Unprecedented Government Proposals Would Harm American Consumers, Technology Industry and Economy

REDMOND, Wash., April 28, 2000 — Microsoft Corp. today said the government’s unprecedented regulatory scheme is unjustifiably punitive and would be a major setback for the American economy and consumers. The company said the government’s proposal threatens a core principle in the American economy: that businesses are encouraged to compete by creating innovative products that respond to the marketplace and consumers.

Microsoft will file its response to the government’s proposal on May 10. The company said it believes the courts ultimately will rule in favor of Microsoft.

“Breaking up Microsoft into separate companies is not in the interest of consumers and is not supported by anything in the lawsuit,” said Bill Gates, Microsoft chairman and chief software architect. “Microsoft never could have created Windows® and Office if they were in separate companies. Innovations that began within Office have quickly been incorporated into Windows so they are available to every applications developer. Dismantling Microsoft would hurt the company’s ability to continue to innovate, and that would hurt consumers. It’s anti-consumer to tear apart the development teams that created two of the most innovative technology products and that have helped to revolutionize productivity. Microsoft has a proven track record of delivering consumer value as a single company.”

“People can disagree about some of the issues in this case, but the government’s proposals are clearly unreasonable and punitive beyond reason. These regulations are out of touch with consumers and are completely out of proportion to the issues in the case. The net effect of these remedies is that they run against what consumers want: products that are easy to use, work well together, are innovative and affordable,” Gates said.

“Microsoft has worked hard for years to develop Windows and Office, and these products have provided great benefits to millions of consumers. The message of today is that if you invent two great products, the government may someday take one of them away. We are proud of the work we did to add Internet features to Windows. Should the courts decide to rule against us, we do not believe that provides a reason to deprive Microsoft of its flagship product,” Gates said.

“Customers, partners and shareholders can expect that Microsoft will continue to compete in a fair and legal manner, as we believe we always have,” said Steve Ballmer, Microsoft president and CEO. “We will continue to work within the American judicial system to resolve this lawsuit, and we will continue to move ahead in the marketplace with a great vision for the next generation of software.”

“For months, the government and a handful of our competitors have been repeating that Microsoft should be broken up. But no matter how many times it’s repeated, it’s still unreasonable,” Ballmer said. “I remain proud of the work this company does. We do not believe we have violated the law and the Court of Appeals has yet to consider this case. We also believe we have an obligation to our shareholders, employees, partners and customers to stand up for what we believe is right.”

“Microsoft has exciting plans to develop a broad array of next-generation software products that will take computing to the next level, but those plans are imperiled by the extreme regulation proposed by the government.”

“These government proposals are disappointing. The Court did not find that Windows and Office became popular because of any wrongful conduct by Microsoft,” said William H. Neukom, executive vice president and general counsel, Microsoft. “The government’s proposals bear little relationship to the case it presented at trial and they are not supported by the evidence or the Court’s legal conclusions. The case has always been about browser software, not the relationship between Windows and Office.”

“There has never been a court-ordered breakup of a unitary operating company. The evidence and law applicable to this case fell far short of providing the basis for such a drastic and unprecedented remedy,” Neukom said.

“This case has always been about browser software, not spreadsheets and word processors,” Neukom said. “The government is seeking to try a whole new lawsuit involving products, competitors and interests that were not involved in any way in the case that was tried. In effect, the remedies proposed by the government acknowledge that competition and innovation in this industry are moving so quickly that the government no longer cares about a remedy that addresses the case the government tried in the courtroom.”

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For more information, print and online media only:

Rapid Response Team, Waggener Edstrom, (425) 450-5019, [email protected]

For more information, broadcast media only:

Michelle Fristachi, Global Communications and Television, (212) 339-9920

For more information, financial analysts only:

Carla Lewis, senior director, Microsoft Investor Relations, (425) 936-3703

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