E-Business Commentary -- Gates Skates

Microsoft walks away with a sore wrist and a slice of Apple's pie.

It was the Slap Heard 'Round the World. That wimpy "thwack" sound you heard was Microsoft Corp. getting a swift wet one on the wrist from the U.S. Government's rubber noodle out back of the Justice Department woodshed. I mean, that cheeky guy from Seattle with the ego the size of Jupiter and a net worth greater than half the countries on earth will think twice before doing that again! But, hey, lest you believe Big Redmond got away without being punished, think again. Microsoft, in exchange for the dismissal of more than 100 private class-action antitrust cases, will have to cough up $1 billion dollars' worth of its software and services free to the nation's poorest public schools. Alright! Eliot Ness and the G-men to the rescue! But wait. Now comes Apple Computer CEO Steve Jobs -- sore sport! Jobs cried foul, charging that the so-called "punishment," instead of restricting Microsoft's aggressive activities, actually gives Microsoft the keys to the lucrative educational software business. Wow. You can see why this deal would give Jobs a burr the size of a grapefruit under his saddle . Except for some high-powered graphic stuff used by a few dozen people who make movies with computers, education is one of Apple's few remaining markets of any size. And no wonder. Just about every cubic gigabyte of corporate computing turf on the globe is taken up by scores of different versions of Microsoft Windows residing on a few hundred million Intel-powered PCs. I mean, the last time Apple had more than a single-digit share of the market, there was a buffalo on the nickel. Under Uncle Sam's wrist-whipping plan, Microsoft would implant a million rebuilt computers and a million copies of Windows operating-system software in more than 12,500 schools in low-income neighborhoods over the next five years. The company also would be made to donate $450 million to a private foundation to fund grants, training and technical help for the schools -- the idea being that computers and software are no good without the staff and training to put them to use. Apple has complained that the problem with the settlement lies not in its intent, but in the way it's set up to encourage the use of Microsoft software. Apple wants to ensure that school administrators are free to pick whatever computers and software they want. Thus, Apple is imploring the Feds to revise their plan and force Microsoft to provide funds, not machines and software. Remember, this is a company sitting on $35 billion in cash. It's useful to keep in mind, though, that politics and business have at least one thing in common with sports, and that is, it's never over until it's over. Microsoft may not be off the hook just yet. No, we're not talking about the Lone Ranger to the rescue. It seems that nine states and the District of Columbia have decided to continue litigation against Microsoft in hopes of swapping out the government's wet noodle for a stiff chunk of hickory with a few nails poking out one end. Consumer groups are up in arms, too. "Consumers in the United States already have lost $10 (billion) to $20 billion in overcharges due to the Microsoft monopoly," says Mark Cooper, director of research of the Consumer Federation of America. "We don't want to lose billions more." Will the Feds listen? Will the Department of Justice toughen up its settlement proposal? Don't bet on it. When you have a nation that's mired in recession and a stock market that behaves more like an old swayback mare than a bull or a bear, it's time to pull in your horns. Anyone who wonders why the Feds backed off should simply recall the decades-old adage about General Motors and America. It's clear Washington believes that the same holds true for Microsoft today. That's right, for what it's worth, Uncle Sam believes what's good for Microsoft is good for America. Hey, it could be worse. I mean, Microsoft could have gotten 10 detentions and had to write on the title screen for Windows XP, "I WILL NOT monopolize the software business, I WILL NOT monopolize the software business, I WILL NOT . . ." Doug Bartholomew is an IW senior technology editor. He is based in San Francisco.

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