As you have probably heard, the Justice Department filed a motion today in federal district court, alleging that Microsoft has violated a 1994 consent decree dealing with certain aspects of licensing the Windows® operating system to computer manufacturers. You might have questions about what this filing means for you the user of Internet Explorer and the Windows operating system. Let me summarize the key points:

• This motion by the Justice Department does not affect your use of any version of Microsoft® Internet Explorer.
• We are proud of the improvements we have made to Windows via Internet Explorer and will continue to innovate in both areas on your behalf. We are operating in a completely appropriate, lawful, and pro-competitive manner. Under the consent decree we are explicitly free to integrate new features into Windows.
• Microsoft’s improvements to Windows are a key contributing factor to the phenomenal growth rate, rapid innovation and intense competition in the PC software industry.

For those of you that want more detail, the specific provision in the consent decree states that Microsoft may not require computer manufacturers who license Windows to also license any other software product, but it also explicitly states that Microsoft may develop integrated products. The latter is what we have done by integrating Internet Explorer into Windows.

Our integration of Internet functionality into Windows is not surprising. The Internet is a fundamental part of computing today, with 50-60 million regular users of the Internet worldwide. Put simply, no operating system can be competitive without making the Internet easier to use and more accessible to customers.

For example, Internet Explorer 3.0 made improvements to allow many companies to build browsing functionality right into their Windows-based applications. When you use products ranging from AOL to Lotus Notes, you may be using functionality provided by Internet Explorer and not even know it. Internet Explorer 4.0 has taken this even further by allowing Windows users to browse their hard disk the same way they browse the Web and even allowing the Windows desktop to become a Web page. In fact, Sony is building a next-generation Flight Entertainment System using Windows and Internet Explorer!

There are many more examples that demonstrate how the integration of Internet browsing into Windows is the next logical step in advancing the operating system. But the critical acclaim it has received from industry experts and the customer momentum we are privileged to have -- about 35 percent of all Internet surfers now use Internet Explorer in the U.S. and a higher percentage use it internationally -- are the greatest testaments to how we have built a better, more integrated product for customers. For example, with Internet Explorer 4.0 we have seen the following results:

• More than 2 million customers downloaded the product in just the first 2 weeks of its availability.
• More than 20 major corporations announced that they are standardizing on Internet Explorer 4.0, committing to deploy it on more than 300,000 desktops, and developing Active Channel™ sites and Active Desktop™ items for their businesses.
• All of the top business and PC industry trade journals -- including The Wall Street Journal, PC Magazine, and CNET -- have recommended Internet Explorer 4.0 over the competition.

• The top 10 PC makers (representing over 40 million PCs shipped last year), the top 10 Internet service and online service providers (representing over 20 million current subscribers), and hundreds of other companies have freely chosen to ship Internet Explorer 4.0 along with customized Active Channel sites.

Again, let me reassure you that we are completely in compliance with the terms of the consent decree. Our efforts are legal and are spurring product innovation -- which in the end brings you, the consumer, the best possible product at the most attractive price. We will keep you abreast of the latest information as it is made available. For more details, please see the Q&A.

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