WASHINGTON -- Microsoft Corp. Chairman and Chief Software Architect Bill Gates took the witness stand just after noon Monday to defend his company against the antitrust proposal set forth by nine states and the District of Columbia to remedy Microsofts anti-competitive conduct.
For the direct testimony of Bill Gates, click here
Gates said that the remedies, if approved, would lead to the end of his companys innovation and the elimination of most of its employees.
The Microsoft co-founder focused his testimony on the harm he sees in the states demand for a modular version of the Windows operating system and the disclosure of source code for the purposes of interoperability. A modular Windows would "ban" Microsoft from continuing to license the desktop operating system within six months, he said. Apparently leaving the parties some wiggle room, Gates said in his written testimony that the "ban" would occur "unless the Court later agreed to modify the remedy."
One of the primary requirements proposed by the states would require Microsoft to sell a version of Windows in which the operating system was separated from any Microsoft middleware. Microsoft has spent much of its court time so far trying to demonstrate that the requirement would devastate the operating system and the "PC ecosystem" that it works with.
"By reducing Windows to some undefined core operating system, the [states proposed remedy] would turn back the clock on Windows development by about ten years and effectively freeze it there," Gates said.
Steve Kuney, lawyer for the states, grilled Gates Monday on the fragmentation in the operating system marketplace that exists already because of the numerous versions of Windows in use. He also quizzed him on the steps Microsoft takes to help software developers interoperate with all versions. Pointing to an email from 1995 in which Gates admonishes his team for spending too many resources on trying to improve the display of Office documents over other vendors browsers, Kuney questioned Microsofts commitment to interoperability.
"Allowing Office documents to be rendered very well by other peoples browsers is one of the most destructive things we could do to the company," Gates wrote in the email.
In response to the email disclosure, Gates said that he tries to strike a balance between promoting interoperability in the marketplace and creating unique features for Windows.
Microsoft is trying to convince Judge Colleen Kollar-Kotelly in a hearing here to reject the states proposal and instead approve the federal antitrust settlement proposal that the Department of Justice agreed to in November. The judge is reviewing the federal settlement proposal separately from the states remedy hearing.
Echoing a theme drummed repeatedly by his lawyers in their cross-examination of states witnesses since the hearing opened, Gates tried to show that the states remedy proposal is too vague to be implemented with any certainty and that it is so over-arching that it would sap the Redmond, Wash., company of any incentive to innovate. The term "middleware" is "a term of such ambiguity you wont find me using it outside of lawsuit-related discussions," he said.
Together with the terms "interoperability" and "platform software," the remedy proposals terminology is vague enough to make essentially all of Microsofts intellectual property available to competitors, he argued. The proposal does not offer guidelines about the boundaries of APIs, communications protocols and other technical information that would have to be disclosed and therefore would allow competitors to clone Windows, reducing its value to zero, he said.
When Kuney pointed out that Microsoft itself has on several occasions pursued the cloning of other software makers products, Gates said that cloning can be legitimate as long as it does not violate intellectual property rights.
When pressed by Kuney whether Microsoft was currently engaged in identifying the boundaries of the source code of its middleware in conjunction with the federal settlement proposal, Gates said that his company is not identifying such boundaries but the settlement proposal defines them clearly.
With a nod toward both the beleaguered technology sector of the economy and the overarching concerns about security since Sept. 11, Gates said that Microsofts .NET and Trustworthy Computing initiatives could spur new investment in the computing industry. "[W]e believe that .NET will bring about growth in economic productivity that will exceed the productivity benefits to date from the development and broad adoption of PC technology," he wrote in his direct testimony.
Gates warned that software would likely become less secure if the states proposal is implemented. "Microsoft could not assure the level of quality that it provides today if we were required to test Windows on the assumption that OEMs or others might run Windows in any of 1,000 or more variations, with entire blocks of interdependent code removed altogether," he said. ". . . Absent such testing, bugs will not be found, quality will inevitably decline and interoperability will suffer."
While one of the states main complaints is that rival software makers are disadvantaged in the marketplace because they cannot always guarantee that their products will interoperate with Microsofts, Gates spent much of his written testimony discussing the interoperability that does exist. "Software products written using Visual Studio.NET will interoperate with products that adhere to the relevant industry standards for XML Web Services whether or not those programs are running on any Microsoft operating system or other Microsoft platform software," he said.
The Microsoft chairman also cautioned that the states remedy plan would undermine the companys incentive to invest in new technologies. "With free access to Microsofts technology, competitors could build a clone of Windows (a product that mimics the key features of the operating system) and their own version of Office without bearing any significant part of the R&D expenses that Microsoft incurred to build the technology," he said.
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