Gates, when questioned by Microsoft attorney Daniel Webb, said the proposed remedies would have "some very dramatic effects on Microsoft" and other companies.
He criticised the remedy for its ambiguities and for a "breadth of restrictions" so broad that it would lead the company to pull Windows from the market.
The states' attorney, Steven Kuney, turned attention back to the 1998-99 antitrust trial; Microsoft's impact on Netscape Communication Corp.'s Navigator.
In focusing on the states' remedy plan to require Microsoft to make its Internet Explorer Web browser open source, Kuney went through the violations cited by the court of appeals which, he claimed, "contributed significantly" to Explorer's dominant market position "at Navigator's expense".
Gates said that while he accepted what the court of appeals found, other key factors had contributed to Netscape's decline.
Kuney asked whether Microsoft could engineer Windows to still perform all of its functions except for playing media if the company removed the Windows Media Player from the operating system.
Gates answered no, saying that the company would have to recreate the Windows Media Player and include it in the operating system, which would violate the states' remedy.
Kuney then asked Gates if Microsoft could create a version of Windows without the Windows Media Player that displayed a message every time Media Player functions were invoked, telling the user that the feature was not included in their version of the operating system.
Gates replied that this was possible, but that every time that message popped up, it would degrade the system's performance and violate the states' remedy.
Kuney moved on to the topic of Windows XP Embedded, a version of the operating system designed for use in devices such as cash registers and medical implements. He attempted to show that Microsoft has already built a version of Windows that can use some, all, or none of its middleware.
Through his questioning, Kuney showed that Windows XP Embedded is designed to let users select which middleware elements they want included in the operating system. For example, he showed a screenshot describing Windows XP Embedded with six versions of Internet Explorer from which to choose.
Users of the embedded operating system choose which components they want, and other components required to make the users' options function are automatically installed, Gates said.
Kuney asked if a user could create a version of Windows XP Embedded for the PC that ran all the same applications as Windows XP. No, answered Gates, because the embedded version doesn't include an installer, so no new software could be put on the PC running Windows XP Embedded. In addition, Microsoft's licensing of Windows XP Embedded doesn't allow for distribution of the operating system running on a PC, Gates said.
Moving to the topic of Windows' fragmentation - another potential result of the states' remedies, according to Gates - Kuney asked whether the operating system is already fragmented because Microsoft updated the desktop in Windows XP, making it different from earlier versions. He also asked if users have to go through a learning period every time they update Windows.
Yes, said Gates, "but you don't have to go take a course." Gates added that these were only changes in the user interface, not in the platform software developers deal with.
The states' lawyer asked Gates to turn his attention to the states' provision regarding porting the Office suite.
"It's called porting, but it's giving away," Gates said, drawing laughter from the courtroom.
Kuney asked why Gates claimed the states' provision forcing it to continue developing Office for the Macintosh would be burdensome, since it is a product the company already updates.
The provision calls for Microsoft to release the same number of Office versions for the Mac as it does for Windows, and with consistent features, which is not something the company does now, Gates said.
"Being required over a period of 10 years to do that work regardless of [the Macintosh market] with things we don't do today, we find that a negative requirement," he said.