Gates, As Witness, Defends Microsoft-DOJ Agreement

Microsoft

In his first public appearance in a courtroom since his company's epic trial began in 1998, Gates took the stand and said the dissenting states' proposed remedies would destroy Windows and his company.

Gates, who entered the courtroom flanked by bodyguards and wife Melinda French Gates, said that removing code from Windows would render the operating system inoperable and lead to the creation of thousands of different versions of Windows. He specifically cited the likelihood that companies such as America Online, Sun Microsystems, Oracle, Gateway and Novell would have their own versions of Windows. This fragmentation, he said, would change the "economics of software."

Gates also said the disclosure of Microsoft's full API set "would lead to cloning of Windows and Office."

"It's very easy to create clones," he said in a half-hour session Monday morning.

Gates said the dissenting states, which oppose the settlement forged by the U.S. Department of Justice and several other states, have proposed a remedy that would rob Microsoft of its intellectual property and patents.

Under cross-examination by states' attorney Steven Kuney, Gates said he believes that the states' proposed remedies would "mean the end of innovation and the elimination of most employees at Microsoft."

Asked by Kuney if he understood the seriousness of the consequences of the remedy on the company's future, Gates said that he did.

"You basically showed a slide showing the disintegration of your company, right?" Kuney asked. Gates agreed. Gates said he viewed the trial and its outcome "as a significant situation, certainly one that could have a significant impact on the company."

Gates also said that to his knowledge, Microsoft had ceased the behaviors that the district court cited as monopolistic in its antitrust decision.

In 156 pages of written testimony distributed Monday morning, Gates said "the practical effect of the nonsettling states' proposal would be to cripple Microsoft as a technology company."

"It would be extremely difficult, if not impossible in some cases, for Microsoft to comply [with revised remedies," he said.

In that testimony Gates also concluded that forcing Microsoft to disclose all of its source code would be "akin to a requirement that BMW give the automobile industry free rights to use its engine technology or that Coca-Cola give the secret formula to Pepsi."

In his published testimony, Gates also denied that Microsoft had retaliated against AOL, Sun or other competitors for their actions. He also said another proposal by the states to auction off the Office source code to three companies would be a "fire sale."

Gates is expected to continue testifying for next few days.