Bill Gates Interviewed about Security and Competition

Microsoft founder Bill Gates, 49, talks about the thorny issues of computer security, competition, software bundling and how he lives with the downsides of his wealth and fame. In addition to being the world's richest man, Gates is the founder of the world's most powerful software company.

SPIEGEL: Mr. Gates you came to Munich this week specifically to initiate a project for more Internet security in Germany. The government sponsor is Labor and Economics Minister Wolfgang Clement. Why are you taking the initiative now?

Gates: The enthusiasm about how computers, the Internet, and good software can help people is probably as large today as it ever was. A lot of fantastic things have happened in the past few years. Just think about how e-mail contact or digital business with photos or music have developed world-wide. But while we still work on wonderful further developments, some really serious issues are being forced onto the agenda, and we now have to ensure that they do not ever become a problem. This stretches from annoyance about a mailbox filled with junk advertising to the risk that your computer has been taken over by hackers to spy on your data. There is a lot to do, especially for Microsoft.

SPIEGEL: You want to achieve that single-handedly?

Gates: The bandwidth of problems is enormous. And not only individual companies are facing demands, but our entire industry. In meeting these demands we have to work together with governments and public agencies. Politics has to ensure the legal framework.

SPIEGEL: And consumers?

Gates: PC users will have to grapple more intensively with very practical questions. For example: Do I need regular updates of my software? That alone is a gigantic thing for us. When we offer an improvement to Windows via the Internet today, there are a few hundred million people who take up the offer, but also a few hundred million who do not do it. Or here's another question: How do my children use the Internet? If nothing else, that is a challenge now because at times kids handle the World Wide Web significantly better than parents. One thing we have to do is make computer use simpler in order to increase people's awareness of such questions.

SPIEGEL: Did you underestimate the security problems? A few years ago, the chief concerns of your industry were making computers more efficient and hooking up as many houses as possible. Now security is of chief concern. Even Microsoft seems to have first become aware of the danger after Sept. 11.

Gates: The terrorist attacks in 2001 just showed people up close where a lack of security can lead. Problems with computer security have more to do with the unbelievable success of the computer itself. The more successful the PC became, the more the downsides also became clear, such as: how can I prevent someone from stealing my credit cards off the Internet? In some areas, the bad boys are also terribly clever -- and occasionally more crafty than we had expected.

SPIEGEL: Those who send spam advertising e-mails for example.

Gates: I don't want to minimize the problem at all. We will still have a few years of fighting with that. But, there are many things that have already improved. On the other hand, problems in the area of data theft have increased.

SPIEGEL: From which corner do you expect the greatest challenge? Virus makers? Hackers? Spam senders?

Gates: There will always be people who try to take advantage of the medium by bothering us with marketing stuff, which is fast, easy, and cheap to distribute world-wide. We will be able to control that to some degree because the sources allow themselves to be traced back. The people who create advertisements for a certain company usually receive money from the company. That makes them traceable. We have been making enormous progress on this front. I worry more about whether our general dream will be fulfilled.

SPIEGEL: What is that dream?

Gates: That we can globally communicate with one another without mistrust and can do it more creatively. To do this, for example, it is important that your identity is safe on the Internet. In the end it involves a promise, the promise of the digital age. But I also do not believe that the current difficulties can really endanger that.

SPIEGEL: Microsoft is not only a part of the solution, but also, because of its market power, part of the problem. When a company provides more than 90 percent of all personal computers with software it is inevitably a target for hackers interested in causing the most damage possible.

Gates: There are actually a large number of operating systems in addition to Windows, for example, such as OS from Apple or Linux and Unix...

SPIEGEL: ... but in the realm of normal personal computers, they don't play a large role worldwide.

Gates: The truth is: the fewer operating systems there are within a company, the better it is from a security point of view.

SPIEGEL: I beg your pardon?

Gates: Simply because one must spend billions of dollars to ensure the security of each individual system. Our company has an unbelievable number of people who are solely responsible for this type of security around the clock.

