April 4, 2000

Dear Shareholder:

As most of you know, the U.S. District Court hearing the antitrust case against Microsoft in
Washington, D.C., has issued its Conclusions of Law.  It's important to remember that we are
only halfway through the legal process -- a final decision could be several years away.  We think
we have very strong grounds for appeal, and that the courts will ultimately affirm that Microsoft's
actions have been good for consumers.  While we continue to work to resolve this case, we will
stay focused on building great software and innovating for consumers.

Microsoft really went the extra mile to end this lawsuit through mediation.  But despite thousands
of hours if work by our mediation team and senior executives -- including hundreds of hours by
Steve Ballmer and me -- the DOJ and the states refused to accept a fair settlement.  Instead, they
demanded radical and unprecedented limitations on our business.  In the end, the DOJ and the
states could not agree among themselves on what they should seek from Microsoft, rendering
a settlement all but impossible.

We remain open to a fair and reasonable settlement, but if litigation continues we believe that the
courts will ultimately rule that Microsoft's actions were both legal and good for consumers.  Our
invesments in developing innovative new versions of Windows have contributed to the growth
of the Internet, benefited a wide range of companies and helped keep America at the forefront
of technology.  We are confident that the courts will rule that the legal system should seek to
promote such conduct, not condemn it.

We wanted to let you know where we stand and what you can do to help.  Just as corporations
listen to their customers, so too do government officials listen to their constituents.  They need
to know that thousands of Americans care deeply about these issues, and do not support the
government's efforts to reshape highly competitive industries through litigation.

Microsoft created the Freedom to Innovate Network (FIN) to provide an effective method for
you and other concerned citizens to communicate directly with government officials.  Please
take a few moments to visit the FIN Web site at www.microsoft.com/freedomtoinnovate.
Alternatively, you can call 888-321-3999, or return the attached postcard with you comments.

Even if you do not contact your government officials directly, you can join tens of thousands
of consumers who have registered their opinions simply by signing up for FIN.  With input
from you and others, we can protect the innovation and freedom that has fueled the high-tech
industry, created millions of jobs and generated unprecedented economic growth.

Thank you for your support.

Sincerely,

Bill Gates
Chairman and Chief Software Architect

Microsoft Corporation is an equal opportunity employer.