The Bill Gates DOJ Email
February 12, 1998
On February 2, 1998, Bill Gates issued a corporate wide email to all employees of Microsoft directly addressing the recent U.S. Department of Justice court actions.
In this internal email, Gates passionately explains the Microsoft position regarding the DOJ case. The email has received wide distribution over the internet, and recently Microsoft has released a copy of it to their major customers.
Below is the full version of Gates' DOJ email.
Memo from Bill Gates
Microsoft Photo
From: Bill Gates
Sent: Monday, February 02, 1998 8:20 AM
To: MS Corporate Employees; MS Domestic Employees Only;
MS Intl Employees Only
Subject: Challenges and Opportunities
We have dealt with many challenges in Microsoft's short history, but few as important as the issues we're facing in Washington, D.C., today. I used to think that all we had to do to be successful was to listen to our customers, work closely with our business partners and write great software. It worked for more than 20 years. I now realize we also need to tell the story of how Microsoft and our partners have built a highly competitive PC industry that is empowering individuals with rapidly improving products and contributing over $100 billion a year to the American economy.
This is especially important in light of recent efforts in Washington, D.C., and elsewhere by some of our competitors and detractors to question Microsoft's integrity, create uncertainty among our customers and undermine the positive role we have played in the economy and in bringing useful technology to millions of consumers. Part of their effort revolves around getting the government involved in limiting Microsoft's ability to compete.
My goal has always been to create software that improves the quality of people's lives, so it's disappointing for me to see the government now trying to put controls on an American success story. People have asked me why Microsoft is taking such a strong stand in our case with the Justice Department over our right to integrate Internet technology into the Windows operating system. My answer is that a vital principle is at stake: whether Microsoft and thousands of other American software companies will continue to be free to create software that benefits consumers. I have immense respect for the authority of the government and the role of the American judicial system, and would like nothing better than to put these disagreements with the government behind us. That's why we recently settled the issue of our compliance with a preliminary injunction.
But a much bigger issue remains. The Justice Department wants us to remove Internet functionality from the Windows 95 operating system. Despite what the Justice Department says, the issue here is not about choice. Computer manufacturers have always been free to install Netscape's browser, and many do. Customers also are free to use whichever browser they wish, and they are very sophisticated about making that choice. Even though early versions of Microsoft Internet Explorer were included with the first Windows 95, it didn't gain significant popularity until we came out with version 3, which won most of the reviews and was chosen by customers for its capabilities. Recent surveys show this as well. Only 20 percent of computer users are currently running the browser that came as part of their operating system.
The rest have gotten theirs from the Web, Internet service providers or elsewhere. So, clearly, customers have choice when it comes to browsers.
Removing the Internet functions from Windows is not simple, as some might think. These features are integrated into the operating system and are used by applications and directly by users. Removing them breaks the applications, degrades other aspects of the operating system and leaves consumers worse off. It appears that the Justice Department believes that Microsoft should never integrate into Windows anything new that was once sold separately. Under these ground rules, we wouldn't have been able to create Windows 95 or Windows NT. We'd be stuck offering operating systems that solved the problems of yesterday, rather than the challenges of today or tomorrow.
Enhancing the Operating System
For more than 17 years, we have consistently built new functionality into our operating systems, just as our competitors have enhanced theirs. This has included improvements like the graphical user interface, memory management, type fonts, disk compression and networking. Every one of these was available first as a separate offering, but eventually was integrated to meet the needs of customers - who want the simplicity of having essential features all work together seamlessly inside the operating system. Operating system advances are also important to thousands of other software companies because their applications build on these new capabilities.
Supporting Internet browsing in Windows is a logical, incremental step in the evolution of the operating system. It's not just Microsoft that sees the benefit of this. IBM and Sun also now offer browsing as a standard feature of their operating systems. It gives users a single, simple way of accessing and browsing information no matter where it comes from - a hard drive, a network or the Internet. In the future, browser technology will replace the "help" system and even be used to display forms and other information on your PC.
Our rivals understand that Windows must evolve to remain competitive, which is why some of them have tried to get the government to intervene and prevent us from continuing to add new features to Windows. For the government to choose sides in a highly competitive industry is unfair and unnecessary. Antitrust laws were written to protect consumers, not competitors. If Microsoft is to fail, let it be because we failed to innovate, not because our innovations were outlawed.
A Healthy, Growing Industry
The computer software industry today does not need this type of government intervention. It is one of the healthiest, most competitive and innovative segments of the American economy, growing at two-and-a-half times the rate of the U.S. economy overall. It employs over 600,000 Americans, more than double what it did just eight years ago. You can buy a personal computer for under $1,000, while performance and new features have leapt forward.
