Washington to Redmond: We're Not Impressed

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At least we can rest assured that no one will ever accuse any party in this trial of behaving impulsively. The battle of wills between Microsoft and the government dragged on Thursday as Justice Department officials and state attorneys general dismissed the software giant's latest peace offering as an "inadequate" response to the government's proposed breakup of the company. And while Washington's notably lackluster reaction might have dampened the spirit of almost any other corporate chairman, Bill Gates seems unfazed.

Of course, the egos of self-made billionaires tend to be on a scale with their bank accounts, and the risk of ruffling a few feathers at the DOJ may not be sufficiently threatening to give Gates pause. But in light of recent developments, perhaps it should be: Microsoft's legal struggle with government lawyers has metamorphosed into something of a public relations contest, evidenced most recently by the appearance of Microsoft's counteroffer in Sunday's Washington Post, apparently "leaked" to the press days before it was meant to be released. The plan, couched in the company's most conciliatory language to date, seemed designed to placate government tempers while simultaneously maintaining the company's innocence against antitrust charges. That attempt has apparently failed; Thursday's reports indicate that DOJ officials are unswayed by Microsoft's advances, and believe U.S. District Judge Thomas Penfield Jackson will share their point of view.

That assumption represents a calculated risk in and of itself — one that government spin doctors may feel is worth the gamble, given their sense that Jackson is going to come down on their side. But they're not trading on an inexhaustible supply of goodwill: Public perception of the prosecution of the Microsoft case is not altogether favorable. Many feel it's been a colossal and futile drain on government resources and taxpayer money. And at this point, it's anyone's guess how the suit will finally end; the government is required to respond to Microsoft's counteroffer by May 17, and Judge Jackson has indicated that he would like to wash his hands of the penalty phase of the trial by the end of May. Microsoft will counter that timetable, according to reports, claiming they need more time to prepare an argument against any plan that involves a breakup.

Consumers, meanwhile, might be the only real winners in this case: Depending on the sentencing schedule, Microsoft officials may spend the next few months bending over backward for their customers and various contractors, trying to prove their good intentions. And Wall Street investors are circling Microsoft stock like so many vultures, waiting for a strategic dip that may never materialize.