Microsoft must remain in one piece to innovate: Gates

Microsoft must remain in one piece to innovate: Gates

SEATTLE (AP): Microsoft Corp. chairman Bill Gates said on
Tuesday that consumers would be hurt if his company were broken
up by the federal government because the synergy between the
various divisions and products are the key to his company's
success.

In an interview with The Associated Press, Gates said new
versions of the Windows operating system, the software that
powers the vast majority of the world's personal computers, would
be stunted if the Windows or Office software divisions were split
from the rest of the company.

"We wouldn't have Windows today if it hadn't been for the
Office group and the Windows group working together," Gates said,
speaking by telephone from a computer hardware developers'
conference in New Orleans. "It was the thinking that was done,
being in one company, going after a new user interface, taking a
huge risk, that we were able to create Windows."

Gates' comments came as the U.S. Justice Department briefed
White House officials on what remedies the government would seek
in its antitrust action against the company.

Gene Sperling, head of the president's National Economics
Council, said it was strictly an informational briefing and that
President Clinton was not expected to take part.

Sperling refused to say whether Clinton's advisers would make
recommendations on how Justice should proceed in the case. "We
are not going to answer hypothetical questions," he said.

Treasury Secretary Lawrence Summers said it was appropriate to
have a briefing on issues that have important economic
ramifications.

Attorneys for the Justice Department and the 19 states that
successfully sued Microsoft for antitrust violations are
considering breaking up the company as a way to curb
anticompetitive practices.

One reported option would be to split the company into two or
three parts, each selling separate products, such as the Windows
operating system or Internet content. Another alternative would
be for Microsoft to divest its dominant Office software suite,
which includes word processing (Word), database (Access),
presentation (PowerPoint) and spreadsheet (Excel) programs and
controls more than 90 percent of the market.

Microsoft has said it would fight any move to break up the 25-
year-old company. Gates said the next generation of Windows,
which will help power various consumer electronics devices as
well as personal computers, depends on the interaction between
his company's divisions.

"We need to have our research people, our Office people, our
Windows people all in one group taking breathtaking risks on this
breakthrough user interface that is delivered in this next phase
of the internet," Gates said.

He added that any breakup of his company would be "anti-
consumer," and that it would be "a very inappropriate thing, even
given the government's unfortunate theory that innovation should
be regulated."

The government's proposed remedies are due to be filed in
court by Friday. Microsoft is then due to respond by May 10, but
company officials have said they may ask for more time,
especially if the government's proposal includes a breakup plan.

News of a possible breakup contributed to a 16 percent plunge
in Microsoft shares on Monday. Investors also were disheartened
by a mediocre earnings report last Thursday and resulting stock
downgrades by analysts at SG Cowen Securities Corp. and the
Goldman Sachs Group.

Microsoft shares were up US$1.75, or 3 percent, at $68.37 1/2
in late trading on the Nasdaq Stock Market.

In response to the recent dive in Microsoft's share price, the
company told its employees on Tuesday that they would receive
additional stock options to help compensate for the market's
activity.