Gates Makes A Case For Microsoft

Microsoft founder Bill Gates took the witness stand Monday for the first time in his company's epic antitrust case to warn that sanctions sought by nine states would set the Windows operating system back a decade, harming consumers and the computer industry.

Maintaining a smile that contrasted with unflattering video clips played at the original trial, Gates kept his cool under hours of questions from a states' attorney who accused him of exaggerating any damage from the states' proposals.

Gates brings a star quality to a drab case that often leaves listeners yawning through testimony about computer codes and copyrights, but CBSNews.com Legal Analyst Andrew Cohen thinks that luster means little.

"This isn't a trial before a jury, remember, and the judge already has heard her share of testimony from experts in this industry," said Cohen.

His written testimony lashed out at a key demand of the nine states for a version of the Windows operating system that can be customized by computer makers and rival software designers.

Gates warned U.S. District Judge Colleen Kollar-Kotelly the 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 damaged the company's defense. The U.S. Justice Department, instead, showed portions of a videotaped pretrial interview in which Gates, slouched in a chair, appeared uncooperative and quibbled over the meaning of common words.

"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 courthouse on Monday accompanied by his wife Melinda.

Gates is Microsoft's seventh defense witness. His testimony is scheduled to resume Tuesday morning and could stretch into Wednesday.

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 four-year-old 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 holdout 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.

An attorney for the states Monday tried to convince Kollar-Kotelly that Gates had twisted the meaning of their proposed sanctions in order to make them look extreme.

In a pre-hearing interview, Gates said a requirement that Microsoft tell competitors about new Windows features could chill cooperation between Microsoft employees.

If an application engineer comes up with a new feature for Windows, "the minute it came into his brain, the guy's in criminal contempt," Gates was quoted as saying.

"You may think of it as an extreme example but I think it's covered here," Gates replied to states' attorney Steve Kuney.

Later, Kuney took issue with Gates for asserting that the disclosure requirement would allow competitors to "clone" the entire Windows operating system.

"It allows copying of virtually all of Windows," Gates insisted.

Armed with what seemed like an encyclopedic memory of the states' proposals, Gates battled politely with his questioners down to the tiniest points, at one point arguing over the word "interoperate."

After watching Gates on the stand, Howard University law professor Andrew Gavil said the Microsoft chairman had succeeded in presenting a "kinder and gentler Bill than was present in the first trial."

"But he's still coming in quibbling over technicalities and he's still avoiding answering some questions directly," Gavil said.

In his written testimony submitted to Kollar-Kotelly, 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 10 years and effectively freeze it there," said the man who co-founded Microsoft 27 years ago.

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.

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 writing new software. Consumers also would have a hard time learning how to use the different versions, Gates said.

The states' proposals would forbid Microsoft from even ordinary business practices, Gates said. They were also vague, self-contradictory and impossible to comply with them.

Gates also argued the penalties would allow competitors to create Windows clones. He named five companies that have assisted the states' lawsuit that he said could create the clones: AOL Time Warner, Sun, Gateway, Novell and Oracle.

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.