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Bill Gates Statement
Dec. 7, 1998

Thanks, everyone, for taking the time to come today. It’s exactly three years ago that I spoke at another event that a lot of press attended. That was Microsoft’s Internet Strategy Day. Think back to what was going on in our industry, just three years ago. Even though Microsoft had been working on Internet technology for several years at that point, a lot of people were writing our obituary, saying that we’d missed the Internet and could never catch up.

On this day in 1995, we showed our customers and business partners that the Internet would be at the core of everything we did at Microsoft. We said the Internet was the wave of the future, and described how we already had begun to build Internet technology into virtually all of our products, to benefit both consumers and software developers.

I guess someone thinks we did too well.

When you stop and think, consumers aren’t complaining about our Internet products -- our competitors are complaining. Consumers and software developers are seeing tremendous benefits from our commitment to the Internet.

It would have been the ultimate paradox if we hadn’t put browser support into the operating system. And customers would have been the losers if we hadn’t supported Internet standards fully in Windows.

It’s unfortunate that the government is listening to the alliance of IBM, Sun, AOL and Oracle and ignoring all the ways our efforts to help consumers have moved forward. You really have to ask yourself the question: who is the U.S. government representing -- a handful of competitors or the consumers?

Continuing to evolve the Internet technologies in Windows is great for consumers and great for thousands of software companies. Ironically, that’s why we find ourselves in court today. When we first included browsing in Windows -- way back with the very first release of Windows 95 to OEMs -- people didn’t use it much. People only started using our browser technologies when we won reviews. We kept improving our technologies, and many consumers decided our technology was better. That’s the way competition is supposed to work.

The software industry is one of the great engines of economic growth and job creation. Over the past eight years, the number of software jobs in this country has doubled. The number of software companies has doubled. Competition is incredibly fierce, and consumers are benefiting through better products and constant innovation.

The government’s case undermines the fundamental principle that has made our industry such an economic and consumer success story. Just like every other company, Microsoft must have the freedom to innovate and to improve our products. Like everyone else, we’re working hard to compete and understand the business dynamics of the Internet. The Internet has changed the rules of the game in our business and many others. Success today is no guarantee of success tomorrow. New technologies, new business models and alliances are forming every day.

When you look at the AOL-Netscape deal, it’s hard to believe the government can still push their case with a straight face. The AOL deal shows the high tech market changing more quickly than any other industry on earth. Three of our biggest competitors have banded together to compete against Microsoft, and yet amazingly, the government is still trying to slow Microsoft down.

As we saw in the IBM case in the ‘70s and ‘80s, advances in the technology marketplace move a lot faster than government regulation and anti-trust lawsuits.

A key point which is central to this case is whether browser technology should be free. This is one of the great ironies of this case -- the government is trying to increase the price consumers pay for browsing.

We recognized a long time ago -- before Netscape ever shipped its first browser -- that browsing is a natural part of an operating system. In fact, I shared that view with Jim Clark (of Netscape). By integrating, customers get a single, simple interface to access all types of information. And it makes it easy for software developers to tap the power of the Internet in their own applications.

Just like the many other features we add to Windows, there is no other extra charge for our browser technology. This makes business sense because it makes Windows more appealing and generates advertising income.

It’s the same reason you can get a cell phone for free. It’s the same reason why the TV networks don’t charge you to watch their programs. The cell phones make money selling telephone access, and the TV networks selling advertising.

And the free browser business is valuable because it generates so much advertising revenue and important business opportunities in other areas like servers.

Why did AOL pay $4 billion for Netscape, even though Netscape’s browser is free? What does this say about the government’s claim that Netscape can’t distribute its browser? AOL knows there is incredible value in the advertising revenues that can be derived from Netscape’s browser business.

So contrary to what the government lawyers say, I’d say AOL paying billions of dollars for Netscape’s browser business shows that the marketplace is working just fine, and there is no need for the government to try to raise browser prices.

I am proud of the work our people have done to bring the benefits of the Internet to consumers, and I am confident that the courts ultimately will uphold the importance of the freedom to innovate.

Thank you.