SPIEGEL: The particular charm of Linux is that it is an adaptable system that users can shape themselves.

Gates: If everything runs under the same platform, however, you can better concentrate resources and more quickly repair errors. For instance, in a hospital where different systems are used, a single problem in one section cause the other systems to crash. Thus, from a security standpoint it is always better to focus on one system.

SPIEGEL: But your small competitor Apple, for example, is much less frequently a victim of virus attacks ...

Gates: ... put so sweepingly, that is not correct. Of course we are the largest target, simply because we have the most widely disseminated system. But it affects others in exactly the same way. Linux is, in many respects, even more significantly affected.

SPIEGEL: In a few hours a Windows virus can travel across the world like an epidemic...

Gates: ... above all because of our global popularity. But we know that. And we must apply still more time and money to it. However, spam or data theft are not questions of the operating system. For this, you also need laws and global standards.

SPIEGEL: Once again: Windows is the most vulnerable.

Gates: You could look at that in many ways. The speed with which, for example, the Linux community reacts to problems is not especially high -- that's because this system, unlike ours, simply does not keep thousands of people on standby to deal with problems. In this respect, a commercially distributed operating system also has decisive benefits. Sweeping judgments don't help because we all have to take the problems seriously. Even Linux developers know that there is no miracle cure in Linuxland. They, too, must continue to work and continue to make progress.

SPIEGEL: In the past 15 years Microsoft has time and again been a target of lawsuits and court disputes. Your company already was required to pay billions of dollars in penalties. The accusers and cases all have the same complaint: Microsoft continues to pack additional innovations onto the Windows platform at no cost, virtually annihilating competitors in the long-term. Why do you promote this strategy?

Gates: Which strategy? In the software sphere in which we operate, only one thing matters: benefit to the customer. And there were more improvements there than in any other economic sector. You need only look at what Microsoft Office or Windows could do 10 years ago and what these programs cost back then and what possibilities they offer today at what price. The costs are going down; the capabilities are increasing with tremendous speed. We should really wish that all other sectors -- from the automobile industry to politics -- would bring us improvements similar to our sector as far as innovations and revolutions are concerned. The software business is really not one where one can rest on one's laurels.

SPIEGEL: That doesn't answer our question about the company strategy, with which you time and again run up against cartel guards.

Gates: Once someone has purchased Windows they don't bring me any turnover again for a while. I only again earn something when I convince the customer that my product has become much better and more exciting and that its new acquisition is worth the cost. Therefore, we are forced to continuously improve our products. That is also the reason that we probably have the largest research and development budget of all company groups on the planet. We do not do this for fun, although I happily admit that it still is fun.

SPIEGEL: Is it only because of the envy of competitors that Microsoft is constantly caught in the justice system's radar?

Gates: If you examine which companies in the USA are among the most popular, Microsoft is always far ahead at the top. Why? Because our products are used around the world and help people a lot. We are successful and now we have all of the problems that come with success ...

SPIEGEL: ... from customer frustration to hostility to court cases in the billions.

Gates: Customers expect a lot from us. And they should. That is great. In the end, they are the ones who decide again every day who they will choose. After all, we have countless competitors who all believe their software is better. That is a sign of healthy competition.

SPIEGEL: The European Commission recently imposed, among other things, a €500 million fine on Microsoft, saying it abused its market power. How will the case end up?

Gates: The appeal against the decision of the EU Commission is making its way through the courts. It will be several years before a final decision comes, and until then we will work together with the Commission to promptly and completely implement the conditions.

SPIEGEL: Nevertheless, you were now for the first time forced by Brussels to slim down Windows. Specifically, Microsoft was forced to offer the software without the disputed Media Player.

Gates: That does not mean that we have to change our strategy. Windows already exists today in very different versions, completely tailored to particular customers. What is new at most is that we are required to offer a product that has reduced capability.

