Microsoft chairman and chief software architect Bill Gates took the stand yesterday to detail the devastating effect the remedies proposed by the nine dissident states would have on his company.
State lawyers attempted to show that Gates overreacted to and exaggerated the effects of such remedies in his 163-page written testimony.
In his statement, Gates lashed out at every remedy proposed by the non-settling states, warning of damage to consumers and the industry, but especially to Microsoft.
He said the remedies would allow PC makers “to remove blocks of software code” from Windows, fragmenting the system, and leaving independent software developers without a “well-defined” set of interfaces for development.
Remedies would ‘devalue’ Microsoft The remedies would, in effect, transfer large chunks of Microsoft’s intellectual property to competitors, devalue its major revenue-generator, Office, and remove any incentive for the company to upgrade Internet Explorer, said Gates.
In short, it would leave Microsoft “greatly devalued as a company,” he claimed.
By forcing Microsoft to remove features, the state settlement “would turn back the clock on Windows-development by about ten years and effectively freeze it there,” according to Gates.
One state-remedy requires Microsoft to grant third-party developers access to its source-code to ensure interoperability with the Windows operating system.
But Gates said these provisions would give competitors “free rein” to take Microsoft’s Windows technology and implement it any way they like. These remedies “would reduce the quality and utility of Windows”.
The remedies for Microsoft’s monopolistic practices sought by the dissident states serve as “as a sword to extract business-advantage from Microsoft, or act as a shield against vigorous competition from Microsoft.”
Making Internet Explorer open-source, another provision in the state-remedy, would give Microsoft “little reason” to continue to invest in its browser.
Broken Windows Gates claimed that, should the company be forced to remove Internet Explorer from Windows, functions dependent on that code wouldn’t work properly. It would be difficult to create an equally functional version of Windows without binding it to additional programs.
Gates claimed the states’ remedies would lead to a fragmented Windows: “Under the states’ remedy, Windows would no longer be uniform; Anyone who offers to license 10,000 copies would have the ability to essentially make arbitrary changes to Windows.”
State lawyers asked Gates if the market for Windows wasn’t already fragmented, since there are similar, but not identical, code-bases for Windows 9x versions of the operating system, and for Windows NT. They stressed that Microsoft already helped developers building applications for the different versions of Windows. Lawyers showed the court a Microsoft instructional document for developers, designed to help them with modifying their applications to work with various OS upgrades.
Gates replied that Microsoft provides “some limited assistance” to developers – but wouldn’t help them, for example, target an out-of-date version of the OS such as Windows 3.1.
Office would suffer The state remedy that would require Microsoft to auction Office licenses to three vendors – who could then develop versions for other operating systems such as Linux – is a “severe penalty” that would have a “grave impact” on the company’s Office business, said Gates.
Office generates as much as three times more than Windows in revenue, said Gates. Microsoft gets about $70 per Windows unit, but anywhere from $150 to $275 for each Office user, he said.
Following Gates’ presentation, state-lawyer Steven Kuney asked Gates if he doesn’t want Microsoft to “continue doing the things” that the US Court of Appeals found wrong.
Gates said: “That’s right.”
The appeals court cited 12 specific violations by Microsoft in illegally maintaining its monopoly. Kuney asked if these violations were continuing. “I do not believe that they are,” replied Gates. “If they were, I would stop them,” he claimed.