A Case of Trial in Error: The Microsoft Antitrust Lawsuit

WASHINGTON, D.C., December 7, 1998 — Microsoft Chairman and CEO Bill Gates told reporters today that the government’s antitrust lawsuit benefits Microsoft’s competitors, not consumers, and could end up undermining the future of the entire high-tech industry. Speaking via satellite from Microsoft’s headquarters in Redmond, Wash., Gates appeared at a media briefing in Washington, D.C., which was conducted by Microsoft’s legal team. As part of the briefing, Microsoft handed out a document titled, “A Case of Trial in Error: The Microsoft Antitrust Lawsuit,” which provides a detailed analysis of evidence in the trial to date and of the government’s inability to prove its case.

“Consumers aren’t complaining about our Internet products – our competitors are complaining,” Gates said in a statement. “Consumers and software developers are seeing tremendous benefits from our commitment to the Internet. It’s unfortunate that the government is listening to the alliance of IBM, Sun, AOL and Oracle and ignoring all the ways our efforts to help consumers have moved forward.”

Gates also made a point of addressing Microsoft’s decision to include Internet technologies free of charge as part of its Windows operating system, which the government alleges was anti-competitive behavior that put Netscape Communications at a competitive disadvantage.

“This is one of the great ironies of this case – the government is trying to increase the price consumers pay for browsing,” Gates said. ” We recognized a long time ago – before Netscape ever shipped its first browser – that browsing is a natural part of an operating system. By integrating, customers get a single, simple interfact to access all types of information. And it makes it easy for other software developers to tap the power of the Internet in their own applications.”

Gates said that America Online’s recent decision to buy Netscape for $4.2 billion clearly shows that competition in the software industry is intense, and that Netscape’s free browser did nothing to disadvantage it during those negotiations. In fact, Gates said, the free browser allowed Netscape to build a very large user base and to derive substantial revenue from other related businesses, such as online advertising and Web servers.

Microsoft General Counsel William H. Neukom told reporters that Microsoft had filed a motion seeking the court’s permission to conduct discovery about the AOL/Netscape/Sun deal by requesting documents from all three companies and various investment banks that represented the three companies. Neukom said Microsoft needs the information to defend itself against the government’s allegations that the company somehow has control over the distribution of Web browsing software.

“This discovery may also give all of us a better understanding about what was occurring with respect to this alliance while witnesses from these companies were on the stand in this litigation,” Neukom said.

Neukom also said Microsoft had just learned that the Attorney General of South Carolina had decided to remove his state from the lawsuit against Microsoft. He said Microsoft was pleased by that decision and hoped other states participating in the lawsuit would follow South Carolina’s lead.

Microsoft’s lead trial attorney, John Warden, said the government has failed to prove any of the fundamental allegations in its case and has turned instead to the court of public opinion by engaging in mudslinging against Microsoft and its chairman.

“The government may think they’re winning on soundbites, but they are striking out when it comes to proving their case,” Warden said. “The major elements of the government’s lawsuit have already been discredited, and not a single Microsoft witness has even testified yet. As someone who has been an antitrust attorney for 30 years, I can tell you that this case should never have been brought.”

Warden called the government’s decision to use of excerpts from Gates’ deposition instead of calling him as a witness “pathetic.” He said the government had such a weak case that it was trying to change the subject by turning the trial into a personal attack on Gates, and had designed its deposition of Gates solely for that purpose.

“Given the complete lack of substance their excerpts have had to date, you really have to wonder what relevance it has to a Sherman antitrust lawsuit,” Warden said. “As a student of antitrust law, I can safely say the answer is zero.”

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