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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Dwight E. Karlsen who wrote (7516)	5/18/1998 6:38:00 PM
From: C. Niebucc	Respond to of 74651

Bill Gates Discusses Antitrust Suit with FORTUNE; Says 'it may be better to get judiciary involved' 05/18/98 PR Newswire (Copyright (c) 1998, PR Newswire) PALO ALTO, Calif., May 18 /PRNewswire/ -- In an interview in the June 8 issue of FORTUNE, Bill Gates expresses his frustration with the antitrust negotiation process, which has now broken down, and tells senior editor Brent Schlender "it may be better to get the judiciary involved, because when you're in a lawsuit people have to tell the truth, and you get to cross-examine people. Whereas when you're in the prefiling stage, any sort of rumor or allegation can be newsworthy no matter how loose it is in terms of facts or law. It's a shame." Gates also levels criticism at Sun Microsystems CEO Scott McNealy and reveals the people he talks to about the situation: Warren Buffett, his dad, and his lawyers. Gates's interview with Schlender took place immediately prior to Microsoft making concessions to the government last week to delay shipment of Windows 98. Gates's frustration with the situation is clear in the FORTUNE interview, although as Schlender points out in the introduction, Gates "has had to curb his well-documented instinct to strike back with blunt candor and sarcasm." Excerpts from FORTUNE's Q&A with Bill Gates follow: Why do you think things have snowballed this way? GATES: "I can't really explain it. Certainly there was no expectation on our part that first we'd get the FTC, and then the Department of Justice consent decree, and then the judges' rulings that we got lambasted on. And it's not expected when Netscape and Sun hire Bob Dole and Robert Bork and they do all these press conferences, and then you get Nader in on the thing, and Orrin Hatch. The state attorneys general add another level of complexity. It's an incredible phenomenon. And now Sun has filed a lawsuit arguing that we fooled them into signing this agreement on Java without telling them we were going to enhance Java to make it work better with Windows. "Yet none of the dialogue goes back to 'Windows has improved over the years and has done some very good things for customers. Is there something wrong with that? Is that a bad thing?' Windows 98 is a good product. You can't just rip the browser out of the thing. We're not just making that up." Do you think there's anything Microsoft did to bring this on yourself? GATES: "We were successful. Seriously." Too successful? GATES: "No. We were successful in a part of the economy that is very interesting and very important. Given out level of success, you're going to have some government scrutiny. That's fine. But when you look at how they've promoted this, how they've kept it open... at the end of the day I'm disappointed that they can't see what they've done, what kind of company we are, and actually encourage us to continue on the path we're on." Are there historical parallels that you've read about that give you insight into your situation? GATES: "I can't think of any parallel where product improvement came under attack. When IBM improved its disk drives or software, when Kodak came out with a new camera with film that wasn't compatible with existing cameras, all those cases were upheld. There's not a single case that says you can't do innovative products if you're a successful company... You know, it's weird. When does anybody step back and think about the fairness of all this? Scott McNealy gets up and says Microsoft is like Russia and Sun's like the United States, and we're just bad, bad people. You'd think that after Scott comes out with that somebody would say to him 'Come on, Scott, this is way, way overboard.' I mean, I sat near him in the Senate hearings when he said that there will never be any competition for Windows, and that we can just sit on it without improving it. Well, that's just an outrageous statement that goes beyond the normal rules of straightforwardness." Well, if you're not as evil as Scott says, what do you think people are missing about what Microsoft is up to? GATES: "At the end of the day, it's the success of Windows, it's the success of the Office applications products, that says it all. Why did Excel beat Lotus 1-2-3? Is it because Jim Manzi wasn't doing his job? No, I don't think so. Why did Scott's prediction that his workstations would wipe out PCs fail to come true? Is it because Scott McNealy isn't tough enough? Not at all. This is about a vision of computing that we have for years and that we pursue on a long-term basis... As an innovative company, we're allowed to add features to our product. The courts always say 'We won't interfere in product design.' Those are the rules. The rules have been upheld many, many times, whenever there is a clear consumer benefit. Features can only be banned when you specifically do something solely to hurt a competitor; that's not at all done to help users of the product. I was very clear with Joel Klein and everyone else that our ability to innovate was not subject to negotiation." Is there anyone you can talk to about all this? GATES: "I talk to Warren Buffett, I talk to my dad, I talk to my lawyers."