Gates Says Microsoft Unwilling to Accept Limits on Its Software

BELLEVUE, Wash. —  Microsoft Corp. “is willing to go a long way” to address the government’s concerns over its business practices, but can’t accept limitations on its ability to develop software, company Chairman Bill Gates told shareholders Wednesday.

Gates and other executives received a standing ovation from the crowd of about 2,700 shareholders at the software company’s annual meeting, less than a week after a federal judge declared the company a predatory monopoly.

The ruling Friday by U.S. District Judge Thomas Penfield Jackson in Washington, D.C., was a first step toward a punishment for what he described as the Redmond, Wash.-based company’s abusive efforts to stifle competition.

The judge particularly singled out Microsoft’s merging of its Internet Explorer Web browser with its Windows operating system for personal computers, along with contracts Microsoft struck or attempted to reach with others in the industry.

Gates and other Microsoft leaders spent much of the hourlong meeting discussing the company’s legal troubles, but shareholders also have had plenty of reasons to be happy. Profit rose 30% in the most recent quarter ending Sept. 30, and Microsoft’s stock price has surged about 60% over the last year. It fell $1.75 Wednesday to close at $87.13 on Nasdaq.

The government “should leave them alone,” said Bill Radecki, a shareholder from Bellevue. “If they want to look into something, look into the savings and loans, and let successful companies compete with each other.”

Gates said that while the company was disappointed at the judge’s findings, “I still believe that the American legal system, at the end of the day, will recognize that Microsoft’s innovations and behavior were completely fair and brought tremendous benefits to millions of consumers.”

Microsoft has welcomed any opportunity for a settlement, he said.

“That’s very important to us and we’ve put a lot of energy into that. Resolving the case would be good for Microsoft and it also would be good for consumers, the industry and the economy as a whole,” he said.

“We’re willing to go a long way to address the government’s concerns. But if we can’t add Internet support [to Windows], we can’t add any new features. If we can’t define the user experience of Windows so that all Windows machines operate the same way, then the Windows brand becomes absolutely meaningless.”

Judge Jackson has yet to rule on what penalties Microsoft should face, which at worst could include breaking up the company.

Microsoft could appeal, possibly tying up the case for years, or settle by agreeing to certain penalties in a bid to cut its losses and eliminate the distraction.