The Case For Microsoft

By Bill Gates

Two weeks ago, in response to the government's proposed regulatory scheme to break up Microsoft, I said that our company could not have created the Windows operating system if we had been prohibited from developing Microsoft Office as well. The symbiotic nature of software development may not be obvious outside the industry, but it is a phenomenon that has produced enormous consumer benefits. Windows and Office--working together and drawing on each other's features and innovations--have improved personal computing for millions.

The benefits of developing operating systems (OSs) and applications software under the same roof will increase as new intelligent devices emerge over the next few years. Take the tablet PC. Today most people carry a paper notebook to meetings and then transcribe their notes to a PC. The tablet PC that we are developing will streamline that process. A small, lightweight, portable device, it will enable you to take notes, dictate, annotate and then seamlessly transfer everything to a PC or any other device. It will make meetings less of a chore.

Under the government's plan, however, Microsoft's tablet PC simply won't happen, because our OS and applications developers will be unable to collaborate. Almost every aspect of the tablet PC's evolution--starting with the design of handwriting-recognition applications--requires real-time collaboration between OS and applications developers. Today that happens spontaneously, just as it does at IBM and Sun Microsystems. Real-time collaboration is the cornerstone of software development.

Just as chassis developments at Lincoln (owned by Ford) are shared with Ford's other car divisions, Microsoft takes the best thinking among its applications software developers and shares it with Windows developers (and vice versa). In doing so, Windows can incorporate innovations that can then be further leveraged by independent developers and even by our competitors.

Just because Ford's Taurus is an American best seller, should the company be barred from sharing its innovative work among its divisions? Should America Online, the No. 1 website, be stopped from sharing technologies developed by Netscape (which AOL owns) or with Time Warner Cable and CNN.com Should Sun, a leading player in high-end e-commerce servers, be stopped from sharing among its OS, applications and hardware?

If consumers' interests are paramount, the answer to each of these questions is clearly no.

Windows never would have gained popularity and reached critical mass without the benefits of innovative, user-friendly technologies developed by our Office team--technologies that often then became part of Windows and further drove innovation across the industry. For example, in 1991 software developers for Microsoft Office introduced a new feature known as a toolbar. We now take toolbars for granted. If you are reading this article online on a Windows PC, the toolbar is the series of icons at the foot of your screen that with one click allows you to switch from your browser to your word processor or your e-mail. Had those toolbars been created elsewhere, they no doubt would have been patented and never incorporated into Windows. Once added to Windows, toolbars became available for use in software programs created by Microsoft and thousands of independent companies. That is the great efficiency of innovation in platform software.

Had the proposed plan to dismantle Microsoft been implemented 10 years ago, such innovations might never have found their way to broad consumer availability. They never could have moved from the "applications" company to the "OS" company that the Justice Department envisions. Consumers and developers would have been harmed.

The DOJ plan reflects a profound hostility to Microsoft's efforts to make products that work well with one another. For example, the plan would effectively prohibit the new Windows and applications companies from engaging in technical discussions to develop new versions of Windows and Office. Such close cooperation would be impossible under the DOJ plan because it mandates that no technical information can be discussed that is not "simultaneously published" to the entire computer industry, which would be a practical impossibility.

The DOJ scheme permanently prohibits any further improvements to the Internet software in Windows. It would mean no improvements in browser technology and no support for new standards or technologies that would otherwise have helped protect your privacy or the safety of your children online.

The DOJ scheme also effectively imposes a ban of up to 10 years on the addition of any significant new end-user features to Windows. New features must be provided on an a la carte basis and priced separately to computer manufacturers. Provisions like these would kill innovation in the OS--and impair the livelihoods of the tens of thousands of independent software developers who depend on constant innovation in the OS to make their products more attractive. Updates to Windows and Office technologies that could, for example, protect against attacks such as the Love Bug virus would also be much harder for computer users to obtain.

The effect of this lawsuit will be to punish Microsoft no matter what harm this does to consumers, software developers, the industry that has driven America's remarkable growth--or, indeed, the entire economy. That is why Microsoft plans to appeal the district-court decision, which is at odds with a decision of the U.S. Court of Appeals and with antitrust law. We remain confident that the courts will reaffirm that every company, no matter how successful, should be encouraged to build better products for consumers.