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Microsoft speaks out on lawsuits

The lawsuits filed against Microsoft will hurt consumers, the software industry, and the U.S. economy, Bill Gates and other company executives said.

The antitrust lawsuits filed against Microsoft today will hurt consumers, the software industry, and the U.S. economy, chief executive Bill Gates and other company executives said today.

Gates said the lawsuits filed against Microsoft would be "costly to taxpayers." The software giant's chief financial officer, Greg Maffei, said he did not expect the state and federal suits to have any "material impact on its business." Company executives said they did not expect them to hinder day-to-day operations.

"How ironic it is that in the United States--where freedom and innovation are core values--these regulators are trying to punish an American company that has worked hard and successfully to deliver on these values," Gates said. "The government's action is a step backward for America."

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Microsoft sued In a briefing at the company's Redmond headquarters, Gates said the Justice Department and state attorneys general were being unreasonable in their demands related to the integration of products on its Windows 98 operating system.

"It's like requiring Coca-Cola to include three cans of Pepsi in every six-pack," he said of one request to provide alternative browsers, not just its own, in Microsoft's operating system.

Gates was joined today by William Neukom, Microsoft's senior vice president for law and corporate affairs, among other executives. Gates and Neukom both had been leading the ten days of negotiations meant to head off today's lawsuit.

Neukom charged that federal and state regulators want Microsoft to "deconstruct our Windows product," and "there is no sensible basis in law or policy for demands like that." He called the case a repeat of the one filed against the software giant last October, which now is on appeal.

Neukom added that original equipment manufacturers can place the Netscape icon anywhere they want on "about 80 percent of the Windows' desktops. There is complete flexibility for the OEM and, most important, for the end user, to configure this desktop."

Both Gates and Neukom repeatedly referred to a sentence in last week's order by the U.S. Court of Appeals that stayed U.S. District Judge's Thomas Penfield Jackson's preliminary injunction as it applies to Windows 98. In it, a three-judge panel wrote: "Any interpretation of [the consent decree] which barred the distribution of Windows 98 under the conditions evidently contemplated by Microsoft would 'put judges and juries in the unwelcome position of designing computers.'"

Following are the regulators' demands and complaints, and Microsoft's responses to them:

•  Including Netscape's browser in Windows. Microsoft called this a "free ride" for Netscape and said it would not add a product to Windows that would "marginalize" the operating system. It does not believe the demand is reasonable or supported by law.

• Allegedly limiting choice for consumers when PC users turn on their machines that run on Windows 98. Consumers who buy a new PC and see the Windows desktop on the first screen are assured of the product's "quality, simplicity, and reliability," Microsoft argued. "Once that first 'boot up' takes place, they can customize the desktop in any way they like."

• Supposedly exclusive agreements with Internet service and content providers. Microsoft calls the cross-promotional agreements "legal and commonplace."

Gates called allegations that Microsoft asked Netscape not to build browsers for the Windows platform "an outrageous lie."

"Computer users today have more choices than ever before," he said. "Interfering with the freedom to innovate through lawsuits like these will limit--not expand--choice."