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More MSFT v. Google: Tantalizing Court Records

By - September 06, 2005

MsftinjuThis Kai-Fu Lee case is starting to look less like an employment dispute, and much, much more like the first of what will likely be many protracted battles between the once mighty king (MSFT) and the young princely upstart (GOOG).

Another reliable source sent me the 26 page document Microsoft filed to support its request for a preliminary injunction which would stop Dr. Lee from beginning work at Google. (The injunction request – and Google’s response to it – is being heard today in Washington state). The injunction makes for damming reading, as it is supposed to – it’s very one sided, of course, but I found it fascinating for what it shows about Microsoft and how clearly vulnerable the company feels in the presence of Google.

Besides the stuff you would expect in such a filing – that Lee violated his non compete agreement, that Google knew what it was getting in hiring him, that Google and MSFT are active competitors – there were some pretty extraordinary facts as well. For example, Microsoft claims that Lee actively tried to get hired by Google, using his knowledge of MSFT’s competitive plans as bait.

From the document:

…”Dr. Lee used his knowledge of Microsoft’s technologies and business strategies to obtain his highly paid position at Google….Shortly after offering his services to Google, and while still in Microsot’s emply, Dr. Lee sent a document he prepared for Steve Ballmer entitled “Making it in China” to Google, after removing the “Microsoft Confidential label from the document….

Much of the dispute seems to turn on whether Lee was in fact working on search technologies that Google might profit from. MSFT argues strongly that he was, in particular in relation to machine learning. But the real fun stuff comes from what Lee apparently knows about Microsoft’s plans to compete with Google.

…Dr. Lee attended a March 24, 2005 highly confidential Executive Staff briefing entitled “The Google Challenge.” Through this briefing…Dr Lee was made aware of: (1) Microsoft’s overarching plan to compete with Google in the search marketplace, (2) specific product characteristics and product components that Microsoft is developing to advance that competition, and (3) specific strategic opportunities identified by Microsoft as the most promising means to compete effectively with Google.

Other tidbits: From a mail now public from Google’s Jonathan Rosenberg regarding recruitment of Lee:

“…I all but insist that we pull out all the stops and close him like wolves. He’s an all star and will contribute in ways that go substantially beyond China.”

MSFT alleges Dr. Lee contacted Eric Schmidt:

…while recruiting for Microsoft’s China R&D operations….(and) Dr Lee began helping Google with its China business plans …while he was still a Microsoft employee.

The document also has details of the package Lee received from Google:

…he was offered an extremely generous compensation package, described internally at Google as “unprecedented”…it included: (1) a signing bonus of $2.5 million, (2) an additional bonus of $1.5 million after the first year, (3) a base salary of $250,000 per year….(4) options for 10,000 shares of Google stock, (5) a grant of 20,000 Google Stock Units over four years (with a value of over $5 million…)

Google also paid for his kids education, a car, and a housing and “hardship” allowance totaling more than $16,000 a month. That is one well paid scientist!

Google has filed an extensive rebuttal to this, which I am digging into now….

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3 thoughts on “More MSFT v. Google: Tantalizing Court Records

  1. Dear John Battelle

    This is what I call as investigative journalism. Your blogs are becoming as popular as RSS..

    Very interesting topic.I really love reading ur site.

    Keep it up

  2. dave says:

    Yes! Google also paid for his kids education, a car, and a housing and “hardship” allowance totaling more than $16,000 a month. That is one well paid scientist!

  3. yes, this blog is the best blog if you need new reports about google, yahoo or alexa.

    big thanks and much luck for the future to John