Gates returning to court to testify

'Here to share my story and answer questions'

Bill Gates, on arrival Monday at federal court in Washington: "Under the state proposal, Windows would no longer be uniform."

WASHINGTON (CNN) -- Microsoft's chairman, Bill Gates, is scheduled to return to the stand on Tuesday, continuing his testimony in the 4-year-old antitrust case against his company. His intent is to dispel what court observers call an evasive impression left by a videotaped deposition three years ago.

"I am here to share my story and answer questions about Microsoft and the PC industry," Gates told reporters outside the courthouse. "I hope that my testimony helps the court to resolve the issues in this case. That would be best for consumers and the industry, and that's why I am here."

Nine states and the District of Columbia are pursuing sanctions against the software giant after a federal judge concluded Microsoft illegally stifled competitors. The federal government and nine other states settled their cases against Microsoft in November.

The states want United States District Judge Colleen Kollar-Kotelly to force Microsoft to create a modular version of its flagship Windows software that could incorporate competitors' features. The states also want Microsoft to divulge blueprints for its Internet Explorer browser.

Gates told Kollar-Kotelly the proposed remedies put forward by the dissenting states would fragment the Windows market, leaving consumers with many different versions of Windows. With some code removed, he said, many programs would be broken.

"The applications would fail," he said. "Under the state proposal, Windows would no longer be uniform."

Intellectual propriety

Gates and wife Melinda met with reporters Monday after the Microsoft chairman's first day of testimony.

Gates said other aspects of the states' proposed remedies would cost Microsoft ownership of its intellectual property and might effectively put the company out of business.

The appearance offered Gates a chance to repair his reputation, which was badly tarnished by his video performance in the antitrust proceedings that began in 1998.

In 1999 proceedings, government lawyers used excerpts from his videotaped deposition to paint him as comically evasive.

For instance, Gates swore in his deposition that he had no interest in Netscape Communications or its Web browsing software during the spring of 1995, but the government presented a raft of internal Microsoft documents and e-mail written by Gates himself during the same period suggesting that in fact Gates was very concerned about Netscape.

Netscape is now a unit of AOL Time Warner, the parent company of CNN.

Gates was hoping to avoid a court declaration that Microsoft had illegally used its monopoly power in the market for desktop computer operating systems, but the court of appeals last year found the government had made its case.

Monday's action

Gates is to return Tuesday to the stand for more testimony in the nine states' and District of Columbia's pursuit of sanctions against Microsoft.

On cross-examination Monday, government lawyer Steven Kuney tried to paint Gates as a Chicken Little, exaggerating the effects of the proposed remedy.

Gates said that the way the remedy was worded, nothing was clearly defined and Microsoft would have to disclose virtually all of the software code for Windows. He argued that the proposal favored by the dissenting states would allow other companies to create "clones" of the Windows operating system, the source of Microsoft's clout. That would destroy Microsoft and force the company to lay off workers, he said.

Gates said that Microsoft's software is so intertwined that he couldn't point to any definable portions of code and label it "Internet Explorer" or "Windows Media Player" for instance.

Kuney pointed out that Microsoft was currently identifying the code for those programs as part of the proposed settlement with the Department of Justice and nine states. Gates said that the definitions are much clearer in the Justice Department settlement, making it easier to comply with.

The original judge in the case, U.S. District Judge Thomas Penfield Jackson, ordered Microsoft broken into two companies, but an appeals court reversed the breakup order and appointed Kollar-Kotelly to determine new punishment. The outcome of the current hearings will determine how severely Microsoft's operations will be restricted in the future.

The nine states still pursuing the case are California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia. Those states and the District of Columbia argued that the Justice Department's remedy wasn't strong enough.

The Justice Department plan banned Microsoft from entering into licensing agreements with PC makers that restrict them from working with other software developers and required Microsoft to provide other software makers access to elements of its Windows source code. But it imposed no restrictions on the features Microsoft is allowed to incorporate in its Windows operating system.