"They're Trying to Change the Rules"

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Gates: Certainly the worst thing that could happen is for people to be confused and think that we're not in a hypercompetitive environment. Windows is facing competition from Internet terminal devices, Linux and other things. One of the ironies of this decision is that it says there are these serious competitors coming along, and then it defines the market in such a way that those competitors don't even exist.

TIME: Yes, but that's what the court found: you're a monopoly.

Gates: It's a shame. It's a shame. [Laughing.] You're not supposed to have a court telling you that you have no competition when you have competition! They are trying to change the rules of the game in a way that would be very chilling, very damaging.

TIME: The court also found that you used your monopoly to harm a competitor.

Gates: The case involves one competitor, Netscape, that got the government to act on its behalf. The irony is that Netscape was bought for $10 billion by the dominant online provider [AOL]. Netscape shareholders did super well, consumers did super well, and what we did with Windows is what we should be doing, because people want Internet support in the operating system. It's a commonsense thing that has been lost in all the rhetoric.

TIME: But you also used your monopoly to bully others, such as Compaq and IBM.

Gates: That doesn't reflect the reality of what went on. IBM licensed Windows at a very, very competitive price. There were tons of choices for consumers.

TIME: But didn't you hold up licensing Windows to IBM at one point to pressure them?

Gates: Because they hadn't paid their royalties. If someone doesn't pay you, pay their subscription, wouldn't you hold it up? Of course! IBM hadn't paid us. Someone who hasn't paid you doesn't have the right to get something.

TIME: But the judge found that the back-payments dispute was just an excuse, that you were trying to bully IBM.

Gates: That's just patently false.

TIME: Why do you think the judge's finding was so brutal?

Gates: I don't understand why you're characterizing it that way.

TIME: You didn't think so?

Gates: The key thing the ruling says is that Microsoft, by creating better Internet support [i.e., embedding a browser into Windows], made it tougher for the guy [Netscape] who was competing with us. In fact, that's exactly what we're supposed to do on behalf of consumers!

TIME: So, in retrospect, wasn't there something wrong with your legal strategy?

Gates: This question is a little bit of a repeat of what was in front of the courts last year. There was the question in the case of Windows 95 whether it was O.K. for us to add Internet support into that. Judge Jackson entered a preliminary injunction, and the appeals court couldn't have been more black-and-white in rejecting everything he had done there. [The appeals judges] went out of the way to state the general principle that the courts won't be involved in software design.

TIME: What are the next innovations you are planning?