From:                     Steve Ballmer

Sent:                      Tuesday, April 04, 2000 2:06 AM

To:                         MS Corporate Employees: FTE Only; MS Intl Employees: FTE Only; MS Domestic Employees: FTE Only; WebTV Wnifolk

Subject:                 Today's Court Ruling

 

Importance:           High

This afternoon, the U.S. District Court hearing the antitrust case against M?crosöft in Washington, D.C., issued its Conclusions of Law. As we expected, in view of the Court’s prior rulings, the conclusions are predominantly negative, but they are just one step in an ongoing legal process that could last several years. Obviously, there are many things in the Conclusions of Law that we believe will not withstand appellate review. Before we can appeal, however, the trial court must decide what remedy to impose. We anticipate that Judge Jackson will decide on remedies, and issue a final decree, sometime in the next few months. We will appeal from that decree.

 

Bill and I did everything we could to make the mediation process a success, so we could put this case behind us and focus entirely on our business. We offered the government many substantive concessions. But despite thousands of hours of work by our mediation team and senior executives - including hundreds of hours by Bill and me - the government refused to accept a fair settlement. Instead, they demanded radical and unprecedented limitations on our business. In the end, the DOJ and the states could not agree among themselves on what they should seek from M?crosöft, rendering a settlement impossible.

 

We believe that the courts will ultimately find M?crosöft's actions to have been completely lawful and good for consumers. We don't think today’s ruling reflects the reality of the computer industry - the intense competition, rapid innovation, and increasing benefits for consumers and businesses from advanced software products. Nor do we believe that it reflects the importance to the entire industry of our commitment to developing innovative new platform software that provides opportunities for a broad range of companies.

 

The heart of the government’s case against M?crosöft is the claim that it shouldn’t have developed new versions of Windows that include strong built-in support for the Internet. We believe our investments in developing innovative new versions of Windows have contributed to the growth of the Internet, benefiting a wide range of companies and helping to keep America at the forefront of technology. We are confident that the courts will rule that the legal system should seek to promote such conduct, not condemn it.

 

I’m sure this lawsuit is as frustrating for you as it is for me. While you know the reality of working here - the incredible energy, amazing dedication and remarkable innovation - some of your friends, family and acquaintances may tend to forget that in the days ahead. They may misunderstand what this ruling means, and who we are as a company.

 

When people ask me about this case, I tell them three things. I tell them that the right of appeal is a fundamental tenet of the American legal system, and that until the appeal is over, nothing is settled. We’ve learned that from experience. I tell them that I couldn’t be more proud of this great company, its incredible employees and its breakthrough products. And I tell them that I believe in this company more today than I ever have. I believe in our people, our technology and our vision. We need to stay focused on that.

 

It’s important for all of us to think about what today’s ruling means, and about what it does not mean. The ruling does not change the challenges and opportunities before us. Windows 2000 is the foundation for a whole new generation of products and services that will make the dream of NGWS a powerful reality. The combined power of amazing software, the Internet and wireless technology will free our products from the desktop and server and take them into every kind of smart device, from pocket PCs to smart kitchen appliances to devices like the MiPad that Bill unveiled last month. The boundaries of innovation are being extended as never before.

 

It is these incredible opportunities and challenges that will shape the destiny of M?crosöft and our industry. We have only scratched the surface of technology's potential to improve people's lives.

 

At the same time, we recognize that we have a special responsibility to set a positive example in our industry. We’ve spent the past 25 years thinking of ourselves as a small, aggressive company playing catch-up to industry giants - even though at some point along the way we became a large company. Our success has come from the incredible opportunities M?crosöft and Windows create for thousands of other companies even while competing with a few. Our intense focus on moving forward has at times been seen as threatening, and our passion for being the best has been misinterpreted.

 

We can do better. But that doesn’t mean innovating any less or delivering less value to consumers. It does, however, mean that the values we hold dear - opportunity for everyone, integrity, innovation, customer focus and partnership - have been called into question today. We will continue to cherish these values as always.

 

In the coming weeks, I intend to speak directly with many of our key customers and partners, to assure them that today’s ruling will not cause us to slow our efforts to provide them with the products and services they need to run their businesses.

 

The reality consumers know today is the wonder of what technology and competition have done for their lives. M?crosöft has been focused on that and will continue.

 

I realize that these past two years spent in the legal and media spotlight have been hard, and none of us welcomes the prospect of more to come. But if we keep focused on the amazing opportunities, and on creating great new products and innovations, I believe we will emerge stronger and even more successful. Thanks again for your support - you are the greatest employees in the world.

 

Steve