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Microsoft Executive E-mail 

Looking Forward

Published: November 13, 2002

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I want to share some thoughts about Microsoft's changing role in the technology industry now that the antitrust settlement has been approved--about how we as a company are forging a new relationship with our customers, our partners, the industry and governments around the world. I believe we are creating an entirely new Microsoft.

The Settlement and Beyond

Two weeks ago, the U.S. District Court ruled that our settlement with the Department of Justice and nine States is in the public interest. The settlement was reached through extensive mediation with the Department of Justice and State Attorneys General, and has now been approved after thorough judicial review. The settlement is tough but fair. It puts new obligations and responsibilities on our company, and we fully embrace them. We have already made many of the necessary changes, and we are dedicated--from the top down--to living up to these obligations:

We are restricted in how we negotiate with computer manufacturers. We now operate based on a transparent and uniform price list for the Windows operating systems.

We are required to make design changes in the Windows user interface so that access to certain Microsoft features can be removed to give prominence to competitor products instead.

We have identified nearly 300 internal Windows interfaces and have disclosed these (at no charge) to competitors and others in the industry so that they can use these to interoperate with Windows.

We have made available for license the protocols that the Windows desktop operating system uses to communicate with our Windows server operating system. Competing server software vendors can acquire up to 113 protocols under this program.

Last week, in response to the judge's directive, Microsoft's Board of Directors created a Compliance Committee that will be chaired by Dr. James Cash of Harvard Business School, an outside member of our board. The Committee has two other members--Ann McLaughlin Korologos, a former U.S. Secretary of Labor, and Raymond Gilmartin, CEO of Merck. We also are in the process of appointing members to a Technical Committee with the Department of Justice. We have an Internal Compliance Officer. And we have rigorous and ongoing oversight from the federal government, the States and the Court.

A New Kind of Industry Leader

As CEO, I can personally assure you that Microsoft will commit all the time, energy and resources necessary to follow through on our responsibilities. But many people ask me: What have you learned from all this?

The answer is that we have learned a great deal from our experiences of these past few years, in particular about our responsibilities as an industry leader. During the antitrust lawsuit, not everyone in our industry raced to support us. As we listened to our supporters--and our critics--we learned that we needed to take a different perspective on being a good industry leader.

Frankly, part of the problem was that, even five years ago, we still tended to think of ourselves as the small startup company that we were not so long ago. Today we recognize that our decisions have an impact on many other technology companies. We have an important leadership role to play in our industry, and we must play by new rules--both legally and as determined by industry trends.

For example, we recognize that we need to support industry cooperation in new and creative ways, as we're doing in the development of standards based on eXtensible Markup Language, or XML. The entire industry has embraced XML as the universal way for computers to talk to each other in a much richer way across the Internet. Today companies like Microsoft and IBM collaborate on enhancing XML-based standards while at the same time competing to make innovative, easy-to-use software that helps customers take advantage of the power of XML.

Another example of our dedication to doing a better job of industry partnership is our recent work with IBM, VeriSign and other companies in developing security solutions based on industry standards, enhancing security for the entire technology industry and its customers.

Besides working better within our own industry, we are reaching out to cooperate even more with national and local governments, and international organizations. In fact, I think we are on the verge of a new era of partnership with government--not just for our company, but for the broader industry.

For example, we're actively cooperating with governments at all levels to fight identity theft, cyber-crime and attacks on the Internet, such as the concerted attacks on DNS servers last month. With more and more critical business transactions taking place on the Internet, hacking is becoming a big-time crime--and security is fundamentally about fighting a community of criminals who are looking to steal people's identities, break into banks or disrupt the Internet. Working together, industry and government can restore the integrity of the Internet and help make it more secure.

A New Microsoft

Microsoft has changed enormously since it started 27 years ago. When I joined in 1980, we had about 30 employees, and we never dreamed, in our wildest imaginations, that we would eventually employ over 50,000 people in more than 70 countries. I certainly never imagined that I would someday be CEO of such a large and complex enterprise. When I assumed that role almost three years ago, the goal was very clear--I would be responsible for overall management of the company and business strategy, and Bill would focus on working with the product groups and developing our long-term technological vision.

I spend a lot of time thinking about the difference between a good company and a truly great company. I definitely think that Microsoft is a very good company--and I want to make Microsoft a truly great company that is respected and successful over the next 50 years. That's why I spend so much of my time and energy working on the foundation of the company--our people, our values, how we work across different groups within the company, how we work with the industry and with government. If we get those things right, then we've built the foundation for a truly great company.

When we started, our goal was to put a PC in every home and on every desk. Today, we have a new mission--to make great software that helps people and businesses realize their potential. In many ways, this new mission is simply an extension of the vision that has driven us from the beginning. We see an opportunity for our technology to go from running PCs to connecting people to all the information they need--at home, at work and in the classroom.

This broader mission is reflected in our internal organization. We have built a new series of leadership teams for each of our business segments. We remain unified around a shared platform and a shared vision for improving people's lives. But we have also built teams with a great deal of accountability and independence to strive to be the best in new, emerging areas of technology.

Along with this new management approach, we have affirmed a set of basic values that are now part of every employee's performance review. It starts with integrity and honesty. We're committed to being upfront about what we are doing and who it affects, open in communicating about every aspect of our business, and sensitive to the new issues of corporate governance that have become increasingly important to market confidence.

One of the hallmarks of Microsoft is that we dream big. That is why we're investing record sums in the future--US$5 billion for R&D this year alone. We're passionate in our belief that technology can change the world and improve people's lives. We don't always succeed, but if one of our products falls short, we don't sugarcoat the problems. We are accountable for our actions, and we always dig in and make it better.

We are renewing our commitment to improve our communications with partners and customers. We are dedicated to being a responsible leader in our industry. And we are passionate about bringing the benefits of digital technology to every community in the world. Everything we do supports our mission of becoming a global technology provider that makes great software to help people realize their potential--whether that's on the PC, the Internet, or a gaming or handheld device.

As a company, we have changed and grown over the past few years. We are committed to being a great partner and a responsible industry leader, and, above all, we remain unceasingly optimistic about the future.

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