Microsoft general counsel William Neukom: "Government regulation would hurt consumers"

In a trial described as "Goliath vs Goliath", lawyers for the American software giant rejected accusations it had used its dominant market position to try to squeeze out competitors and said the US Government was trying to "demonise" Mr Gates.

Lead counsel for Microsoft said: "A personal attack unleashed by the government on such a visionary as Bill Gates is no substitute for proof."

BBC Internet Correspondent Chris Nuttall: Microsoft's business morality to be questioned

Justice Department lawyers opened their case on Monday by singling out Mr Gates, pointing out what they said were inconsistencies between sworn videotaped evidence and e-mails and memos that Mr Gates had written several years earlier.

Microsoft's legal team maintains the Seattle-based company is fighting for the principle "that every company ought to be able to innovate ... to improve its products in a way that meets the demands of its customers."

Jim Barksdale, chief executive of Netscape Communications and a key player in the so-called "browser wars', is to be the trial's first witness and is due to appear on Tuesday afternoon, local time.

The key argument is over the way Microsoft markets its Internet browser, Microsoft Explorer, which it gives away free with the Windows 98 operating system.

Illegal deal

Washington Correspondent, Paul Reynolds: "The case is seen as a landmark effort by the government"

The prosecution says Microsoft has used its influence and financial clout to intimidate computer makers and entice other companies to distribute Microsoft's own Internet software over that of Netscape.

The company is accused of proposing to divide the browser market with Netscape - an agreement that would break anti-trust legislation.

In written testimony released on Monday, Mr Barksdale said that at a meeting in 1995 Microsoft executives had made it clear that if Netscape didn't agree, "Microsoft would crush Netscape, using its operating system monopoly."

Justice lawyer David Boies told the court: "What you see is a consistent pattern of Microsoft doing this, using its monopoly power, using its leverage, using everything it has."

Windows dominates the operating software market

The company says that by building its browser into the Windows package it is bringing new and better products to the market to meet consumer demand.

The federal Justice Department and 20 state governments accuse Microsoft of using its market dominance to try to squeeze out its competition in an attempt to unfairly create a monopoly.

Microsoft operating systems run on more than 90% of the world's computers.

Eight year investigation

Microsoft has made Bill Gates an estimated fortune of over $50 bn

Mr Gates, the richest man in the world, is not expected to testify in court - attorney Stephen Houck, representing the prosecution, said his absence showed "a lack of intestinal fortitude."

But Microsoft officials dismissed allegations that after eight years of investigation the government could prove that the company has tried to stifle competition in the software industry.

"We didn't hear anything that the government hasn't been saying for weeks or even months," said Mr Neukom after the first day of the trial.

In its opening remarks, the prosecution pointed to inconsistencies between Mr Gates' video testimony on the 1995 meeting with Netscape case - which he did not attend - and his private memos and email, saying they revealed Microsoft's unfair market tactics.

Microsoft spokesman Mark Murray, said the government was "taking two bits of information and trying to weave them together to make these allegations."