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Monday, October 19, 1998 Published at 21:30 GMT 22:30 UK

Business: The Company File

US Government targets Gates in Microsoft trial

Bill Gates' Microsoft versus the US government

The trial of the world's leading computer software firm, Microsoft, has started with the US Government launching a direct attack on its billionaire chairman Bill Gates.

The software giant stands charged with breaking the country's anti-trust laws after a long-running government investigation.

Gates's actions inconsistent

In its opening remarks, the prosecution pointed to inconsistencies between Mr Gates's video testiminony in a previous case with his private memos and email saying they revealed Microsoft's unfair market tactics.

BBC Internet Correspondent Chris Nuttall: Microsoft's business morality to be questioned
The world's richest man, Bill Gates, is not expected to be called as a witness but has said he is confident the court case will clear his company of wrong-doing.

The trial adjourned its first day early with opening remarks from Microsoft to come on Tuesday.

However, Microsoft has already described itself as a "vigorous but ... very fair competitor."

William Neukon, general counsel for Microsoft, told reporters outside the court house that the Seattle-based company was fighting for the principle "that every company ought to be able to innovate ... to improve its products in a way that meets the demands of its customers."

The federal Justice Department and 20 state governments accuse Microsoft of using its market dominance to try and squeeze out its competition in an attempt to unfairly create a monopoly.

They will argue in the federal court that the company's actions have narrowed choice and raised prices for consumers.

Browser wars

At the heart of the case will be the 'browser wars' which have seen Microsoft make its Internet Explorer browser an integral part of its Windows software, leaving the only other major browser provider - Netscape - out in the cold.

With Windows software enjoying a 90% share of the market for PC operating systems, integration makes it easy for Mirosoft to push its new browser to users.

[ image: Netscape, losing market share]
Netscape, losing market share
Microsoft has been able to grab half the browser market in very short time at the expense of Netscape's Communicator.

US anti-trust laws forbid the use of monopoly power to maintain market share or gain monopolies in other product areas.

Restricting innovation

Microsoft says the government is restricting it from bringing new and better products to the marketplace.

It says its defence will show evidence that the company had decided to integrate its browser into its Windows software long ago, before Netscape was on the market.

A company statement last week said: "Microsoft has not behaved like a monopolist, anti-trust laws do not exist to protect companies from competition, which is what the Department of Justice is trying to do for Netscape."

[ image: Microsoft says it has not broken US laws]
Microsoft says it has not broken US laws
The prosecution will allege that a Microsoft executive threatened to "cut off" Netscape from the market.

It alleges the executive said: "Everything they're selling we are going to give away for free."

Apple Computer and Sun Microsystems will also figure in the case as the government builds a case of widespread anti-competitive practices by Microsoft.

Stakes are high

The trial before Judge Thomas Penfield Jackson, is expected to last six to eight weeks. But with appeals possible all the way to the Supreme Court, the case could last for years.

Joel Klein, the Justice Department anti-trust chief who is heading the government team, said there were no plans to settle the case out of court.

But the Federal Government's attempts to apply anti-trust legislation to the computer industry have been fraught with difficulties.

After a 13 year investigation and trial, the government abandoned attempts to bring IBM to book in 1982.

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