Gates: Internet Bubble Is Back

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Bill Gates, the co-founder of Microsoft , warned Thursday against the rush to new Web-based software services, likening the frenzy to the days of the 1990s Internet bubble.

Asked for his opinion about the Google & YouTube , the free video exchange Web site that is being acquired by Google for US$1.65 billion, Gates said that he was cautious.

"There are a hundred YouTube sites out there," Gates said during an interview with a group of journalists in Brussels before a speech to European lawmakers. "You never know. It's very complicated in terms of what are the business models for these sites." Endless traffic "We're back kind of in Internet-bubble era in terms of people thinking: 'O.K., traffic. We want traffic. We want traffic,'" Gates said. "There are still some areas where it is unclear what's going to come out of that." On another issue, Gates said that U.S. competitors were attempting to manipulate foreign regulators to weaken the newest version of the Windows computer operating system. Microsoft a month ago redesigned elements of the software to address the concerns of European regulators.

"I think all of our competitors have had fun flying around the world. They are almost all U.S. competitors trying to get regulators in any market to castrate the product. But it didn't happen," Gates said.

Microsoft said in October that it was redesigning Vista, the successor to Windows XP, to accommodate concerns that the world's largest software maker was attempting to use its de facto monopoly in desktop operating systems to promote its own antivirus, search and document products.

Vista problems

Gates played down the influence exerted on the software company by the European Commission, which has already fined Microsoft 777.7 million euros, or $998 million, in a seven-year antitrust case in which it found Microsoft guilty of abusing its Windows market dominance. Microsoft is appealing the decision. But Gates said that Microsoft did not buckle to pressure from EU regulators on Vista.

"I wouldn't say that antitrust played any dramatic role," Gates said at a Microsoft conference center in Brussels.

Explaining Microsoft's decision to redesign Vista less than a month before its announced introduction, Gates said: "No government actually ended up telling us to take the security features out. We had competitors who were pushing for that, asking for that."

Gates never named the competitors. The European Commission has said that Adobe , the leading digital document maker; the search-engine leader Google; and the security software makers McAfee and Symantec had all raised concerns about what they perceived to be competitive threats from Vista. McAfee criticized Vista in a full-page advertisement in a European newspaper. "The worse Windows is, the better off some of those competitors are," Gates said.