Statement From Microsoft on Past Exploratory Discussions With SAP

REDMOND, Wash., June 7, 2004 — Due to certain confidential information obtained from Microsoft Corp. in the pretrial discovery process that Oracle Corp. is expected to raise at the trial concerning the U.S. Justice Departments lawsuit to block Oracles takeover of PeopleSoft Inc., Microsoft will, in this instance, depart from its longstanding policy of not commenting on discussions related to potential mergers and acquisitions.

Microsoft confirms that late last year it initiated preliminary discussions with SAP AG to explore the possibility of a potential merger between the two companies. A few months ago, Microsoft ended these discussions due to the complexity of the potential transaction and subsequent integration. There are no intentions to resume these talks.

After the merger talks ended, the two companies continued other discussions that resulted in a deepened relationship on Web services and a patent cross-licensing agreement between them. Information is available at http://www.microsoft.com/presspass/press/2004/may04/05- 12MicrosoftSAPRaisesStakesPR.asp . As this reflects, Microsoft and SAP remain committed to a mutually beneficial commercial relationship that creates value for their customers.

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