Microsoft Says to Appeal Ruling, Confident of Victory
Company Will Maintain Its Focus on Consumers, Innovation and Values

REDMOND, Wash. -- April 3, 2000 - Microsoft Corp. said that it plans to appeal today's ruling by U.S. District Court Judge Thomas Penfield Jackson, and that the company will continue to focus on creating the next generation of innovative software that benefits consumers, the high-technology industry and the American economy.

Today's ruling was not unexpected, given the District Court's previous rulings. Microsoft will request an expedited review by the U.S. Court of Appeals, following a remedies phase and final decree. The appeal will stress a 1998 U.S. Court of Appeals decision that affirmed Microsoft's right to support the Internet in the Windows operating system.

"As we look ahead to the appeals process, innovation will continue to be the No. 1 priority at Microsoft," said Microsoft Chairman Bill Gates. "While we did everything we could to settle this case, and will continue to look for new opportunities to resolve it without further litigation, we believe we have a strong case on appeal. The Appeals Court already has affirmed Microsoft's right to build Internet capabilities into the Windows operating system to benefit consumers."

Gates added: "Microsoft's past success has been built on innovation and creativity, and our future success depends on our ability to keep innovating in the fastest-moving marketplace on earth."

In response to today's ruling, Microsoft President and CEO Steve Ballmer said: "As Microsoft continues to innovate, we recognize that industry leadership brings both opportunities and responsibilities. Our mission and success has come from the incredible benefits that Microsoft and Windows creates for consumers and for thousands of other companies, while operating our company based on a set of values that include integrity, innovation, customer-focus, partnership with a wide range of companies, an entrepreneurial culture, encouraging and supporting our people, promoting a diverse workplace, and giving back to the community."

"We believe we have strong grounds for an appeal based on this ruling," said Bill Neukom, executive vice president for law and corporate affairs, Microsoft. "As the Appeals Court already has ruled, it is a mistake for government regulators or the courts to try to design high-technology products. Government regulation of software product design would surely slow innovation and harm consumers."

Added Neukom: "It's important for people to understand that today's court ruling is just one step in a legal process that could last several years. We worked extremely hard to resolve this case in mediation, but the divisions between the DOJ and the States, and their extreme demands, made settlement impossible."

In his decision, Judge Jackson concluded that Microsoft's marketing arrangements with other companies were lawful. "Microsoft's multiple agreements with distributors did not ultimately deprive Netscape of the ability to have access to every PC user worldwide to offer an opportunity to install Navigator," the judge's ruling said. "Netscape was able to distribute 160 million copies of Navigator, contributing to an increase in its installed base from 15 million in 1996 to 33 million in December 1998."

Gates underscored how Microsoft has been a leader in bringing the benefits of the personal computer and the Internet to tens of millions of consumers and businesses around the world: "The high-technology industry that Microsoft has helped create has unleashed a wave of competition and innovation that has led to new, more powerful products for consumers, at lower prices than ever before. This high-tech explosion also has dramatically increased business productivity and is truly the engine of the American economy, and increasingly, of the global economy.

"Since this case was filed almost two years ago, the high tech industry has changed dramatically, with amazing new technologies that are building on the power of the PC to offer consumers everything from Web-phones to smart kitchen appliances, and record-breaking mergers reshaping the competitive landscape. This incredible pace of technological change is the clearest evidence of the competitive environment in which Microsoft and every other company must operate and continue to innovate if they are to survive and prosper," Gates concluded.