Is Microsoft Free to Go?

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DANIEL SHEEHAN/AFP

Let's stay together: Gates

Even though the Justice Department’s trustbusters decided Thursday to abandon their effort to break up Microsoft in court, drop its "bundling" investigations and open its arms to a case-closing settlement, the Redmond software giant’s troubles are not immediately over.

The feds were careful to point out that since an appellate court has signed off on their monopolist charge, the government "believes it has established a basis for relief that would end Microsoft's unlawful conduct, prevent its recurrence and open the operating-systems market to competition." Translation: The lawyers will be watching for signs that the boys from Redmond are abusing their power — and ready to pounce with new lawsuits.

Wall Street, upon hearing the pro-business news, promptly figured out that even a liberated Microsoft has to make its money doing business in today’s tech sector, and business in today’s tech sector is still lousy. Within moments, investors were looking at Microsoft like any other tech stock — with deep skepticism — and selling the whole lot accordingly.

But there is the chance that the Justice Department simply felt that its work was done. Like IBM in the '80s, Microsoft didn’t have to lose its antitrust case to be tamed by the protracted scrutiny — the company has had to be on its best behavior for the past five years while a thousand other tech flowers bloomed. By this summer, Bill Gates was introducing the company’s new operating system, Windows XP, with just the sort of concessions on bundling that the feds have been after.

But at what cost?

But was that just sleight of hand? Was Microsoft contained, or merely redirected? The company's new operating system may play fair, but Microsoft’s browser, Internet Explorer, has achieved a 90-plus percent dominance in the Web-surfing market — and its new incarnation, IE6, may be quietly getting up to Gates’ old monopolistic tricks, version 2.0.

At a time when Web users are beginning to freak out about sites collecting (and hawking to others) their sensitive billing and personal information, the presumed dominance of IE6 would allow Microsoft a new chance to play the gatekeeper — this time setting its own standards for which Web sites’ user-profiling "cookies" work on Web surfers and which don’t.

The choke's on e-commerce

It also puts them in an ideal position to pitch users the company’s alternative: Microsoft Passport, the one-stop "e-wallet" which has already been called an attempted "choke point" on e-commerce by none other than Microsoft’s chief rival, AOL-Time Warner (parent company of this writer, and developer of competing choke points).

If the feds thought Windows and Explorer were a potent combination in the age of the desktop wars, they might want to take a look at what Explorer and Passport can do together in the next battle: the e-commerce wars. The way Gates sees it, not only would an Explorer-promoted Passport have the definitive leg up in delivering Web shoppers to sites of Microsoft’s choosing, Explorer-Passport could then become the mother of all cookies, protecting users’ online privacy by keeping the information all to itself.

This is the sort of thing Justice has in mind when it says it will "end Microsoft's unlawful conduct, prevent its recurrence and open the operating- systems market to competition." But George W. Bush, fearing for both his economy and his standing with the business lobby, seems unlikely to press too hard —not when Bill Gates is his still a leading candidate to get the tech sector fizzing again. Microsoft, after some rough-and-tumble negotiations, looks poised to go free.

Here we go again.