Mr Gates spoke out after last-ditch negotiations between Microsoft and government lawyers ended in abrupt failure on Saturday. It now seems certain that lawsuits will be filed against the company this morning by the US Justice Department as well as by the attorneys general of about 20 US states.
The simple act of filing the lawsuits is likely to cast a chill on the US hi-tech sector and could trigger a sharp sell-off in stock markets this morning, some Wall Street analysts warned last night.
Microsoft said that it would begin shipping Windows 98 to computer makers today and that it would stick to its deadline of 25 June for having it in computer shops.
The government and the 20 states are expected to accuse Microsoft of illegally abusing its dominant position in the operating system market to restrict consumer choice and to extend its grip to the Internet sector by flattening all potential competitors, most notably arch-rival Netscape Communications.
A key concern for government lawyers is Microsoft's ability to "bundle" additional functions of its own into the Windows start-up menu, such as the "Internet Explorer" browser that gives users direct access to the World Wide Web. Thus few consumers pause even to consider the alternative "Navigator" developed by Netscape.In a video-taped messaged distributed by Microsoft, Mr Gates said he was "very disappointed" by the collapse of the peace talks. "Microsoft is innocent of any of these charges and we're certainly going to defend ourselves vigorously," he said.
Sources close to the meetings, however, suggested that they had broken up only after Mr Gates himself ordered his lawyers to withdraw concessions they had put on the table. Mr Gates is thought to have been enraged by demands that Microsoft actually incorporate Netcape's Navigator browser as a function automatically appearing on the Windows 98 menu. The request was dismissed as "simply outrageous, over the top," by Microsoft spokesperson, Greg Shaw. It would, he said, be "like telling Coke that they have to have three cans of Pepsi in every six pack".