link features between different programs. Microsoft has a competing technology called OLE that it wants to become the industry standard.

In a broader sense, Apple’s complaint is a sign of the uneasiness within the computer industry about Microsoft.

Since the antitrust settlement was reached, Microsoft has announced plans to buy Intuit Corp., leading maker of personal finance software, and launch an on-line service. Both moves have been criticized by companies and customers who say Microsoft is using its dominance in operating software to move into other businesses.