Mr Gates, trying hard to live down his reputation in Washington for arrogant disregard of the political establishment, was testifying before the Senate Judiciary Committee at a special hearing held to consider the state of the computer industry.
"Microsoft does not have monopoly power in the business of developing and licensing computer operating systems," he told the committee, describing it as "preposterous" to think that any one company could control access to the Internet.
In an interview with the Washington Post, timed to coincide with the hearing, Mr Gates maintained that his company's ability to innovate could be endangered if its business was restricted. And "if we cannot innovate, then you know we will be replaced" as industry leader.
Yesterday's hearing, much of which was televised, had been keenly awaited as an opportunity for the political and legal arguments currently swirling around Microsoft to be aired in public. At issue is whether Microsoft's market dominance is a just reward for its innovativeness (as it claims) or an impediment to free competition that should be curbed (as its rivals claim). The might of the US computer industry - chief executives of Dell, Netscape, Sun Microsystems and others - turned up in person to testify.
While the Republican chairman of the Senate panel, Orrin Hatch, denied that the hearing was intended to vilify Microsoft, proceedings developed rapidly into an inquisition into Microsoft's market dominance. Its software is installed in 85 per cent of personal computers world-wide and accounts for 95 per cent of the software installed in PCs now sold.
In a graphic illustration of the state of the market, Jim Barksdale, president of Netscape Communications, one of Microsoft's main rivals, asked yesterday's audience how many used PCs (almost all); and then how many did not use Microsoft's Windows software (almost none). That, said Mr Barksdale, was a monopoly, and he called for rigorous enforcement of US competition (anti-trust) legislation to deal with it.
Otherwise, he said: "Microsoft's abuse of its monopoly power ... will adversely affect the course of American commerce and communications in the information age."
In a lawsuit brought by the US Justice Department, Microsoft is accused of trying to consolidate its hold on the market for "browsers" - the software that controls access to the Internet. It is also accused of breaching a 1995 undertaking on competitiveness by imposing restrictive deals on its customers: computer-makers and Internet providers.Reuse content