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Thu, Sep 08, 2005 - Page 12 News List

Microsoft's laundry aired in hearing


Former Microsoft Corp executive Kai-fu Lee (李開復) accused the software titan of incompetence in its plans to gain a business footing in China, and testified that being yelled at by chairman Bill Gates was a low point before he defected to Google Inc.

In testimony during a Tuesday hearing on Microsoft's lawsuit against Lee and Google, Lee said he wrote a memo to another Microsoft executive saying he was "deeply disappointed at our incompetence in China -- that we have wasted so many years in China with little to show for it."

Microsoft is suing on the grounds that Lee, an expert in computer recognition of language and Internet search technology, signed a noncompete agreement, in which he agreed not to perform similar work for any rival for one year after leaving Microsoft. Lee was hired away by Google this summer; Google and Lee maintain that he has not, and has no intention of, compromising Microsoft's trade secrets.

Lee went on to say in the e-mail that he was embarrassed by Microsoft's business practices and that people in the government joke about Microsoft's internal politics. But he provided few details in his testimony on Tuesday about what exactly the Chinese government was frustrated with.

The former executive testified that one of the lowest moments of his career with Microsoft was a conversation in which Gates yelled at him and said that the company had been "f-----" by the Chinese people and its government. Lee did not clarify the context of Gates' alleged comments.

Microsoft spokeswoman Stacy Drake said Gates did not make such a statement.

"Bill Gates adamantly denies ever making such a comment. This is another attempt to deflect interest from the real issues in this case," she said.

Google spokesman Steve Langdon said he did not know the context or date of Gates' alleged comments, and did not know if he would be able to obtain that information. He said neither Lee nor Lee's attorney was immediately available to comment following the proceedings.

In his testimony, Lee also complained that Microsoft had more than 20 business groups operating virtually autonomously in China, with little cohesion.

Among other problems, Lee said, was a commitment Microsoft chief executive Steve Ballmer made in 2002 to outsource $100 million in work to China. Within the last year, after it had become clear that Microsoft was not fulfilling this promise, Lee said, he was put in charge of outsourcing jobs to China.

Drake said she could not confirm the numbers cited by Lee. But she confirmed that Microsoft has been outsourcing some work -- such as software testing -- to China and other countries, to free up its US staff for other projects.

In video testimony on Tuesday, Ballmer defended Microsoft's business plan in China, saying that through a process of trial and error the company had developed what he called a "secret sauce" for successful operations there.

Lee, who had worked at Microsoft beginning in 2000, joined Google in July to lead its expansion into China.

Microsoft contends that Lee's duties at Google would violate the terms of the noncompete deal. It also accused Lee of using insider information to get the Google job.

Google denies the allegations and has countersued Microsoft.

Microsoft attorneys sought on Tuesday's hearing to restrict what work Lee can do for Google until the lawsuit goes to trial in January.

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