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Gates lashes out at press

Microsoft's CEO says the company settled contempt charges partly because of public and press reaction when it offered a crippled version of Windows.

SAN JOSE, California--With the anger evident in his voice, CEO Bill Gates said today that Microsoft settled its contempt-of-court charges with the Justice Department partly because of the ridicule that Microsoft endured after offering a crippled version of Windows to satisfy a court order.

Pointing his finger squarely at the press, Gates said sharply: "I'd be glad to explain to you how disappointed I was at the way we were portrayed."

"That [contempt issue] was a sideshow," See special coverage: Microsoft case keeps growing the Microsoft chairman said in an interview with CNET's NEWS.COM before an address at San Jose State University. "The judge heard the government witness come in and say that he had no idea of any other way to comply with that order." Gates is referring to a federal judge's temporary injunction to unbundle Internet Explorer from the Windows operating system.

"[The judge] heard him say that; he heard [Microsoft expert witness] David Cole come in--who's the most sincere, straightforward person you will ever meet--and the way Cole has been cast in the press is really unbelievable," he added.

Asked if Microsoft's negative portrayal pressured the software giant to settle the contempt dispute, Gates said: "I think so. We did exactly what the order said to do; there was no freedom or flexibility. We went as far as to say what version of Windows that you could delete these files from and it will still run. It turns out it's the retail version that sells hundreds of thousands of copies a month. And what did people say about that?"

The executive made it plain that he disagreed with how Microsoft was portrayed as arrogant and indifferent to the court. He took great pains to defend Cole, the Microsoft vice president who took the stand to testify why the company should not be held in contempt for delivering a inoperable version of Windows 95 as the solution to the order issued by U.S. District Judge Thomas Penfield Jackson.

"We even created that as a third option," Gates noted. "The order doesn't ask for a third option, but we did it just so people would know. And how were we treated on that? Just brutally, brutally. Cole is an honest person, and he came up with a plan on how to comply with that order reading the plain English. There isn't any flexibility in there at all. It says, 'Remove the retail IE files.'

"Well, the command we have does confuse people, I will admit--the one that says [add/remove Internet Explorer] removes none of the IE functionality. None of it."

Gates has been adamant in his views on various issues of the case since the government took Microsoft to court in late October, alleging that the company's requirement that Windows 95 be shipped with the Internet Explorer browser violated terms of an antitrust settlement reached two years earlier. Microsoft contends that the 1995 consent decree specifically gives it the right to integrate products.

In December, Judge Jackson appointed a computer expert to study the case and make a recommendation by May 31. He ordered Microsoft to separate browsing software from all its Windows products in the meantime.

Shortly afterwards, the government was back in court, alleging that Microsoft's plan to sever IE from versions of Windows that were commercially useless or inoperable violated Jackson's preliminary injunction. It asked the judge to fine Microsoft $1 million for every day it remained in contempt of court.

The motion was contentiously argued in a two-day hearing in mid-January and in numerous court briefs. A closing hearing previously scheduled to take place Thursday was canceled after the settlement was reached.

Still, Gates characterized the case as one of innovation vs. government regulation. "This is a novel lawsuit, and we're sticking up for innovation. We're sticking up for the ability to put new features into our products. What you have here is, basically, the U.S. government saying our products are too capable...They're trying to get us not to support the Internet in Microsoft Windows. It's pretty straightforward. Yes, it's surprising, but it's pretty straightforward.

"So I'll tell my lawyers to defend our ability to do Windows 95, to do Windows NT, to do speech recognition. Observers of the legal process may or may not get confused about what goes on there, but I have asked them to defend that, because I think it's not only important for Microsoft--I think it's important for users of personal computers. "

Gates continued to hammer home his points later in the day at an informal discussion sponsored by the San Jose Tech Museum of Innovation.

"We've got a real problem with the principle here," the casually attired CEO told a half-filled hall. "The lawsuit is not about choice. Choice is not the issue and browser share is not the issue.

"For us, the big thing is simplifying the system," he continued. "That's procompetitive."

The executive also slammed competitors, noting that many of them seem to want "to use the government to cripple [Microsoft]" rather than compete on products.

At one point, Gates struck a familiar, slightly bewildered tone, unsure why the government would focus so intently on the software giant: "It is disappointing to see people back in Washington thinking that the PC industry is a bad thing."

Reporter Ben Heskett contributed to this report.