Wednesday, March 17, 2004 - Microsoft Is Facing More Telling E-Mails In Minnesota Lawsuit - Microsoft Is Facing More Telling E-Mails In Minnesota Lawsuit "The federal antitrust trial focused on Microsoft's efforts to protect Windows from innovative Internet technologies in the mid-1990s. The Minnesota case begins even earlier, alleging that Microsoft also targeted competitors in both applications and operating-system software, ranging from Lotus Development Corp. and Novell Inc. to giant International Business Machines Corp.
Lotus, which dominated the spreadsheet business in the industry's early years, was a favorite target. In a 1988 memo, Mr. Gates calls for deep price cuts with a goal of "cutting Lotus' profit in half." Another strategy memo, responding to Mr. Gates, calls for a "Kill Lotus Plan."
It includes, among more-serious proposals, a "Santa Claus scenario" in which Microsoft would drive down Lotus's share price by price cuts, secretly buy 4.99% of the company, then launch a hostile takeover. "Assuming [Lotus Chief Executive Jim Manzi] wants to keep his job, we could then negotiate a 'greenmail' price of say $30 share," reaping $40 million in profit by selling the stock back to Lotus, the memo says.
Microsoft dismisses the memo as the musings of a midlevel manager that were never acted upon -- and points out that strong language in the heat of competition isn't illegal. Microsoft eventually did slash prices, bundling its products together into the now-dominant Microsoft Office package of applications; Lotus's 1-2-3 spreadsheet, the PC industry's first big hit, was driven into single-digit market share. Lotus, its future threatened, was bought by IBM in 1995."

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