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Gates ready for Senate hearing

Saying Windows 98 will ship in summer, the Microsoft CEO claims he welcomes the chance to speak about competition in the computer industry.

WASHINGTON--Speaking to reporters a day before he will address a key committee in Congress, Microsoft chairman Bill Gates said he welcomed the chance to speak about competition in the computer industry, a topic that has dogged his company in recent months.

Gates also said that Windows 98, the successor to the Windows 95 operating system, is slated to ship by midyear despite a flurry of investigations by the Justice Department and at least 11 state attorneys general. He offered his view that the agency's inquiry into the new OS, an item that has yet to hit the market, "really sounds a lot like product regulation."

"This is an amazing business that has thrived as a deregulated business," Gates said in a brief press conference here today. Referring to the Windows operating system, used in an estimated 90 percent of computers worldwide, Gates emphasized that much of the industry's health is due to "the open standards around the PC."

Gates made his remarks in anticipation of tomorrow's Senate Judiciary Committee hearing, called "Market Power and Structural Change in the Software Industry." In addition to Gates, top executives from some of the industry's other software titans also will attend, including Jim Barksdale of Netscape Communications, Scott McNealy of Sun Microsystems, Michael Dell of Dell Computer, and Doug Burgum of Great Plains Software.

In the past, Sen. Orrin Hatch (R-Utah), who chairs the Judiciary Committee, has been critical of Microsoft's business practices. Addressing a conference organized by the conservative Progress and Freedom Foundation, Hatch said last month that without close scrutiny of Microsoft practices or vigorous enforcement of existing antitrust law, new regulatory oversight might be necessary in order to protect the Internet.

At an earlier hearing on competition in the software industry held last November, Hatch decried a cross-promotional contract between Microsoft and EarthLink Network which forbade the Pasadena, California, Internet service provider from disclosing to some of its new subscribers the fact that they had the option of using browsers made by Microsoft's competitors. Hatch also criticized a quota provision in the contract that allowed Microsoft to terminate the deal if the number of EarthLink subscribers using Microsoft's Internet Explorer browser fell below a certain percentage.

Last week, EarthLink, Sprint, America Online, and MCI Communications all said the Justice Department had served them with demands for documents. The Wall Street Journal quoted one AOL executive as saying that the online service was held to a similar quota requirement.

As previously reported, Microsoft said late last Friday that it would amend the contracts. The software giant announced similar amendments to contracts with European ISPs a month earlier, as the European Commission was scrutinizing the contracts simultaneously with the Justice Department's probe into the ISP deals.

Gates said today that the changes were "based on a business review" rather than an attempt to stem off the investigations, and played down Hatch's past criticisms, which generally have focused on allegations that the Redmond, Washington, company is attempting to extend its monopoly in the operating system market to the Internet.

"The Internet lets you go wherever you want to go. That openness is a cornerstone of what we want to do," said Gates. "The goal that I have of the Internet and the goal that the senator has are very much in line."

Gates rejected the notion that Microsoft holds a monopoly on anything, saying that, in today's industry, the company's products are "replaced very quickly.

"The only question is whether we will be the one to do that," he said, adding that "the only thing we have over a period of time is our ingenuity."