Gates speaks optimistically after judge offers ruling

Courts will vindicate Microsoft, chairman says at news conference

November 06, 1999|By Michael Stroh | Michael Stroh,SUN STAFF

Microsoft Chairman Bill Gates put on a brave face last night after a federal judge ruled that his company was a monopoly and had harmed consumers, a finding that could conceivably lead to the breakup of the business he built into the world's largest software empire.

"We respectfully disagree with a number of the court's findings," Gates said at a short news conference after the decision. "And we believe that the American legal system ultimately will affirm that Microsoft's actions are fair and legal, and have brought tremendous benefits to millions of consumers."

In a powerfully worded decision, U.S. District Judge Thomas Penfield Jackson denounced the company for using its position to snuff out competition.

"Microsoft has demonstrated that it will use its prodigious market power and immense power to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products," the judge wrote.

"The ultimate reason is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest," he said at the conclusion of his 207-page decision.

Joel Klein, the deputy U.S. attorney general who filed the case and oversaw its development, called the ruling "an important victory for America's consumers and for the American economy. It shows once again that in America, no person and no company is above the law."

During the news conference, Gates did his best to highlight the positive remarks the judge made in his findings about the company.

"The court findings do acknowledge that Microsoft's actions accelerated the development of the Internet, reduced the cost to consumers and improved the quality of Web browser software," he said, his voice occasionally sounding strained.

Gates stuck tightly to themes that he and the company lawyers have highlighted again and again since the Justice Department and 19 states filed their lawsuit in May 1998: that the company did not try to inhibit competition in the software industry.

"Let me be clear: The law on this point couldn't be more black and white," said Gates. "The kind of innovation we do is absolutely encouraged."

Although legal experts have speculated that a decision against Microsoft might push the company closer to a settlement with government regulators, Gates was polite but defiant.

"What we get excited about is building great software. The only thing that's important to us is that we're allowed to innovate in that software," he said. "We'll continue to make our best efforts to resolve the case. But we still have to stick up for that one principle."

Gates also said that he had no idea how the decision would affect the company's stock. "Microsoft is not a prognosticator on the stock market: not up, not down, not sideways."

The decision was issued after the stock market closed. Microsoft shares traded as low as $86 in after-hours trading, down from $91.5625 at the close of regular trading.

Behind the scenes, Gates has been known to throw tantrums over the government's assault on his company, but he told reporters last night that he has spent the past week on retreat, thinking about the direction of the company and the "opportunities ahead of us."

At a news conference last night, Deputy Attorney General Klein refused to speculate on whether the judge would order the breakup of Microsoft, and reiterated the Justice Department's willingness to settle the case.

He did say, however, that the findings of fact, if ultimately upheld by the Supreme Court, could be used by private companies to file damage suits against the software giant.

Connecticut Attorney General Richard Blumenthal, spokesman for the attorneys general of 19 states who joined the lawsuit, called for strong sanctions against Microsoft.

"These are serious and far-reaching violations that should lead to serious and far-reaching remedies," he declared.

However, Microsoft pointed out that the case is far from over. "We expect that at the end of the judicial process, Microsoft's opinion will be fully vindicated," said William Neukom, the head of the company's legal department.

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