LAS VEGAS (05/10/2000) - Microsoft Corp. Chairman Bill Gates says the government's proposal to break up the company includes a number of deficiencies that ensure consumers get "screwed." However, the feisty software titan said that there are two core issues that would lead the company to agree to a settlement in the ongoing antitrust suit.
Yesterday, the eve of Microsoft's response to the government's proposal to break up the company, Gates told Network World in an exclusive interview that the government in no way can dictate the development of software as well as the marketplace has and that consumers will be the ultimate losers.
"What the government is trying to say is that the Office user interface and the Windows user interface divert from each other so that they should be incompatible. They don't want the Windows company to ever talk to the Office company, so when you call up to get support, if you have anything that falls between the boundaries of those two things they are going to guarantee that you are screwed," Gates says. " And there are dozens of things like that in it (the government's proposal)."
Microsoft later today will submit its formal response to the Department of Justice's plan to break the company into two entities. The proposal is expected to offer Windows installed on PCs without access to Internet Explorer, sharing of APIs (application programming interfaces) and limits on OEM (original equipment manufacturer) relationships.
Last week, Microsoft's lobbyists told Congressional lawmakers that the Justice Department's plan puts a ban on innovation, forces the two companies to develop incompatible products, robs consumers of Microsoft's research and innovation, and prohibits new products currently under development, according to The Washington Post.
Critics claim Microsoft is loosely interpreting the Justice Department proposal to bolster its own case.
The government's proposal, which was submitted April 28, called for the company to be split into an operating system company and an applications company, which would include Office and BackOffice. Among other things, the proposal prohibits the two companies from entering into any business agreements or sharing of technology, such as application programming interfaces.
When the proposal was released, Joel Klein, assistant attorney general with the antitrust division of the Justice Department, said that a separate company in control of Office could develop the application for other platforms to help break the strangle hold Microsoft has on the operating system business.
"Their expertise is not what customers need in this world of software," says Gates. "And so the regulatory approach they come up with obviously is not going to work as well as the marketplace has worked on these things."
He said Microsoft is disappointed the case hasn't been settled and he is still open to that possibility. But he said any settlement must align with two specific requirements - that Microsoft can still enhance Windows with Internet support and that the integrity of the Windows brand is maintained.
"Those are the only really core things, where we say, that it is not about Microsoft, that it is about what we brought to the industry that created the PC revolution. People knew what MS-DOS was, people know what the various versions of Windows are, and we drive that forward with new things including support of the Internet," Gates said.
Gates said being able to enhance Windows with Internet support is something he thinks Microsoft should not agree to block because that would not be good for consumers.
He said if there was an agreement that Microsoft's choice of designing software to support the Internet was a legal and a "great thing" for customers, "I'm sure we would have some kind of a settlement."
But he says the government disagrees with Microsoft's software design. "They don't agree that putting Internet APIs into Windows, or putting the browser into Windows, was a good thing."
Additionally, Gates said any settlement must protect the Windows trademark.
"The name Windows has some integrity, their (government's) whole intent is that somebody can rip out part of Windows, change the user interface, and do whatever they want and call it Windows. And we say, if people do those things that is OK, but it shouldn't be called Windows."
He said that consumers who buy a computer that says it runs Windows should be assured the operating system is what they have read about or used on another machine and that the compatibility testing that Microsoft does is available.
"The idea is that the Windows trademark ought to mean something. People ought to know about that," Gates said.