March 17, 1988: Apple sues Microsoft for allegedly stealing 189 different elements of its Macintosh operating system to create Windows 2.0.
The incident, which causes a deep rift between Apple and one of its top developers, paves the way for an epic battle between the two companies that will rage for years.
Microsoft goes from friend to foe
As a valued developer, Microsoft got a behind-the-scenes look at the development of the Macintosh project prior to its 1984 release. Shortly after the Mac 128K went on sale, Microsoft founder Bill Gates wrote then-Apple CEO John Sculley. Gates suggested Apple should license the Macintosh operating system to outside manufacturers to help establish it as the standard interface for personal computing.
Sculley was tentatively open to the idea. But on June 25, 1985, Apple exec Jean-Louis Gassée shot down the proposal. (Gassée took over running the Mac division from Steve Jobs.)
Gates decided to capitalize on what he saw as a great business opportunity to create a mass-market operating system. He debuted Windows on November 15, 1985.
Sculley reacted furiously when he saw Windows, although version 1.0 did not compare well to Mac OS. For example, although the new Microsoft OS featured onscreen windows, they could not overlap one another.
Since Microsoft made up two-thirds of software sales for Mac at the time, it was in nobody’s interest to break up the partnership. Mac sales were underperforming as it was, and Microsoft’s first version of Windows was no more threatening than any of the other Apple knockoffs floating around.
A disastrous agreement
Microsoft began developing Windows before Gates ever saw the Macintosh. And both operating systems licensed technology from Xerox PARC, which did a lot of the invention legwork on the graphical user interface. As a result, Microsoft and Apple came to an agreement.
Sculley and Gates signed a deal on Nov. 21, 1985, that licensed the Mac’s “visual displays” to Microsoft. Gates agreed that Microsoft would continue writing software for Mac. Microsoft also gave Apple a two-year exclusivity window on popular spreadsheet program Excel.
Controversially, this deal gave Microsoft a “non-exclusive, worldwide, royalty-free, perpetual, nontransferable license to use [parts of the Mac technology] in present and future software programs, and to license them to and through third parties for use in their software programs.”
A couple years later, Windows 2.0 arrived. It resembled the Macintosh interface much more closely. As a result, on March 17, 1988 — the date we’re commemorating today — Apple sued Microsoft for stealing its work.
Unfortunately, things didn’t go well for Apple. Judge William Schwarzer ruled that the existing license between Apple and Microsoft covered certain interface elements for the new Windows. Those that weren’t covered were not copyrightable.
It was the start of a decade of dominance for Microsoft, and a decade of disaster and near-ruin for Apple.