EDITORIAL - Lost the battle but winning the war

Can you guess which lawyer accepted the biggest legal defeat in his company's history this week with the battle cry: 'However, the stipulation does not settle other issues before this court'? No prizes for guessing it was Microsoft's hot shot legal eagle Stephen Holly. The settlement reached on 22 January over the unbundling of Internet Explorer from Windows 95 was a huge defeat for Microsoft and one which the company will not easily recover from. But, Holly's remarks underline the software giant's persistence - and the main reason why it is so successful.

It is a story we should try and look at objectively. Unfortunately, Microsoft is the one company we cannot look at objectively anymore.

So while not condoning Microsoft's attitude, it is worth skating over the surface of some historic moments. Was it not Apple who nicked the look and feel of the undeveloped Xerox Parc concept - then did a deal with Microsoft to licence that less-than-virgin concept? Apple arrogance met the cunning and seemingly self-effacing Mr Gates, and took too short a spoon when it went a-suppin' with the Microsoft devil. So why complain when the devil eats your dinner as well?

The business practises of both companies are not that far apart. What is happening, whether we like it or not, is the inevitable accumulation of capital into fewer and fewer hands. It has its downside in the power of Microsoft. And there is no doubt that when IBM was in a similar position in the mid-range software market it behaved the same way.

The argument is not over the size of a bloated software giant - it is how we can ensure that Microsoft doesn't eliminate the entire food chain. That is a perfectly legitimate worry, and one that is increasing as Microsoft's corporate arrogance grows.

This industry seems to be so anally retentive that it looks no further than its own preconceptions. This is still a young, vibrant industry which can spawn massively successful startups like Netscape, able to zoom into the profit stratosphere very quickly. But behemoths such as IBM, Microsoft, Novell and Compaq will always tend to swallow the bright young things. But does that mean business acumen and super-aggression or does it really mean an attempt at world domination?

How far should governments interfere in the regulation of an international market they probably don't understand? In this single case, at least the US Department of Justice have got it right.

Microsoft's policy of throwing more and more products at the customer disadvantages small companies who depend on added value for their profit margins. And the astonishing 'offer' on a two-year old version of Windows to users who did not want Internet Explorer was an insult Judge Jackson could not ignore.

How can Microsoft hit back without stirring up even more animosity?

I look forward to hearing Bill Gates speaking from the dock next time.