SPIEGEL: In the court disputes in the USA you always say that one cannot tear apart Windows. But now its being done, isn't it?

Gates: We are talking about bits. You can always separate everything from anything. You could amputate a leg, cut off an arm. I just don't think it's in the interests of our customers to be required to offer them a product that has less ability than it actually has. What we with Microsoft brought to the computer industry was a competition field that has never existed before in any industry in the world. With Windows we brought comparability. Who is the fastest, most secure, least expensive, most serviceable? This dynamic was and is an unbelievably strong motor ...

SPIEGEL: ... that a political organ now for the first time is slowing down, is prescribing to you what you may offer.

Gates: No, no, no. We are already today confronted with thousands of regulations and statutes in umpteen countries, all of which we take seriously. In this respect, this is not at all the first time that a regulation has consequences for Windows.

SPIEGEL: Particularly in Germany, your small competitor Linux is gaining more and more popularity. Even the City of Munich, where your German headquarters is located, decided on a change. Is this freely available operating system a threat to you?

Gates: No, a competitor. That is all.

SPIEGEL: Five years ago you officially withdrew as CEO of Microsoft. Do you still actually get involved when large acquisitions are involved -- such as the planned takeover some time ago of the German software manufacturer SAP?

Gates: Of course I was involved in the discussions of whether one can merge the two companies. I am good friends with the guys at SAP, as is our CEO Steve Ballmer. But the discussion did not go beyond a certain point.

SPIEGEL: The takeover is no longer on the table?

Gates: There are no further discussions.

SPIEGEL: What is your most important goal for the coming years?

Gates: We must ensure that the trust placed in us is kept. That way we can push for more brilliant developments, such as speech or handwriting recognition, and make more breakthroughs.

SPIEGEL: If you had to describe for your oldest daughter, 8-year-old Katharine, in three sentences what you actually do, what would you tell her?

Gates: She uses a computer, of course. She already knows very well how it helps her contact her friends and other things. I think that she already has a very concrete idea of what I do. She knows her father works on software.

SPIEGEL: When one puts the sentence "Bill Gates is the devil" into the Internet search engine Google, one gets thousands of hits. Does this bother you?

Gates: I have never searched for such a sentence. Plus: if you understand the search engine properly, it doesn't mean that you will find exactly this sentence on these pages.

SPIEGEL: The anger that you occasionally encounter is just part of the business for you?

Gates: Up until now I have only looked at very few of these anti-pages. That has also changed since the beginning of the PC revolution. I have also over years donated quite a bit to charitable causes. For this, I am quite admired. My role in the software industry plus my role as founder of a charitable foundation are both things that can provoke envy or jealousy. But I do not have a problem with how I am seen. I do what I do because I think I am making a contribution.

SPIEGEL: The foundation you run with your wife Melinda administers almost $30 billion of your private wealth. Did you also help with the tsunami catastrophe in Asia?

Gates: Oh yes. But you must also look at what we already provided in the affected countries in prior years. We do not only give when a current crisis arises somewhere. When the tsunami came we immediately donated $3 million dollars. But what we donated a year ago was certainly 10 times more important because it made long-term development possible.

SPIEGEL: You are the richest man in the world. Do you still have things you'd like, but are not yet fulfilled?

Gates: I go to work every day as before, also because the dream of what the PC should be able to do as a tool has not yet been realized. About 30 years ago I founded Microsoft together with Paul Allen because the capabilities and possibilities of computers back then frustrated us. Since then, I have worked on making my dream that computers can understand us better and work more simply a reality.

SPIEGEL: And when will the dream be reality?

Gates: I am an optimist. And I always think: okay, in 10 years we will have accomplished it. But I already thought that 10 years ago. And obviously we are not yet that far.

SPIEGEL: Mr. Gates, thank you for this conversation.

© DER SPIEGEL 5/2005 All Rights Reserved Reproduction only allowed with the permission of SPIEGELnet GmbH

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