Memo: Microsoft threatened to shut down Mac Office

Computerworld - Microsoft Corp. threatened to dump the Macintosh version of Office 10 years ago during talks with Apple Inc. because the move would "do a great deal of harm" to its rival, according to a memo made public in a recently-settled antitrust case.

The 1997 memo from Ben Waldman, at the time the head of Microsoft's Macintosh development group, to then-CEO Bill Gates, urged Mac Office 97's release. The suite, which in June 1997 had not yet reached beta, was eventually released as Office 98 in March 1998.

But Waldman understood that the next Mac Office was a stick that could be used against Apple. "The threat to cancel Mac Office 97 is certainly the strongest bargaining point we have, as doing so will do a great deal of harm to Apple immediately. I also think that Apple is taking this threat pretty seriously," Waldman said in his e-mail to Gates.

Less than six weeks after Waldman's e-mail, Microsoft and Apple announced a deal under which the former bought $150 million of Apple stock. As part of the pact, Microsoft promised to release the next version of Office and was allowed to bundle Internet Explorer with the Mac OS. The two companies also agreed to a patent cross-licensing deal.

At the time, Apple was struggling. Steve Jobs had returned to the company only months before, and share prices were at all-time lows. The Microsoft-Apple agreement was seen by many as a bail-out of Apple by its long-time rival.

Later, the U.S. Department of Justice included the bundling of Internet Explorer among the charges it brought against Microsoft in its antitrust case. "Microsoft, by threatening to cease development of its Office for Macintosh productivity suite, coerced Apple into making Internet Explorer the default browser on all Macintosh operating systems and to disadvantage competing browsers," the federal agency charged in 1998.

Waldman also wrote in the memo -- which was revealed in the recently-settled Iowa antitrust case against Microsoft -- that keeping Mac Office alive was a good idea because the suite's users could be used as guinea pigs to test new features.

"Because Mac Office is so much less critical to our business than Windows, we have the flexibility to test out new things in the product before we try them on Windows," wrote Waldman. "I've personally also found the Mac market interesting because I've seen so many trends appear there first and eventually become important on Windows."

Waldman cited examples ranging from hard disk and memory use to user concerns over bloat in the suite.

The e-mailed memo is available online (download PDF).