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By Peter Kaplan
WASHINGTON (Reuters) - A hopeful Microsoft Corp. Chairman Bill Gates entered federal court on Monday for the first time in his company's four-year landmark antitrust battle, looking to fend off stiff sanctions sought by nine states that have refused a settlement plan.
"I hope that my testimony helps the court to resolve the issues in this case. That would be best for consumers and the industry and that's why I'm here," said Gates as he entered the court house accompanied by his wife Melinda.
His written testimony lashed out at key demand of the states for a version of the Windows operating system that can be customized by computer makers and rival software designers, saying it would set back Windows ten years.
Gates warned U.S. District Judge Colleen Kollar-Kotelly the nine states' demands threatened Windows existence as a stable platform that allows a wide range of computer hardware and software to work together, and would deny Microsoft the incentive to make continual improvements.
"The (states) would undermine all three elements of Microsoft's success, causing great damage to Microsoft, other companies that build upon Microsoft's products, and the businesses and consumers that use PC software," the world's richest man said in his 155-page written submission.
The decision to put Gates on the witness stand marks a reversal from the original trial.
Some legal analysts have said Gates absence then damaged the company's defense. The U.S. Justice Department, instead, showed unflattering portions of a videotaped pretrial interview in which Gates, slouched in a chair, appeared uncooperative and quibbled over the meaning of common words.
During the first 40 minutes of questioning by states' attorneys on Monday, Gates sat up straight and was measured in his answers about Microsoft's place in the computer industry.
A federal appeals court in June upheld trial court findings that Microsoft illegally maintained its Windows monopoly in personal computer operating systems with tactics that included trying to crush Netscape's Internet browser.
The nine states still pursuing the case have refused to sign on to a proposed settlement of the case reached between Microsoft and the Justice Department in November.
The settlement is designed to give computer makers more freedom to feature rival software on the PCs they sell by, among other things, hiding some Windows add-on features.
But the hold-out states, led by California, say stronger measures are necessary to prevent Microsoft from abusing its Windows monopoly in the future, particularly against recent computer technologies like handheld devices and interactive television.
UNITING COMPUTING
Appearing as Microsoft's seventh witness, Gates credited Microsoft's Windows monopoly with having helped to unite a fragmented personal computer industry.
"By reducing Windows to some undefined 'core operating system' the (states) would turn back the clock on Windows development by about ten years and effectively freeze it there," said the man who co-founded Microsoft 27 years ago.
Gates said the company's new .NET strategy for Internet-based services would spark a new round of investment and business opportunities in the computer industry, contradicting some witnesses for the states who feared Microsoft would use its Windows monopoly to dominate this emerging technology.
The demands of the non-settling states are technically impossible, Gates said. And he dismissed the idea that Windows' could function properly with add-on features, known as "middleware," that were easily added and removed.
"There is no clear dividing line between where a particular block of "middleware" ends and the rest of the operating system begins," Gates said.
Gates said the multiple variations of Windows would take too long to test and software developers would have to spend much of their time reconciling all the different operating systems rather than buildings new software. Consumers also would have a hard time learning how to use the different variations of the operating system. he said.
The states' proposals would forbid Microsoft from even "ordinary business practices," Gates said. They were so broad, so vague and self-contradictory that it would be impossible for Microsoft to comply with them.
Requiring Microsoft to make Windows' features removable without causing any "degradation" to the operating system "would put Microsoft on the horns of a dilemma," Gates said. Critics would end up accusing the company of either removing too little or degrading the software.
Gates also warned that the state's proposals for Microsoft to disclose more of its computer code would give competitors free reign over Microsoft's innovations and leave the company with "little it could uniquely offer the marketplace," and no incentive to improve the operating system.
"Within a few years, as competing platforms raced ahead by adding new capabilities, Windows would become obsolete," Gates said. "In short, the practical effect of the (states' proposals) would be to cripple Microsoft as a technology company."
Judge Kollar-Kotelly is weighing both the proposed settlement and the demands of the nine states. The hearings on sanctions are expected to go through May.
The nine states still pursuing the case are California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, West Virginia, plus the District of Columbia.
