Gates pleased with court ruling

Microsoft chairman and chief software architect Bill Gates, hailing a US appeals court ruling to overturn a lower court order to break the company in two, said in a press conference Thursday that Microsoft will continue with its aggressive new initiatives in the computer and Internet markets and will work to conclude its current legal battle "without the need for continued litigation."

"We're still reviewing the details of the ruling but it's clear that it reverses and significantly narrows the District Court decision," Gates said. "It lifts the cloud of break-up over the company... We do not believe a break-up will take place."

Gates focused on the company's plans for continued innovation and the release of several new products this year. "There's nothing in today's rulings that changed our plans for future products including Windows XP," he said.

During the past three years of legal proceedings, the company built its Windows 2000 operating system, launched its .Net strategy, and released Office XP, the newest version of its desktop software suite. It is planning to launch its newest operating system, Windows XP, on 25 October followed by its video game console XBox and the Tablet PC.

"That's completely on track," Gates said. "Microsoft as an entity is moving ahead."

The US Appeals Court for the District of Columbia issued a ruling Thursday overturning Judge Thomas Penfield Jackson's order that Microsoft be split into two, but said that Microsoft illegally maintained its Windows monopoly.

"Of the three antitrust violations originally identified by the District Court, one is no longer viable: attempted monopolization of the browser market," the Appeals Court wrote in its 125-page ruling. "One will be remanded for liability proceedings under a different legal standard: unlawful tying," the document continued.

"Only liability for the monopoly-maintenance violation has been affirmed - and even that we have revised."

Those liability issues directly link to the Appeals Court's decision to toss out the remedies. The appeals court further cited judicial misconduct as a reason to seek a reconsideration of remedies.

The panel of seven appellate judges generally agreed with the lower court ruling that Microsoft used its monopoly power to engage in anticompetitive behaviour. However, the court sharply criticised Jackson for not holding an evidentiary hearing in the case and for his actions in the media. The court wrote in its ruling "that the actions of the trial judge seriously tainted the proceedings" by discussing the case with the press outside of the courtroom, "and called into question the integrity of the judicial process."

Microsoft officials did not comment on the court's rulings on Jackson.

The Appeals Court did agree that Microsoft wielded its monopoly power illegally, and ordered that the case be sent back to the lower court to determine once again what remedies should be applied to curb Microsoft's behaviour. It isn't illegal to be a monopoly; but it's illegal to use monopoly power in an anticompetitive way. The Appeals Court also ordered that the case be heard by a different judge to decide what penalty Microsoft will face.

David Smith, an analyst for Gartner, said the appeals court ruling was a "solid double, not a home run for either side." But it did bring with it an important confirmation: That Microsoft is a monopoly. "That's something they really don't want to have on their record," he said.

Microsoft and the Department of Justice can appeal all or parts of the appeals court verdict with the Supreme Court. A separate case regarding unlawful tying could also be pursued, though Microsoft argued it would be difficult for the prosecution to make a case for that. The company said it would also consider settling out of court.

"We will be reviewing the ruling and determining what actions we need to take," Gates said.

The company's chairman did acknowledge that Microsoft has become a large and influential player in the technology industry. "We take that responsibility very seriously," he said.

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Matt Berger

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