Gates' Hands-Off Not a Sign of a Relaxed Grip

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At the World Economic Forum in Switzerland Monday morning, Bill Gates and Steve Case, America's two most powerful technocrats, had the ears of the world's economic policy makers. While Case took the time — again — to sing the praises of his merger with Time Warner (parent company of Time Daily) and the synergies it will allow, Gates touted the virtues of the one-product company. Pressed on rumors of a Microsoft merger with media content firms such as Viacom, Gates said Microsoft will stick to software design. Industry analysts see the announcement as a preemptive strike against Microsoft's possible breakup into three smaller firms as the result of the government's antitrust case. The thought of a merger that would let Microsoft Explorer guide users to more and more sites filled with Microsoft-owned content terrified business watchdog groups. But by laying out the we'll-concentrate-on-software path, Microsoft gets to cast its own image — as a group of techno-nerds made good, led by the man who just stepped down as CEO to devote himself to software design full-time.

But this doesn't diminish Microsoft's grip on the Web. "We're not going to go out and buy magazines or other traditional content things," Gates told the WEF crowd. "Instead, I think there's room for a company whose main goal is to create software and allow that software to be a very empowering tool." By keeping its management energies narrowly focused on software, Microsoft could continue its dominance in the operating system and web software markets. In any case, Microsoft's management style, a delicate balance between top-heavy control of product content and maverick innovation in the trenches, would be impossible to maintain in a conglomerate such as Viacom. So while the breadth of a firm such as AOL Time Warner, with holdings in varied markets, may seem more daunting than a group of nerdy guys from Washington State, Microsoft remains a force to be reckoned with.