The year was 1995, and Apple Computer took legal action against developer San Francisco Canyon Company, extending the lawsuit to include tech giants Microsoft and Intel, alleging the theft of Apple code. The core of the dispute centered around code purportedly utilized to enhance Microsoft’s Video for Windows technology.
This legal confrontation escalated into a potential multibillion-dollar lawsuit against Microsoft, countered by then-CEO Bill Gates’ threat to discontinue Microsoft Office for Mac.
Allegedly Stolen Code in Video for Windows
The initial dispute between Apple and San Francisco Canyon Company took a dramatic turn, significantly impacting Apple’s trajectory.
In the 1990s, Apple’s QuickTime software gave the company a distinct advantage in the realm of personal computer video technology. In 1992, Apple enlisted San Francisco Canyon to adapt QuickTime for Windows. By November 1992, a PC-compatible version of QuickTime was released. Subsequently, in July, Intel contracted San Francisco Canyon to refine Microsoft’s Video for Windows software suite.
The crux of the issue arose when Apple asserted that the resultant software incorporated thousands of lines of code that were created while San Francisco Canyon was under contract with Apple. Apple initiated legal proceedings against the developer and, on February 14, 1995, broadened the scope of the lawsuit to encompass Microsoft and Intel.
Shortly thereafter, a federal judge mandated that Microsoft cease distribution of the existing iteration of Video for Windows. A revised version was later introduced, accompanied by release notes indicating the exclusion of “the low-level driver code that was licensed from Intel Corporation.”
Microsoft’s Stance
According to Microsoft spokeswoman Pam Edstrom: “Legally, Microsoft is under no obligation to give away beta copies of its software. Microsoft chooses to make prerelease versions of its software widely available to software companies because they offer input that allows Microsoft to improve the product and because their livelihoods depend on Windows. Neither is the case with Apple.”
Apple Accuses Microsoft
The allegations against Microsoft brought by Apple’s legal team transformed what might have been a routine dispute over allegedly stolen Apple code into a far more captivating narrative.
As Microsoft was achieving great success with Windows 95, Apple mounted an aggressive response, accusing Microsoft of attempting to sabotage Apple by delaying the release of beta versions of the new operating system. The purpose was allegedly to prevent Apple from ensuring compatibility between Macs and Windows.
Microsoft had already distributed the software to approximately 40,000 independent software developers. However, Apple was excluded unless it agreed to drop its existing lawsuits against Microsoft and abandon OpenDoc. OpenDoc was a software program that competed with Microsoft’s Object Linking and Embedding technology.
Resolution
Ultimately, Apple and Microsoft reached a settlement in August 1997. Apple agreed to drop all lawsuits against Microsoft, including the QuickTime source code dispute. Apple also committed to making Internet Explorer its default browser (later replaced by Safari).
Additionally, Microsoft provided financial assistance to Apple by purchasing $150 million of non-voting Apple stock and pledging ongoing software support for the Mac. This capital infusion came at a critical juncture when Apple was reportedly facing potential bankruptcy within a matter of months.
In the aftermath, Microsoft reached its tech bubble peak and subsequently experienced a decline in the early 2000s. Apple, on the other hand, launched the original iMac, iTunes, iPod, iPhone, and other groundbreaking products that propelled its ascent to tech industry dominance.
This legal battle underscores the intense competition and strategic maneuvering that defined the tech landscape of the 1990s. The resolution paved the way for a complex, and at times symbiotic, relationship between two of the industry’s most influential players.