Gates Paints Dire Scenario

Testifies that states' proposed remedies would harm not only Microsoft but also 'PC ecosystem'.

Bill Gates may have been out of his element, but he remained calmly on message: Proposed remedies for his companys monopolistic behavior would mean the end of computing as we know it.

Microsoft Corp.s chairman and chief software architect took the witness stand in U.S. District Court here early last week to defend the Redmond, Wash., software maker against a group of states seeking expanded antitrust remedies. Appearing comfortable and more jovial than in previous videotaped testimony in the case, Gates told the court that if the nine states and the District of Columbia get their way, Microsoft could be forced to make code available to individuals forbidden by U.S. law from seeing it; license versions of Windows with serious, known security flaws; and stop issuing emergency security patches.

"Microsoft could not assure the level of quality that it provides today," Gates testified. "Bugs will not be found, quality will inevitably decline and interoperability will suffer."

Gates said the expanded remedies would harm not only his company but also the "PC ecosystem," consumers and even the national interest.

The dire scenario followed testimony a day earlier in which Gates said the "vague" remedies would force him to remove Windows from the market and lay off most of his employees. Part of the states proposal, which requires the licensing of old versions of Windows for five years after the release of a new version, would force Microsoft to continue distributing a version of the operating system even if it had "a serious security flaw" that cant be fixed with a software patch, Gates testified.

"By reducing Windows to some undefined core operating system, the [proposed remedies] would turn back the clock on Windows development by about 10 years and effectively freeze it there," Gates told the court.

During cross-examination, Steven Kuney, the attorney for the states, said that Gates was exaggerating and misinterpreting the remedy proposal and that many of the provisions involve existing Microsoft practices.

Kuney questioned Gates on fragmentation in the operating system market that already exists because of the numerous versions of Windows in use. He also quizzed him on the steps Microsoft takes to help developers create software that interoperates with all those versions. Pointing to an e-mail message 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 e-mail.

In response, Gates said he tries to strike a balance between promoting interoperability and creating unique features for Windows.

Microsoft attorney Dan Webb objected throughout the cross-examination, arguing that Kuney was attempting to re-litigate the liability trial, in which Microsoft was found to have behaved in an anti-competitive manner.

Microsoft is trying to persuade federal Judge Colleen Kollar-Kotelly 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 DOJ settlement proposal separately from the states remedy hearing.

"Microsoft [research and development] at best would go into a 10-year period of hibernation," Gates told the judge. He said that the result of proposed Windows licensing provisions would be a single operating system license for the whole world.