The following was released to the press by the Plaintiffs lawyers.
Numbered lines come straight from legal filings and testimonies.

December 10, 2006

One of Microsoft’s longest serving and most senior executives, Jim Allchin said in an email read in court Friday that Microsoft has lost it way, and that he would buy an Apple MacIntosh if he didn’t work for Microsoft. Allchin makes these comments in an email to Bill Gates and Steve
Ballmer on January 7, 2004 it is quoted in full at the end of this media update.

On Friday, December 8, 2006 Court began with the jury at 8:45 am. Co-counsel Roxanne Conlin for the Plaintiffs continued this morning with her opening statement. This morning she told the stories about the Real Networks, Be, Linux, and spoliation.

• In Summary, Real Networks software involves digital media. This story talks about how Microsoft achieved near universal distribution of its media player by bundling it with Windows then using contractual restrictions to make if even more difficult for PC makers to preinstall or promote competing digital media players such as Real Networks’ software. Mr. Richards, from Real Networks, is scheduled to testify for the plaintiffs.

Ms. Conlin states in the conclusion of her Real story, (3711)

16 The evidence will show that Microsoft

17 is protecting the ABTE, applications barrier to

18 entry, by engaging in the same conduct toward

19 Real that it engaged in toward Netscape and

20 with the same results.

• In summary, Be Operating System is a fully multi- threaded and multi- tasking with memory protection built from the ground up to do advanced audio visual editing. Of course, Microsoft refused to allow the OEM’s to pre-load BeOS, to put an icon on the desktop, and to load the boot manager to permit switching between OSes. But even with the strong support of its powerful partner, Intel, and just as with DR-DOS and OS/2, it cannot break the lock Microsoft has on the OEM’s. In 2001, Be dissolves. Ms. Conlin is quoted saying,

1 “ So again, the evidence will be that a

2 product that some consumers would have chosen

3 is gone from the marketplace.

4 A product that offered unique

5 capabilities still not present, still not

6 present on Windows, never really had a chance.

7 And the evidence will be that consumers are

8 deprived of choice and innovation because

9 Microsoft breaks Iowa’s Competition Law.” (3747)

• The story of Linux; Linux is open source software available for free download over the internet. It is a potential desktop option particularly in developing nations. One of the biggest vendors is the Red Hat, Inc. Red Hat is increasingly popular on servers. But Red Hat also wants OEM’s to offer Red Hat Linux preinstalled on PC’s.

Ms. Conlin sums it up by saying,

9 “This brings us to the present.

10 We will prove Microsoft still has

11 monopoly power in the operating system market.

12 Microsoft is still charging monopoly prices,

13 and class members do not have the benefit that

14 competitive markets bring, including greater

15 variety, better quality.” (3754)

• Linux starts emerging as competition to Microsoft in developing countries where governments and schools have decided to make technology purchases. This is a direct threat to Microsoft.

“In December 2001, the PM, prime

12 minister, made a suggestion at the cabinet

13 meeting that the Malaysian government should

14 evaluate Linux and open source as an

15 alternative platform.

16 It seemed that PM had been influenced

17 by very strong Linux supporters that Microsoft

18 has too much technology monopoly in the

19 government IT.” (3756)

In Addition,

22 Government and school projects started

23 considering Linux as a viable option to Windows

24 on the desktop.

25 Government saw a savings of around

1 10 million from Windows by going to Linux. (3757)

Microsoft learns of these plans:

7 The government in Malaysia is looking

8 at Linux and an Office Suite because Windows

9 and Microsoft Office are too expensive.

10 When it learns that the government is

11 considering — what the government is

12 considering, Microsoft Malaysia escalates the

13 issue all the way to Bill Gates.

• Microsoft employees developed a program called EDGI (Education Government Incentive) that would deal with this growing Linux problem. The EDGI program is to fight low cost or no cost competitors in these developing areas, keep Windows pre-installed and stop the shipping of naked machines (machines without an OS). Microsoft has pretended that this a charitable program but the internal Microsoft documents reveal it was exclusively a way to prevent these developing countries from using Linux instead of Microsoft products.

Ms. Conlin explains when the EDGI program can be used quoting from an internal Microsoft document ,
(3764)
18 “It is essential, therefore, that we

19 use this only in deals we would lose otherwise.

