McNealy slams Microsoft in Washington

Sun Microsystems President and CEO Scott McNealy this week told a Congressional committee that Microsoft's practices are hurting consumer choice and the US Department of Justice is right to 'scrutinise' the company.

Sun Microsystems President and CEO Scott McNealy this week told a Congressional committee that Microsoft's practices are hurting consumer choice and the US Department of Justice is right to "scrutinise" the company.

"We need a competitive industry," said McNealy to the Joint Economic Committee, which held its third and last hearing today on the high-tech industry.

But, McNealy said, Microsoft's control over productivity applications, such as word processing, spreadsheets and operating systems, has curtailed investment in those areas. And he warned of Microsoft's movement in the Internet appliance area.

"Would AT&T really be using CE [Microsoft's operating system for handheld devices] if they hadn't gotten a $5 billion investment from Microsoft?" said McNealy. Sun makes a rival Java-based appliance operating system.

Shortly after McNealy finished testifying, Microsoft Chairman and CEO Bill Gates joined about a dozen other high-tech executives to talk about legislative initiatives in the high-tech area.

The purpose was to release a new study prepared by the Business Software Alliance that added up the contributions the high-tech industry is making to the economy. The executives also discussed top legislation issues: encryption export controls, Y2K liability protections and "Net friendly" legislation that doesn't restrict e-commerce.

In what may have been a response to critics who argue Microsoft is hurting innovation, Gates said "the rate of new company formation is at an all-time high and that is pushing the innovation forward."

According to the BSA study, the software industry will surpass the automotive industry as the largest contributor to the U.S. economy by the year 2000 (see story). The annual receipts of the software industry last year were nearly $141 billion.

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