Gates Confident of Microsoft's Survival

By David Lawsky

WASHINGTON (Reuters) - Microsoft Corp (NasdaqNM:MSFT - news) Chairman Bill Gates said on Tuesday he did not think a federal judge's ruling that Microsoft violated U.S. antitrust laws, would lead to a break-up of his software company.

Gates made the comment to BBC television's 24-hour news program after District Judge Thomas Penfield Jackson on Monday found that the Redmond, Washington-based firm broke the law by abusing its monopoly power in personal computer operating systems, doing ``violence to the competitive process.''

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``I don't think any kind of extreme remedy such as a breakup is at all consistent with what the court put forward,'' Gates told the BBC.

He said the matter was subject to an appeal and added he was confident Microsoft would prevail. ``Common sense stands on our side,'' he said.

U.S. government officials were equally confident they will prevail if the case goes to appeal and welcomed Jackson's ruling. ``Microsoft has been held accountable for its illegal conduct by a court of law,'' Attorney General Janet Reno told a news conference on Monday.

Jackson's most serious conclusion was that Microsoft violated Section 2 of the Sherman Antitrust Act by using its might against other companies, especially Netscape communications, its rival in the 1990s for control of the Internet browser market.

Netscape's market share withered under Microsoft's attack and it sold out to America Online (NYSE:AOL - news) during the early part of the trial.

``We've been vindicated,'' said Netscape's James Barksdale.

``This ruling is great for consumers and for people who use technology,'' Barksdale said. ``It will greatly improve America's technological leadership and the ability of small tech companies to do business.''

 

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The ruling ``confirms what almost everybody in the world knows -- Microsoft is a monopoly that has acted illegally,'' said Scott McNealy, chief executive officer of Sun Microsystems Inc. (NasdaqNM:SUNW - news), the leading maker of computer servers and a fierce competitor of Microsoft.

Sun, as it has in the past, called for the splitting of Microsoft into three separate companies.

Intel Corp. (NasdaqNM:INTC - news), the world's largest computer chip maker and a long-time partner of Microsoft in selling the key components of personal computers, said it was ``neutral on the dispute'' between Microsoft and the government and would add no comment.

In his 43-page ruling Jackson said ``Microsoft maintained its monopoly power by anti-competitive means and attempted to monopolize the Web browser market.''

While it is legal to gain a monopoly through skill or luck, it is illegal to use that power to perpetuate a monopoly by preventing competitors from springing up.

Representatives of the Justice Department and the 19 states that brought the case left open the possibility that they would seek the strongest remedy available for such a serious violation -- a break-up of the company. Alternatively they could seek changes in the company's business practices.

Jackson will determine the remedy during the next phase of the trial. The trial, which began in October 1998, will likely be completed in October of this year and appeals could last through 2002, if the case goes to the Supreme Court.

Microsoft became one of the world's wealthiest companies, making Gates the world's richest man, by manufacturing Windows, the software that runs more than 80 percent of the world's personal computers.