Microsoft’s Gates Shuns the “M” Word

Microsoft CEO Bill Gates, before a U.S. Senate panel Tuesday, refused to concede that his company is a monopoly while competitors argued that the software giant crosses the line into anticompetitive behavior.

During the four-hour hearing before the Senate Judiciary Committee, Gates said the high-tech industry is healthy and competitive, based on lower prices for computing, job creation, and the number of new companies. The hearing, entitled “Market Power and Structural Change in the Software Industry,” largely focused on Microsoft’s grip on the computer industry.

Microsoft has faced an antitrust investigation brought by the Justice Department which is supported by dozens of state attorneys general.

During the hearing, Gates responded to senators’ grilling
alongside a panel of high-tech leaders that included Scott McNealy,
chairman and CEO of Sun Microsystems; Jim Barksdale, president and
CEO of Netscape Communications; Michael Dell, chairman and CEO of Dell Computer; Doug Burgum, president and CEO of Great Plains Software; and Stewart Alsop, venture partner with New Enterprise Associates.

McNealy said Microsoft is indeed a monopolist, and said only a
monopolist could study a competitor and destroy its business by giving
away products, promise favored placement on computer screens and menus, and purchase rather than develop promising technologies such as WebTV. He called for enforcement of existing antitrust laws.

“By owning the entry points to the Internet and electronic marketplace, Microsoft has the power today to exercise predatory and exclusionary control over the very means by which we access the Internet,” McNealy said. “This is like GM having the power to dictate what type of gasoline you put in your car or what interstate you can drive on, and even how you get on the interstate.”

In one exchange, Judiciary Chairman Orrin Hatch, R-Utah, asked
Gates about Microsoft’s license agreements with Internet service
providers for the company’s Internet Explorer browser. Gates and Barksdale debated the issue before the senators in a pointed back-and-forth at the panelists’ table.

Gates said, “Somebody who uses these ISPs has the ability in five
seconds to switch their browser to whatever they want. In order to avoid this being a distracting issue, we have agreed in reviewing our activities that we’re going to drop anything that people find objectionable in terms of how we do these ISP agreements.”

Barksdale said, “I would say that basically what Mr. Gates is saying is that is just not the way it works. The fact is that they worked very hard to get exclusive licenses. We never use that because we are subject much more to market forces than they are. And in a market-force environment, you go ask for an exclusive, and the guy is likely to tell you to take a walk. Microsoft, because of the other positions in their business, is able to force some people to do things that are not necessarily in their interest. If they weren’t a problem for Microsoft, they would not have changed 40 licenses the day before this hearing.”

Gates interrupted to say, “The licenses are not exclusive, and let’s be very clear about that.”

“They’re exclusionary,” Barksdale countered.

At this time, the Senate committee is not considering any particular measure to address the concerns raised by Microsoft’s competitors. However, there are likely to be additional hearings on the issue of competition in the digital age.

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