There Will Be No Breakup, Says Ballmer

Microsoft Corp. Chief Executive Officer Steve Ballmer today slammed yesterday's decision by the US District Court to pursue the break-up of the company, branding it unreasonable, excessive, inconsistent and riddled with errors.

"There will be no breakup," he said. "It is premature to look at the cost of implementing the behavioral restrictions and the effects on the business," he said, and the company is "not making contingency plans. We are pursuing our appeal and our basic job of building new technology," he said.

Speaking of his enthusiasm for Microsoft's future he said, "Microsoft is moving forward with an appeal to the US District Court's decision."

The appeal is complicated because two lawsuits are involved, one by the federal government and one by state governments, he said. "The case brought by the states cannot directly go to the Supreme Court. The only place those cases can be consolidated is the appeals court", he said in a press conference here at the Microsoft Internet Experience, an event for the company's customers.

Ballmer is on a European tour, meeting customers and business partners in Norway yesterday, the Netherlands this morning, and the U.K. later this afternoon.

"The overwhelming response from the customers and partners that I have visited in Europe in the past days has been supportive," he said.

"The District Court's decision unfortunately does not reflect the reality as customers and partners the world over experience it. Microsoft has always worked to improve our products and make then widely available at low prices, certainly the mark of a company in a very competitive industry," Ballmer said.

Nor does the court's decision reflect the reality of the world's other competitive and creative industries, he said.

Since the lawsuit was filed, he said, over 200 million computers have been sold, and the competitive landscape has been reshaped by a number of factors, including the sharp rise in Internet commerce and a number of large mergers, such as that of AOL and Time Warner.

A new generation of powerful software, chips and wireless technology is making the power of the personal computer available on a whole range of devices, from domestic appliances upwards, he said.

"Breaking up Microsoft would almost certainly disrupt that, and would certainly mean higher prices, less choice and harder to use products for consumers," he said.

With or without the break-up of Microsoft, "small companies have flourished and would indeed continue to flourish," he said, but without an intact Microsoft, "the unique innovation which Microsoft has been able to bring to market will be denied to consumers world round."

Criticizing the process by which the decision had been arrived at, he said, "This decision is really inconsistent with the past decisions of both the U.S.

Appeals Court and the U.S. Supreme Court."

"Two years ago the U.S. Appeals Court overturned a preliminary injunction issued by the same district court, affirming purely demonstrated the benefits of integrating browsing into Windows 95. Yet in this current lawsuit the district court declined to follow the explicit guidance of the appellate court and based its decision on a number of factual errors," he said.

The court had not given Microsoft a fair hearing, he said.

"It even rejected our request for testimony regarding the likely disastrous consequences of the DoJ's extreme remedies, consequences that would negatively effect millions and millions of computer users. We believe that this ruling represents an unwarranted and unjustified intrusion into the marketplace which has been the engine of economic growth for the United States and the world economies. It ignores the fact that consumers benefit most when companies, all companies, have the freedom to develop new features and new technologies. This decision tells the creators of intellectual property that the government can come in and take what you have created and give it to others if it becomes too popular," Ballmer said.

"We will be appealing yesterday's decision and will also be seeking a stay of this decision so that the appeal can move forward without harm to consumers and to Microsoft that this unbelievable remedy would bring."

The company is confident its appeal will succeed for a number of reasons, said Ballmer.

"First, this decision is inconsistent with past decisions by the appeals court."

"Second, it is based on numerous factual and legal errors."

"Third, it is unreasonable and excessive in its cause to break up Microsoft and to regulate the high-tech industries. The district court adopted the government's plan to break up and regulate Microsoft without even a single day of testimony. Microsoft asked for a fair and reasonable opportunity to respond to the governments unprecedented plan, but we were denied that fundamental right."

Two years ago, he said, the appeals court overturned a decision made by the same district court against Microsoft for one very simple reason: if the government and the courts oversee the design of new products, then innovation is slow. "And that harms consumers," he said.

"In the event the government's proposal is adopted, I am quite sure people will see less innovation, consumers the world round will see higher prices for software and higher prices for personal computers," he said.

Asked whether a republican administration might be more pro-Microsoft and if that is the reason why Microsoft wants to go to the appeals court and not directly to the Supreme Court, he said, "I don't believe this is a question of politics and administration. This is a question for the courts. We are looking for the best opportunity we can get to talk with the appellate court."

"As we work to resolve these issues through the appellate process we'll continue to run our business based on the same core values that have made us successful: integrity, innovation and a focus on creating opportunity for customers and partners. We understand the unique industry leadership position that we have and the opportunities and responsibilities that brings. We accept those responsibilities," Ballmer said.

"Keeping our team together as one company is critical to our efforts to create technology that improves peoples lives."

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or http://www.microsoft.com/ The DOJ, in Washington, D.C., can be reached on the Internet at http://www.usdoj.gov/.

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