Microsoft Confident That Judicial System Will Overturn District Court Ruling

REDMOND, Wash., June 7, 2000 — Microsoft Corp. plans to file its notice of appeal and motion to stay today’s order by U.S. District Court Judge Thomas Penfield Jackson to break up Microsoft into two companies and impose burdensome restrictions on the company’s ability to develop new products and work with industry partners.

“This is the beginning of a new chapter in this lawsuit,”
said Bill Gates, Microsoft chairman and chief software architect.
“We have a very strong case on appeal, and we look forward to resolving these issues through the appeals process and putting this case behind us once and for all.”

“Two years ago I said that we would vigorously defend a principle that is critical to both consumers and the future of the high-tech industry — the right of every company to innovate and improve its products. Today we move forward to protect this principle and maintain our commitment to innovation.”

Gates said Microsoft is confident that the judicial system will overturn Wednesday’s ruling for a number of reasons.
“This ruling is inconsistent with past decisions by the Appeals Court and the Supreme Court that support product improvement; it is unreasonable in its call to break up Microsoft and regulate software design; and it contradicts the reality that consumers see every day,”
he added.

“Consumers know that healthy competition in the software industry is delivering great products, low prices and rapid innovation,”
Gates said.
“And consumers know that Microsoft’s efforts to drive the Windows® platform forward have helped to make personal computers easier to use and more versatile,”
Gates added.

The company also will seek an immediate stay of the District Court’s order so that the appellate courts will have an opportunity to consider Microsoft’s appeal before the District Court’s order takes effect.
“Our ability to build great products that benefit consumers will be seriously harmed if Microsoft is forced to disclose its most valuable intellectual property and to redesign Windows to the government’s specifications while our appeal is pending,”
said Bill Neukom, Microsoft executive vice president for law and corporate affairs.

The company’s executives stressed that Microsoft would continue to devote all of its energy and resources to developing software and responding to the needs of its customers, even as the legal case made its way through the appeals process.

“While our legal team works to resolve these issues, our employees will continue to focus on building the next generation of great software, which will make the Internet far more useful and easier to use for consumers,”
said Steve Ballmer, Microsoft president and CEO.
“Microsoft will continue to move its business forward with the values and principles that have guided our business for the past 25 years — integrity, innovation and a focus on creating opportunity for millions of customers and partners around the world,”
he added.

The company said its appeal would focus on legal and factual errors in the District Court ruling, as well as procedural irregularities.

“We respectfully disagree with the Court’s analysis of the facts and the law in this case, and we will ask the appellate court to review every aspect of the case. We have built a solid legal record, and we are confident the judicial system will ultimately agree that our actions were completely lawful and that they resulted in more rapid innovation and better choices for consumers,”
Neukom explained.

The company will also raise numerous procedural issues in its appeal.
“We believe the proceedings in the District Court were flawed from the beginning, and strayed further and further off course, both procedurally and substantively, as the case progressed,”
Neukom said.

One element of the company’s appeal will focus on the extreme and unprecedented remedies demanded by the government and imposed by the Court without adequate legal process.

“This unprecedented order against Microsoft was conceived by our competitors, drawn up by the government, and imposed by this ruling without a single day of testimony or scrutiny,”
said Neukom.
“Microsoft asked for a fair and reasonable opportunity to present evidence concerning the negative consequences of the government’s plan, but we were denied that fundamental right.”

“Even if you set aside the unprecedented breakup plan, this ruling would force Microsoft to disclose the inner workings of our software to our direct competitors. That is unfair confiscation of our intellectual property, and it goes far beyond any issue in this case,”
Neukom said.

“There’s a great deal at stake in this case. Breaking up Microsoft would hurt consumers, make computers harder to use, and impact thousands of other companies and their employees throughout the high-tech industry,”
added Ballmer.

Neukom said that the company would file its notice of appeal with the Clerk of the District Court as soon as possible, and would seek a stay of the District Court ruling from the Appeals Court.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
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