While Microsoft has played a very important role in this, we account for less than 5 percent of total software industry revenues and must face new competitors every day. Since 1990, the number of software companies in the United States has doubled to more than 44,000, and investment in new technology companies is at an all-time high. Sun promotes Java as an operating system that could eliminate Windows. IBM has more than 10 times as many employees as Microsoft, and its influence with large customers is immense. Our products must be much better than theirs in order to succeed with large accounts. Hardly a week goes by without another announcement that IBM, Oracle, Sun and Netscape are teaming up in some way to compete with Microsoft. If we didn't have so many competitors, there wouldn't be nearly so much noise about a lack of competition!
Microsoft Windows played a significant part in fostering this creativity and competition by providing an open platform on which tens of thousands of companies can freely innovate. The great thing about Windows is that it hides the differences between all the different hardware and enables the software to work together. This has allowed customers to make hardware and software choices knowing that whatever they acquire will work together and that it will be available at a very competitive price.
People sometimes forget that Microsoft didn't inherit Windows. We bet the company on it and invested billions of dollars creating and improving Windows, testing compatibility and working closely with hardware and software partners. It has become so popular because it offers consumers a winning combination of high performance and low price.
A Fiercely Competitive Environment
Windows is one of the most powerful and least expensive commercial operating systems ever developed. This is because of the incredibly innovative and fiercely competitive business environment in which we compete with operating systems made by Apple, IBM, Sun, Novell and others. That's why we've continually added new features and functionality and kept prices low. It's also why we have more than tripled our research-and-development expenditures on Windows in the last six years. If we don't continue to advance Windows, some other company will quickly replace us. Future operating systems won't be competitive if they don't include things like speech recognition, visual recognition and the ability to learn and anticipate what a specific person wants. Government intervention will prevent us from adding these kinds of features. This would hurt not only Microsoft, but consumers as well.
In terms of innovation, competition and opportunity, the Internet holds more promise than anything else that has come along in the industry in the last two decades. Building Internet support into Windows promotes the efficiency and competition that the Internet provides. Microsoft understands the need, as well as anyone, to preserve a vital and open Internet. That's why we spend considerable money and effort helping advance Internet standards that ensure freedom to exchange information and transact business in any way that anybody wishes. That's the beauty of the Internet.
Last October, the Justice Department filed a petition seeking to hold Microsoft in contempt of a 1995 consent decree for integrating Internet functionality into Windows. When we signed the consent decree with the Justice Department, it recognized Microsoft's right to develop integrated software products. I personally asked for that to be made explicit because many new operating system functions are originally developed and shipped separately from the operating system. Now, however, the government is trying to block exactly these kinds of improvements.
At the request of the Justice Department, a federal judge ordered Microsoft to offer computer manufacturers a version of Windows 95 with the retail Internet Explorer files removed. We had told the Justice Department and the Court several times in advance that this would result in an operating system that wouldn't work. When the Justice Department eventually realized this, they then asked the judge to require us to "hide" the Internet Explorer capability rather than delete it. Although we think it's unfair and anti-consumer to deliberately make a product inferior, we decided to settle the matter temporarily by offering to let manufacturers hide Internet Explorer should they wish to. In the meantime, we have appealed the District Court's ruling to the Court of Appeals, which has agreed to hear it on an expedited basis. We also are working hard to resolve related issues in Congress, several states and overseas.
It's important to understand that nothing in the temporary agreement with the Justice Department changes Microsoft's current Windows technology, including its integration of Web-browsing features. Computer manufacturers can still choose to install the fully featured version of Windows, and we expect that most will continue to do so. We also expect that most computer makers will install Windows 98, with full Internet functionality, when it becomes available later this year.
Microsoft Principles
The popularity of Microsoft software reflects our commitment to four core business principles: We listen to customers; we believe in technologies that improve the quality of people's lives; we partner with other companies that share our vision of a powerful, affordable PC; and we work hard to create innovative products.
Our commitment to these principles, combined with the freedoms and opportunities of the American enterprise system, has allowed Microsoft to succeed. I feel incredibly fortunate to have been a part of it all, and I'm excited about the great things we are working on today at Microsoft: bringing the Internet into people's lives, delivering the best productivity applications, offering tools that help companies write great software, and delivering world-class operating systems for everything from handheld computers to huge computer systems for the world's largest companies.
Microsoft's vision is to create software that will
make the personal computer a powerful and easy-to-use tool in
every home and on every desk. With your continued support, and
the help of our business partners and customers, we will make
this a reality.
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