"When one company takes out ads that are large and expensive that extol the virtues of another company, it's usually because it's a monopolist trying to tell people that they're not really a monopolist," Boies said.

"You see this discussion in the ads about how dynamic and competitive the software industry is, but there is no discussion at all about the PC (personal computer) operating system, and that's what this case is about," Boies said.

Boies' remarks were meant to send a strong signal that government trustbusters plan to press on with their case despite the AOL-Netscape merger and will still take steps to try to reign in Microsoft's power over the high-tech industry at the end of the trial.

"The issue is, is there anything in the merger that is going to affect the core issue in this case, which is the operating system monopoly that Microsoft has and uses in unfair and exclusionary ways to prevent new competitors from developing?" Boies said.

Last week Microsoft lawyers said the AOL Netscape deal totally undermined the government's case and called on Attorney General Janet Reno to drop the lawsuit.

In the new ads, which began running in several newspapersthis weekend, Microsoft praises the merger between rivals AOL and Netscape and says:

"The lesson of the past week is that the market will take care of consumers better and faster than the government ever can. Winners ought to be decided by you - the consumers in the marketplace - not by armies of lawyers in the courtroom."

Microsoft spokesman Mark Murray said the company launched the ads to remind the public that it believes the competitive landscape in the high-tech industry has been dramatically altered by the $4.21 billion AOL Netscape deal, outpacing the government's ability to regulate it.

"Government regulation is always going to be five steps behind," Murray said.

The ad campaign comes at a time when polls are showing public sympathy running in favor of Microsoft and its high-profile Chairman Bill Gates - the world's richest man.

A recent Business Week Survey shows 47 percent of the public thinks the government is hampering Gates' ability to innovate and compete - while only 34 percent believe Gates has too much power.

But inside the courtroom, the tide seems turning against the software giant.

Judge Thomas Penfield Jackson, who will be deciding what, if any, remedies to impose on Microsoft at the end of the trial, seems increasingly exasperated with Microsoft's defense tactics and is giving government witnesses a wide berth to tell their stories under oath.

Company lawyers are clearly behaving as though they already expect to get an adverse ruling from Jackson and are using the trial to build a record that appears designed for higher courts, legal experts say

-- Niles Lathem - 12/01/98