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. Last Updated: 07/27/2016

Exec Testifies Gates Threatened Intel

WASHINGTON -- Microsoft Corp. chairman Bill Gates made a "credible and fairly terrifying" threat to withdraw crucial technical support from one of his closest business partners, Intel Corp., if the chipmaker did not stop developing computer software that would compete with Microsoft's products, an Intel executive told a federal judge.

Gates, the world's richest man, bluntly told Intel executives at an August 1995 meeting that Microsoft would not support a new line of Intel microprocessors - those with multimedia enhancements known as MMX - if Intel didn't stop working on certain software projects, Steven McGeady, an Intel vice president, testified at the Microsoft antitrust trial Monday.

Gates "was very upset at the fact we were making investments in software of any sort," McGeady said. "He became quite enraged at one point" that Inte l had 600 to 700 software engineers "who were, in his view, competing with Microsoft."

McGeady said that "Bill made it very clear that Microsoft would not support our next processor if we did not get alignment on the issues." Intel eventually decided to scale back many of the projects that were troublesome to Gates, because if Intel's new microchips couldn't run Microsoft's dominant Windows operating system, "they would be useless in the marketplace," McGeady said.

McGeady's testimony, delivered in one of the most dramatic sessions of the antitrust trial, could provide crucial evidence for government lawyers who are trying to demonstrate that Microsoft has illegally bullied many of its rivals in the technology industry. The government has sought from the beginning to demonstrate that Gates was personally involved in the company's alleged anti-competitive behavior. At the end of the day, a Microsoft spokesman said McGeady had "distorted the facts" and had an "ax to grind against Microsoft" because some of his software projects were canceled by Intel's senior management.

Unlike smaller firms whose executives have testified at the trial, Intel is not a fierce competitor with Microsoft. The two industry behemoths have long been close collaborators - their alliance has been dubbed Wintel - because Intel builds the microprocessors found inside most of the world's personal computers, while Microsoft makes the crucial Windows software that allows the Intel chips to perform useful tasks.

But even that relationship, the government alleges, has not muted Microsoft's strong-arm tactics. By showing that Microsoft threatened its big friend, lawyers for the U.S. Justice Department and 20 states hope to make their claim that Microsoft ran roughshod over smaller rivals more believable.