E-Business Commentary -- Microsoft Check . . . And Mate

The king is dead. Well, not really dead. He's just been dethroned. Checkmated. I'm referring, of course, to Bill Gates, chairman of the largest, most successful software firm in the world. In case you've just returned from an extended trip to another galaxy, Uncle Sam has decided it's best to break up Microsoft Corp. In effect, that would leave Gates with only half the pieces needed to continue the high-tech chess game that for so long he dominated -- admittedly, as last year's trial revealed, with enough illegal moves to subdue IBM Corp.'s Deep Blue. Now Gates and Co.'s uninterrupted reign of power over the software world and hegemony over much of the personal-computer industry is coming to an end. Even Gates' and Microsoft's titles as "wealthiest" are in jeopardy. A recent tally shows Larry Ellison of Oracle Corp. worth $53 billion versus less than $52 billion for Gates. What's more, Cisco Systems Inc.'s market capitalization recently surpassed Microsoft's. Some in the business community believe Microsoft and its leader are being punished merely for having achieved unrivaled success in the software trade. They find the king's being deposed at the hands of the misguided feds a bitter pill to swallow. They view Gates as the embodiment of a new American resurgence. In their eyes, he is the undisputed world leader of a soaring high-tech industry that, by virtue of being chiefly U.S.-led and -inspired, has single-handedly restored our nation's economic dominance. Those in this camp tend to be free-market types who accept the notion that the unhindered pursuit of commercial success -- regardless of any federal laws governing business conduct -- is the American way. Others have labeled the Justice Dept. vs Microsoft clash a morality tale having to do with the limits of personal power. In their view, Gates, like John D. Rockefeller and former president Richard M. Nixon, is suffering a comeuppance as a result of excessive hubris. In Gates' case, his fatal flaw is not only that he lacks any contrition, but that he simply doesn't see that Microsoft did anything wrong. He continues to behave with the same old sense of personal omnipotence and righteousness. And he continues to belittle the government's view. In his latest move in this losing game, Gates hired a key George W. Bush advisor, Ralph Reed, to lobby the presidential candidate. One factor in Gates' favor is Microsoft's perceived influence on the stock market and the economy. I say "perceived," because I am not at all convinced that "what's good for Microsoft is good for the U.S. economy," and by extension for the stock market. While there is an ounce of truth to this idea, the reality of the role Microsoft plays in the economy is that of one multibillion-dollar high-tech company -- no more and no less. Microsoft certainly doesn't represent the vast breadth of technology, but it is a bellwether of sorts, similar to Intel Corp. or Cisco Systems. And the market's perception of the role Microsoft plays is far greater than the reality. Witness the recent 40% plunge in the value of Microsoft shares. While not the only contributing factor, this certainly helped nudge the market on its steep slide downward. That kind of power can be used as ammunition against the government's effort to break up the company, and Gates knows it. In a recent essay, he wrote, "The effect of this lawsuit will be to punish Microsoft no matter what harm this does to consumers, software developers, the industry that has driven America's remarkable growth -- or, indeed, the entire economy." What's at stake here is bigger than whether Bill Gates and Microsoft survive their bout with the government intact or are broken up. The real question is, are we, as citizens and responsible businesspeople, so desperate for a robust economy that we are willing to sacrifice our sense of what constitutes fair competition? We shouldn't have to choose between the two. We can have fair competition in high tech, and we can have a robust technology industry. One doesn't preclude the other. The king would have you believe otherwise -- that only an untouched, unbowed, unbridled Microsoft can lead us to the Promised Land. But hey, he's been checkmated, right? Doug Bartholomew is an IndustryWeek senior editor based in San Francisco