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Gates to testify at Senate hearing

The Microsoft CEO accepts an invitation to speak at a Senate Judiciary Committee hearing concerning competition in the computer industry.

Microsoft (MSFT) chairman Bill Gates will face off with at least one of his fiercest Internet rivals at a Senate Judiciary Committee hearing on competition in the computer industry, a congressional spokeswoman said today.

As reported yesterday, Sen. Orrin Hatch (R-Utah) invited Gates, along with Netscape Communications (NSCP) chief Jim Barksdale and Sun Microsystems (SUNW) CEO Scott McNealy, to testify at a March 3 hearing entitled "Market Power and Structural Change in the Software Industry."

"The committee is pleased that Mr. Gates has accepted the invitation to testify," said Jeanne Lopatto, spokeswoman for the judiciary committee. A Netscape spokeswoman said today that, in light of Gates's acceptance, Barksdale also will attend. A Sun spokeswoman said today that it was too early to know whether McNealy can make the meeting.

Forming the backdrop to the committee hearing, Microsoft is fighting an antitrust investigation

Sun CEO Scott McNealy on the monopolist's advantage
by the Justice Department over whether the software giant violated a 1995 consent decree that prohibits it from tying the sale of Windows to any other application. (See related coverage)

Moreover, Microsoft and its executives, including Gates, have bristled at the press about what they say are unfair interpretations of Microsoft and its business practices as bullying and arrogant while softening the heated rhetoric in its court dispute with regulators. Although Gates consistently has conveyed that the company is not violating antitrust laws, nevertheless he is sure to take advantage of the Hatch hearing to reiterate his message to a national audience without convoluted discussions about DLLs (dynamic link libraries) and other esoteric technical issues.

In a statement released yesterday, Hatch billed the Senate hearing as part of an ongoing examination of competition in the computer industry. Despite the open-ended description, however, debate over Microsoft's allegedly anticompetitive activities so far has been a major focus of the examination. With the promises by Gates and Barksdale to attend the hearing, the war of words is likely to continue.

At a judiciary committee hearing last November similar to the one that Gates has agreed to attend, a cross-promotional contract Microsoft signed with EarthLink Network came under fire because it prevented the Internet service provider from informing some subscribers that there were alternatives to Microsoft's Internet Explorer browser.

Hatch--whose state is home to Microsoft archrivals Novell and Caldera--has criticized the software giant in other forums as well. In comments to a Washington conference last week, Hatch said the government may need to form an "Internet commerce commission" to prevent Microsoft from building its own, proprietary Internet.

Republican Sen. Slade Gorton came to the defense of Microsoft, which employs the majority of its 22,000 or so employees in his home turf of Washington state. Gorton criticized what he called the "attacks" being leveled at Microsoft and suggested there was a lack of balance in the debate that took place at last November's hearing.

Hatch's invitation to Gates and his foes--as well as the remarks he made in announcing the hearing--may be an attempt to stem such criticism.

"I believe it will be very instructive to the committee to hear first-hand from the industry players who are themselves driving these developments," Hatch said in announcing the invitations yesterday. "This should provide an important step in our consideration of how antitrust policy could best serve consumers, the long-term health of the software industry, and the Internet generally."

Last November, consumer advocate Ralph Nader held a two-day conference to discuss the software giant's business practices. Gates declined to speak at that event, but McNealy and Netscape's general counsel, Roberta Katz, addressed attendees. Gates had characterized that meeting as a "witch hunt" during the company's annual shareholders meeting.

McNealy too has publicly voiced his opinion on antitrust matters. In a speech delivered last night at a Churchill Club dinner in Silicon Valley, he joked that he would be nothing less than thrilled if the Justice Department targeted his company for being monopolistic, as it has with Microsoft, arguing that "rational" consumers always purchase the products of a monopolist company because it commands such great market power.