So far, Bill Gates has had everything his own way - but no longer. Washington is out to humble him with a legal cudgel. Hugo Gurdon reports
THE smile on the face of the world's richest man has frozen. And the inexorable ascent of his Microsoft empire is about to falter. It may even crash.
Bill Gates has amassed a $40 billion personal fortune over the past 20 years by being far-sighted - and a year ago he saw he was being cornered. The expected blow came on Monday.
Washington hit Mr Gates with a legal cudgel - the same one it used to tame the oil magnate John D Rockefeller, and break up his conglomerate, Standard Oil, into its component companies, Esso, Mobil, Chevron and Amoco.
Just as it attacked the world's first billionaire in 1906, the Justice Department has charged Microsoft with using its awesome monopoly power to drive competitors out of business.
The boyish Mr Gates regards himself as an innovator hounded by government buffoons who are being fooled by his less successful rivals.
The two sides agree on nothing except that the Justice Department's cease-and-desist lawsuit is a defining event in the world's second great industrial revolution.
It will determine whether bureaucrats crush the entrepreneurship that has restored America's economic supremacy; or, some say, whether a single massive company gets to control access to the cybermarket in which we will soon do much of our shopping.
If people thought about Mr Gates at all a year ago, it was as a nerdy, mildly spooky, reclusive genius. He was like Richard Branson writ large; his open-necked shirt and boyish demeanour somehow suggested that fabulous wealth did not depend on Machiavellian cunning. The nerd was fascinating, not frightening.
Microsoft's campus in suburban Seattle disdained politics. Mr Gates seemed a new breed of risk-taking businessman. He worked hard and did not bother to oil up to politicians. Everyone wanted to know him, but did not expect to get the chance.
Then, last May, he invited 100 of the most powerful business and government executives to his mansion on the shore of Lake Washington.
The heads of Boeing, Universal Studios, Wells Fargo, United Airlines, plus America's vice-president, Al Gore, and Gen Kenneth Minihan, head of the National Security Agency, gathered at the court of this self-made man.
Frank Gregorsky, of the think-tank Discovery Institute, said: "Bill has known nothing other than dominating the market and controlling information. It's given him supreme confidence and passion. God doesn't usually give you 20 years of uninterrupted good news - He does something now and then to make you humble. Is anyone ever going to humble Bill?"
Yes, it seems someone will. Or at least they will try. And Mr Gates knew the good news was running out when he hosted that gathering of grandees. It was a pre-emptive strike for Microsoft. Mr Gates called on his guests for "friction-free capitalism". By this he meant that the government should not meddle in his quest to hook people on the Internet.
But the Justice Department claims it has a compelling case for interfering: Microsoft has the world's dominant operating system, Windows, which is installed in nine out of 10 new computers; it is melding Windows with its own net-surfing software, Internet Explorer, thus controlling the gate to cyberspace while excluding its main rival Netscape Navigator; if computer makers want Windows, and they have no choice - Microsoft bans them from removing Explorer.
It is a classic monopoly, the government lawyers say. They want a quick injunction forcing Microsoft either to remove Explorer or install Netscape too, which Mr Gates says is like ordering Coca-Cola to sell three cans of Pepsi in each six-pack.
The Justice Department has found internal company memos which seem to show Microsoft deliberately squashing competitors.
In one message, executives suggest that Explorer could not beat Netscape head on, but "if [computer users] get our technology by default on every desk, then they'll be less inclined to purchase a competitive solution. . ."
Mr Gates has contributed to the impression of monopoly mania by saying: "Our business model works well even if all Internet software is free . . . We are still selling operating systems. What does Netscape's business model look like? Not very good."
This insouciant threat fits a version of Mr Gates the public knows little about. A chief executive who attended the lakeside audience last year was quoted on an Internet news website as saying: "The purpose was to get all of us to make the trip, to show that the leaders of government and captains of industry were smaller than he was."
It was a telling comment for the Justice Department lawyers who arranged a meeting with Microsoft earlier this month to see if they could settle the anti-trust suit amicably.
Joel Klein, assistant attorney-general, and his team sat and waited at the department for half an hour, but Microsoft's legal eagles never showed up. An official came in and told them Microsoft thought the meeting was at the office of the company's Washington lawyers, Sullivan & Cromwell.
A misunderstanding? Of course, the department concedes, but typical of a company that assumes that others will come to them, not the other way round.
Mr Gates is learning that he cannot stay aloof from the mud-wrestling of Washington politics. He has to engage the enemy and get his hands dirty. Suddenly he is donating software and cash to politicians - $220,000 since the beginning of April. And he is also to be seen in suit and tie talking to reporters, getting the word out.
The trouble for him and Microsoft, though, is that even if they win, they may still lose.
A long legal battle will sap company morale, and staff may cut their losses and seek work elsewhere. Executives will have to make decisions with a lawsuit hanging over their heads. And if the injunction decision, expected in six weeks, goes the government's way, Microsoft will inevitably start including Netscape and other Internet rivals in its long-term software planning.
A final court decision may not come until next year, and that is an eon away in an industry that produces new generations of software every six months. Even if Microsoft wins the court case, it may have effectively fled the battlefield by then.
That is what happened to IBM. The government pursued Big Blue through the courts for 13 years, accusing it of monopolistic behaviour, until finally dropping the case in 1982 because new technology had made the issue moot. By then, the demoralised "victor" had been supplanted by other manufacturers who, having less distractions, had realised that personal computers, not mainframes, were the wave of the future. Similarly, eight years of litigation forced American Telephone & Telegraph to break into seven competing companies.
Mr Gates argues, and many agree, that he is being picked on because today's political climate does not embrace success. "They want to penalise us for being too good at giving consumers what they want," he wrote in the Wall Street Journal this week.
He said he was willing to endure the long legal battle. "We simply don't think the government should get involved in product design." He may be right, but in these monster cases, which have re-shaped the American industrial landscape, being right is not enough. Law and principle may be on the nerd's side, but history is not.
