Six years ago today: the infamous Apple-Microsoft deal announced

Six years ago today, Apple and Microsoft announced a broad agreement between the two companies that has resulted in urban myths as extreme as “Microsoft owns Apple” that persist to this day. Slated to last five years,the agreement lapsed one year ago.

In a keynote address delivered Aug. 6, 1997, at MacWorld Boston, Apple Computer Inc. director and co-founder Steve Jobs and Microsoft Corp. chairman and CEO Bill Gates announced a broad product and technology development agreement between Apple and Microsoft including the following:

– Microsoft will develop and ship future versions of its popular Microsoft Office productivity suite, Internet Explorer and other Microsoft tools for the Mac platform.
– Apple will bundle the Microsoft Internet Explorer browser with the Mac OS, making it the default browser in future operating system software releases.
– The companies agreed to a broad patent cross-licensing agreement. It paves the way for the two companies to work more closely on leading-edge technologies for the Mac platform.
– Apple and Microsoft plan to collaborate on technology to ensure compatibility between their respective Virtual Machines for Java and other programming languages.
– To further support its relationship with Apple, Microsoft will invest $150 million in non-voting Apple stock.

To put that $150 million in non-voting share purchase in perspective, on June 27, 1997 in their United States Securities and Exchange Commission 10-Q filing, Apple stated US$3.493 billion in total assets with over US$1 billion in cash and cash equivalents on hand.

Apple’s most-recent 10-Q, filed on 5/13/2003, states US$6.361 billion in total assets with US$3.41 billion in cash and cash equivalents on hand.


  1. Didn’t I read somewhere that the Apple board start hissing when Gates appeared on the videolink?

    Marvellous; nice to see being rich and clever doesn’t really change human nature…

    Brother Mugga

  2. The intellectual property (IP) cross licensing was not quite as broad as implied here, but it did cover more than just patents. It was broad, but did not cover everything. Also it did not cover new IP either company developed in the future.

    The core issue in the cross licensing was to cover the fact that Apple had found QuickTime code in Microsoft’s new media player. At the time this was discovered the general thoughts were that this was a “slam dunk” lawsuit for Apple. (Apple had gone out of house for some of the pieces of the development of QuickTime. Microsoft did the same thing for its new media player and went to the same group Apple did. Some of the code developed for QuickTime [paid for by Apple and thus owned by Apple] was put into the Microsoft stuff. Apple found out and threatened to sue Microsoft over it. Did Microsoft request the code be put in? Did the outside group put it in thinking they owned it and not Apple, thus they could put it anywhere they wanted? We’ll never know. The cross licensing allowed Microsoft to not have to rewrite those sections of its first version of its media player.)

    Additionally, Microsoft paid Apple an undisclosed amount of money to settle the claims Apple had about using QuickTime code in Microsoft’s media applications. They both admitted there was an additional amount of money exchanged besides the non-voting stock purchase, but neither disclosed how much it was. At the time speculation ran from the tens of millions of dollars range all the way up through several hundred million dollars. I doubt anyone other than the very top levels of both companies knows the true dollar amount.

    Also the Microsoft had to hold the non-voting stock it purchased for a minimum period of time. I believe it was three years, but I could be remembering the period wrong. I also believe that Microsoft has now sold all its Apple stock.

    At the time many people believed it was the QuickTime source code issue that allowed Steve to twist Bill’s arm to do the entire agreement.

  3. And even if they hadn’t sold it, it was less than a 4% of non-voting stock… But they did sell it when the Apple stock was around 70$ a share… They had bought the stock at a much lower price.

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