Gates' Testimony Gives Sneak Peak Of Product Plans

Gates, Microsoft's chairman, co-founder and chief software architect, said the state-endorsed sanctions, if adopted, would inhibit innovations under way such as the company's planned video Windows Messenger technology for Windows and Internet Explorer, and future innovation in Office.

Microsoft's next version of Office, known as Office.NET, is due in 2003 or 2004.

"Future versions of Office will include innovative new features such as presentation technology that facilitates digital meetings [with participants located anywhere in the world, visualizations and other live connections to data, and improvements to Outlook so users can spend less time sorting through and filing e-mail," Gates wrote, expressing concerns that Sun Microsystems would mimic Microsoft's office innovations in its StarOffice Linux suite if some of the state remedies are approved.

Gates, in his first court appearance since his company's antitrust trial began four years ago, did not talk about those innovations on the witness stand Monday. However, in his written statement, he claimed that opening up a wider set of APIs and giving competitors the ability to peer at the Windows source code would crush innovation. He painted an apocalyptic picture for Microsoft if the judge forces it to hand over more technical information to the market.

"Bearing little R and D cost, competitors could effectively render Windows irrelevant by licensing their implementations of Microsoft's technology at zero or low cost," Gates wrote in his testimony.

"The auction of all our existing Office technology plus all the new Office technology we develop over the next ten years, as required by Section 14 [of the states' proposed revised remedies, would greatly reduce Microsoft's incentives to innovate in business productivity software, further decreasing competition," he added.

"Section 14 contemplates that all three bidders would get identical rights to identical technology. The winners would thus compete with each other to offer versions of Office on Linux or other platforms," wrote Gates.

However, the lead attorney for the nine dissenting states challenging Microsoft's agreement with the U.S. Department of Justice said demands for Microsoft to open up more APIs is not akin to asking the company to hand over source code.

Kuney noted, for example, that the state attorneys general want Microsoft to reveal more external APIs to enable competitors such as Novell, America Online, Sun and others to access more system features of Windows and develop better products. The external API code base represents roughly 440,000 lines of code in Windows XP, a small fraction of the 39 million lines of code in the new OS, observers said.

Taken together, the external and internal APIs in Windows XP represent almost 25 percent of all Windows code, according to Michael Pettit, president of ProComp, an organization representing the interests of Microsoft's competitors.

These external and internal APIs are used by Microsoft's engineers to develop applications that exploit more of the features of Windows and are tightly integrated. This integration strategy, at the core of the antitrust case, enables Microsoft to maintain its monopoly position, Microsoft's opponents claim.