20 Bottom line, do our best to show the

21 great value of our software to these customers

22 and ensure we get paid for

23 it. Under no circumstances lose against Linux

24 before ensuring we have used this program

25 actively and in a smart way.” (3764)

She also adds;

9 “So EDGI has the added benefit to the

10 outside world as appearing to be based on

11 Microsoft generosity, but in fact the program

12 is intended only for use where Linux is a

13 threat.” (3765)

14 “What is EDGI? EDGI, pronounced EDGI,

15 is both a process for responding to large

16 competitive threats and a source of funding to

17 level the playing field between Windows and

18 Linux when a deal involves the purchase of new

19 PCs.”

20 What is EDGI? There is no mention of

21 any charitable purchase. This is about beating

22 Linux. And it is not even limited to

23 developing countries, and squarely, directly,

24 and only for defeating competitors in the guise

25 of benevolence. (3766)

• Ms. Conlin last story is titled, Spoliation. In short, it is about how Microsoft disposed of many e-mails that could be incriminating against them. Spoliation means evidence destruction. She showed several pieces of evidence showing company practices.

12 This is Plaintiffs’ Exhibit 7361.

13 This is the job description for Bill

14 Gates’ technical assistant, and it says, it is

15 a corporate policy not to make a permanent

16 record of Bill’s works.

17 This task of making sure there is no

18 permanent record of Mr. Gates’ work is left to

19 this technical assistant. The job duties of

20 the technical assistant require him to delete

21 E-mail files from Mr. Gates’ computer weekly.

Ms. Conlin points out additional evidence about Microsoft’s E-mail policy that is reflected in memos between executives:

17 Top Microsoft executives Brian

18 Valentine and Jim Allchin in January of 2000

19 issue the following order to employees to

20 delete all E-mail from their computers after 30

21 days.

22 This is Plaintiffs’ Exhibit 6704,

23 January 22, 2000, from Brian Valentine, senior

24 vice president Windows division.

25 “But we should really be using wise

(3794)

1 E-mail retention practices of keeping nothing

2 older than 30 days of old E-mail. I mean this.

3 Purge every 30 days.”

4 He says, “I personally only keep 15

5 days.” And then he sends them out a property

6 page so they know that. “Get rid of it. Don’t

7 store it in PSTs. Don’t keep it around. Just

8 get rid of it.” And he tells them how to do

9 that automatically.

10 This directive is issued weeks after

11 the finding of fact in the government case

12 which refer to so many E-mails in support of

13 anticompetitive acts by Microsoft.

14 Valentine’s order requires employees

15 to get rid of all E-mail after 30 days no

16 matter where it is. And it is unequivocal.

17 Mr. Allchin, who is group vice

18 president platforms product group, approves of

19 Mr. Valentine’s order and sends another

20 follow-up E-mail on January 23, 2000. This is

21 Plaintiffs’ Exhibit also 6704.

22 He says, “being even more hard core,

23 this is not something you get to decide. This

24 is company policy. Do not think this is

25 something that only applies to a few people.

(3795)
1 Do not think it will be okay if I do this, it

2 hasn’t caused any problems so far. Do not

3 archive your mail. Do not be foolish. 30

4 days.”

(3796)
11 Just days after this, Iowa class

12 members filed this lawsuit, February 18, 2000.

Ms. Conlin completed her opening statement at 12:50. Co-counsel Mr. Rick Hagstrom began his part of the Plaintiffs opening statement.

Mr. Hagstrom first began with a quote from Nathan Myrhvold, “There is a huge value to a monopoly, and we have the position and skills that it makes sense for us to shoot for it.” PX 258.

Mr. Hagstrom continues to say, “Huge value to a monopoly, think about what that means.”

• Mr. Hagstrom reviewed the specific ways that Microsoft harmed Iowans. He emphasized that “competition is good, monopoly is bad”.

A good example of that:

(3813)
9 Exhibit 7264.

10 Almost three years ago, on January 7,

11 2004, Jim Allchin, the senior executive at

12 Microsoft, sent an E-mail to Microsoft’s top

13 two executives, Bill Gates and Steve Ballmer,

14 and the subject was losing our way.

15 Mr. Allchin says, I’m not sure how the

16 company lost sight of what matters to our

17 customers, both business and home, the most,

18 but in my view we lost our way. I think our

19 teams lost sight of what bug-free means, what

20 resilience means, what full scenarios mean,

21 what security means, what performance means,

22 how important current applications are, and

23 really understanding what the most important

24 problems our customers face are. I see lots of

25 random features and some great vision, but that

(3814)
1 does not translate into great products.

2 He goes on to say, I would buy a Mac

3 today if I was not working at Microsoft.”

• Mr. Hagstrom explained that they have several economic experts that will testify that Microsoft caused willful harm to Iowa consumers.

• The jury was dismissed at 2:25 pm and Mr. Hagstrom will continue his opening statement for the Plaintiffs on Monday, December 11, 2006 at 8:30 am.

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Actual .doc file sent to the media (same content as above)