UPDATE: Microsoft to Appeal Antitrust Ruling

SAN FRANCISCO (04/03/2000) - As expected, Microsoft Corp. said it plans to appeal today's ruling from U.S. District Court Judge Thomas Penfield Jackson that the software giant violated federal and U.S. state antitrust laws.

"While we did everything we could to settle this case and will look for continued opportunities to resolve it, we believe we will have a strong case on appeal," Microsoft Chairman and Chief Software Architect Bill Gates said at a press conference after Jackson's ruling was issued this afternoon.

Microsoft will appeal its case to a three-judge panel of the Court of Appeals for the District of Columbia, which will examine each aspect of the trial's proceedings including the procedure, the facts presented and the conclusions of law issued today, Bill Neukom, Microsoft's executive vice president for law and corporate affairs, said at this afternoon's press conference.

The appeals process could take years, and won't begin until after remedies for Microsoft's conduct have been set, a process which in itself could take several months, Neukom said. Remedies that have been proposed by the U.S. states range from breaking the company up into separate parts to placing limits on how Microsoft can do business in future with partners and customers.

The same District of Columbia appeals court has looked kindly on Microsoft in the past, Gates noted. In June 1998, the court overturned a ruling by Jackson that had barred Microsoft from requiring PC makers licensing its Windows 95 operating system to also take Microsoft's Internet Explorer Web browser.

In a 2-1 decision, the appeals court concluded that integrating Internet Explorer with Windows 95 created a technologically beneficial result. The appeals court also said essentially that courts should hesitate before second guessing decisions made by high-technology companies, because courts don't have the technical expertise to make such decisions.

One legal expert today suggested that Microsoft may have let the trial go to a verdict, rather than settling the case, precisely because the appeals process is expected to take so long, and because remedies aren't likely to be applied until the trial comes to a final conclusion.

"Microsoft realizes there's a time element here that's valuable to them," said Dana Hayter, an antitrust attorney with Fenwick & West LLP in San Francisco.

"They may be in a better net position if the remedies are applied in two years than if they were applied now."

Reiterating arguments that the software maker made throughout the trial, Gates said Microsoft has been a great beneficiary to consumers, delivering technology that is innovative, easy to use and affordable.

"This ruling turns on its head the reality that consumers know -- that our software has helped make PCs more accessible and affordable to millions," Gates said. "We started with just a few simple ideas and the result has brought innovation, improved productivity, and enormous benefits to consumers."

During the course of today's press conference, Microsoft President and Chief Executive Officer Steve Ballmer seemed determined to try and portray the company as an unwitting giant that has been misunderstood by the world.

"For the past 25 years we've been thinking of ourselves as a small, aggressive company playing catch-up with industry giants, even though somewhere along the way we became a large company," Ballmer said. "Our intense focus in moving forward has at times been seen as threatening and our passion for being the best has been misinterpreted."

Gates said the company is "incredibly sensitive" about the way it is viewed by consumers, but expressed the hope that consumers will judge Microsoft by the wealth of Windows products available, and not by Jackson's ruling today.

Ballmer said he will meet directly with key Microsoft customers and partners in the coming weeks to assure them that the ruling "won't slow our efforts to provide them with the products and services they need to run their businesses."

Far from scaling back its efforts following today's ruling, Ballmer sounded a note of defiance and said Microsoft's software will permeate every aspect of computing from handheld computers to Web phones to smart kitchen appliances that connect to the Internet.

"The combined power of amazing software, the Internet and wireless technology will free our products from the desktop and servers and take them into literally every walk of life," Ballmer said.

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or at http://www.microsoft.com/.

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