Gates Decries ‘Witch Hunt’ Waged Against Microsoft Tells Shareholders That Company’s High-Tech Rivals Are Behind Accusations

Microsoft Corp. Chairman Bill Gates fired back Friday at his increasingly vocal critics, accusing them of a “witch hunt” aimed at hampering the software company’s ability to compete.

His remarks were the latest in a drive by Microsoft to blunt a rash of criticism provoked by the Justice Department’s charges last month that Microsoft abused its monopoly in PC operating software to shut out rivals. Consumer activist Ralph Nader joined the fray this week by sponsoring a conference where critics portrayed the company as an out-of-control monopoly.

Gates contended high-tech rivals were behind the accusations.

“We do have some competitors who have chosen to fund these things and promote these activities in order to handicap Microsoft in a competitive market,” Gates said at the company’s annual shareholders’ meeting.

Gates was retaliating deep inside friendly territory. Shareholders, many of whom have gotten rich off Microsoft stock, were more focused on record company profits than on the government probe. This past year alone, Microsoft’s stock has nearly doubled in value.

“When you get a witch hunt atmosphere like this, it’s nice not only to defend yourself but to have the owners, which you are, and also the customers … speaking up as well,” Gates told the roughly 1,500 shareholders at the Washington State Convention & Trade Center.

At the end of the meeting, they gave Gates and other company officers a standing ovation.

The Justice Department lawsuit accused Microsoft of violating a 1995 consent decree barring the company from anti-competitive practices. The government asked a federal court to impose a $1 million-a-day fine on Microsoft for allegedly requiring personal computer manufacturers who want to license Microsoft’s Windows 95 operating system to also use its Internet browser, known as Internet Explorer.

That has shut out software rivals such as Netscape, which sells the popular Navigator browser, the government charged.

Gates contended that Microsoft has played a crucial role in making the PC business “the model industry in the entire economy,” with high rates of innovation and openness.

Consumers can choose from a wide range of hardware and enjoy rapid improvements along with falling prices, Gates said. The company’s Windows operating software has been central to that, he said, by becoming an industry standard that Microsoft has chosen to sell at a low price.

Gates said Microsoft’s decision to incorporate browser technology into Windows predates the founding of its chief Internet rival, Netscape Communications, and is simply part of “the march of progress,” like adding speech recognition or linguistics capabilities to the operating system.

He noted that browsers such as Netscape’s Navigator and new software languages such as Java are seen as challengers to Microsoft’s domination of PC operating systems.

Gates said he’s confident Microsoft will prevail in its legal fight, but it doesn’t intend to hunker down in the meantime.