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What Did Microsoft and Adobe Chiefs Talk About?

Steven Ballmer, Microsoft’s chief executive, recently showed up with a small entourage of deputies at Adobe’s corporate offices in San Francisco to hold a secret meeting with Adobe’s chief executive, Shantanu Narayen.

Adobe's headquarters in San Jose, California.
Adobe's headquarters in San Jose, California.

The meeting, which lasted over an hour, covered a number of topics, but one of the main thrusts of the discussion was Apple and its control of the mobile phone market and how the two companies could partner in the battle against Apple. A possible acquisition of Adobe by Microsoft were among the options.

The New York Times learned about these meetings through employees and consultants to the companies who were involved in the discussions that took place or familiar with their organization, all of whom asked not to be identified as they are unauthorized to speak publicly by Microsoft or Adobe. Those involved in the meeting, from its logistical set up to the discussion that took place between the two companies, were instructed to stay very quiet about the two companies holding council.

In the past, Adobe and Microsoft have been rivals with competing software and the companies really became combative in 2007 when Microsoft began promoting its Silverlight, a software plugin for the Web that directly competes with Adobe Flash.

Holly Campbell, senior director of Adobe’s corporate communications, did not deny the meeting took place when asked via e-mail and said, “Adobe and Microsoft share millions of customers around the world and the CEOs of the two companies do meet from time to time. However, we do not publicly comment on the timing or topics of their private meetings.”

Microsoft said it does not “comment on rumors/speculation.”

"There’s not a question that the atmospherics of Microsoft are much more different that they were a decade ago,” he said. “I think you could imagine Microsoft being a more aggressive purchaser in a world where they are no longer an 800-pound gorilla." -University of Chicago, professor of law, Randal C. Picker

One person familiar with the discussion said the two companies had talked about the blockade Steven P. Jobs, Apple’s chief executive, had placed on Adobe’s Flash software for its handheld devices and if a partnership by Adobe and Microsoft could fend off Apple, which continues to grow at juggernaut speeds.

Another person with knowledge of past talks between the two companies explained that Microsoft has courted Adobe several years ago with possible acquisition discussions. But the deal never moved past informal talks as Microsoft feared that United States Department of Justice would likely block the deal on antitrust grounds.

This person noted that back then Microsoft was the dominant force in technology and Google and Apple were not the giants they are today.

Randal C. Picker, a professor of law of the University of Chicago law school, said in a telephone interview that the technology space is drastically different than it was when Microsoft was originally charged with antitrust violations and an acquisition or partnership of this nature would likely not be halted.

“There’s not a question that the atmospherics of Microsoft are much more different that they were a decade ago,” he said. “I think you could imagine Microsoft being a more aggressive purchaser in a world where they are no longer an 800-pound gorilla.”

Mr. Picker said that the Department of Justice and Federal Trade Commission are focused on other large technology companies and consumer related issues.

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