Gates Refutes Monopoly Charge

Microsoft Corp. chief executive Bill Gates said yesterday his company holds no monopoly on computer operating systems and has no intention of making the Internet a toll road from which it could exact royalties.

Microsoft does not have monopoly power in the business of developing and licensing computer operating systems, Gates said in testimony prepared for delivery to a Senate Judiciary Committee hearing.

Gates was due to appear at the hearing with CEOs of four other computer and software companies, including two bitter rivals. As you know, a monopolist, by definition, is a company that has the ability to restrict entry by new firms and unilaterally control price. Microsoft can do neither, Gates said.

 

The Justice Department has charged that Microsoft holds a monopoly in the market for personal computer operating systems and has accused the company of violating a 1995 consent decree that was aimed at increasing competition in the software industry.

Gates said some critics say Microsoft wants to use its Windows operating system to gain control of the Internet and extract a royalty for every transaction on the net. He said that was untrue and it was preposterous to think a single company could ever control access to the Internet.

I can say without hesitation that it is not, nor has it ever been, the intention of my company to turn the information superhighway into a toll road, Gates said.

On Monday the Justice Department told a US appeals court that the Microsoft Corp. broke a promise and used monopoly power to force its Web browsing software on personal computer makers.

The department delivered its scheduled filing as Microsoft CEO Bill Gates and his bitter rivals arrived in Washington on the eve of the congressional hearing to look into competition in the software industry.

In court, Microsoft has appealed a US District Court preliminary ruling that bars it from bundling its Windows 95 software operating system with software used to peruse the Internets World Wide Web.

Microsoft has already made its case in writing to the appellate court and on Monday it was the Justice Departments turn.

The Department is in litigation against Microsoft, charging it is in violation of a 1995 consent decree sometimes called a final judgment aimed at increasing competition in the software industry.

In consenting to the final judgment, Microsoft committed not to use its monopoly power in operating systems to force OEMs (original equipment manufacturers of personal computers) to license any other product, the Justice Department said.

The Justice Department said the promise was broken because Microsoft violated the courts order by conditioning Windows 95 licenses on OEMs licensing Internet Explorer, a Web browser Microsoft undeniably treats as a distinct commercial product in every relevant sense.

The Department got support from 27 states that filed a friend-of-the-court brief Monday.

Microsoft is stifling competition in clear violation of the law and plainly contrary to consumer interests, said Connecticut Attorney General Richard Blumenthal, writing for the states.

Microsofts rival want the government to do more.

I do think that there is a bigger issue beyond the current instance of the specific violation of the consent decree that Microsoft signed, said Jim Barksdale, CEO of Netscape, at a joint news conference with Sun CEO Scott McNealy.

At a news conference earlier in the day, Gates said the issue is whether his company can innovate without interference from the government.

Theres only one key principle at stake there, which is our ability to innovate in our products, he said, sounding a familiar theme.

Gates said Microsoft is moving ahead with its plans for the latest version of its Windows operating system software at mid-year.

Were on track to release Windows 98 and were full speed ahead, Gates said, speaking to reporters in the offices of Sen. Slade Gorton, a Republican senator from Microsofts home state of Washington.

Netscapes Barksdale said his companys rival Web browser does not work with a preliminary or beta version of the new Windows operating system.

Run Windows 98 with the beta version of (Netscape) Navigator today, said Barksdale. It wont run.

A Microsoft spokesman replied that Windows 98 does run with Netscape.

Ive talked to Windows 98 developers at Microsoft who are running Netscape navigator on the beta version of Windows 98without any difficulty, said Mark Murray. He called Barksdales comments unfortunate and unfounded.

Suns McNealy said his company also had found problems of compatibility with Microsoft. He said Microsoft is one of many software companies that license Suns Java software. Sun contends that Microsoft has altered the software to make it non-compatible.

This has always been our beef with the Java license, said McNealy. The license requires compatibility. They (Microsoft) went out and created a different version so that an application written for Java might not run on their Java platforms.

Those issues and others will be hashed out Tuesday at 10 a.m. EST/1500 GMT before Senate Judiciary Committee Chairman Orrin Hatch, a Utah Republican.

Also appearing will be Michael Dell of Dell Computer Corp.