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S P E C I A L Target: Microsoft

Gates: Innovation, not greed, drives Internet

Gates defends his company before a Senate panel  

"Software industry success has not been driven by government regulation ..."
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"Innovation depends on freedom ..."
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Tech chiefs testify at Senate hearing

WASHINGTON (CNN) -- Defending Microsoft against its critics, chief executive Bill Gates said Tuesday his company's dominant position in the computer industry was due to fast-changing innovation in the technology field, not a desire to monopolize it.

"Innovation depends on freedom to move constantly from one frontier to the next," Gates told the Senate Judiciary Committee at a hearing on anticompetitive issues and technology.

The Justice Department has charged that Microsoft holds a monopoly in the market for personal computer operating systems and has accused the company of violating a 1995 consent decree that was aimed at increasing competition in the software industry.

Gates denied that Microsoft wants to use its Windows operating system to gain control of the Internet and extract a royalty for every transaction on the Net.

"Microsoft is in a court battle to test its right whether we can support these open Internet standards in its Windows system," he testified. "The beauty of the Internet is its openness. It cannot be controlled or dominated or cut off because it is simply a constantly changing series of linkages."

Gates has said Microsoft would lose its industry leadership position if the Justice Department prevailed in its lawsuit alleging the company was leveraging its dominance in operating system software to gain business in the market for Internet browsers.

Gates also drew an analogy to point up the enormity of the changes the computer industry has undergone in a relatively short span of time.

"Computer prices have decreased 10 million-fold since 1971. That's the equivalent of consumers getting a Boeing 747 for the price of a pizza today."

The Microsoft chief sat at a witness table with CEOs of other computer and software companies, including two bitter rivals -- James Barksdale of Netscape Communications and Scott McNealy, chief executive of Sun Microsystems.

They were to testify later.

Other testimony

"Most innovative industry ..."
Sen. Patrick Leahy, D-Vermont
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In an opening statement as the hearing began, Committee Chairman Orrin Hatch, R-Utah, warned that monopolistic power could stifle creativity in the technology field.

"Potential innovators," he said, could be "cut off before they even start" if a single firm "is able to exploit its market power to prevent competition and demonstrates an avid willingness to do so."

"I think all of our panelists will agree that our antitrust laws are designed to protect consumers, not competitors," Hatch said. "But I hope they will also agree that at least over the long run, consumers can be harmed when one firm is able to use its current power to prevent the successful establishment of competing new technologies that drive innovation forward."


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