REDMOND, Wash. -- A giant company, driven by an ultra-competitive businessman, frightens an entire industry. Can

anyone stop him, asks a national magazine.

A scene from "Dallas"?

No, a scene from Redmond, where Microsoft Corp. and Chairman Bill Gates are not just winning but massacring competitors, as Forbes magazine recently proclaimed.

As Microsoft has strengthened its grip on the personal-computing industry, competitors have groused privately about its aggressiveness.

Now a Federal Trade Commission investigation is focused, at least in part, on allegations that Microsoft may have teamed up with another giant, IBM, to control the market for systems software.

Mr. Gates predicts a resolution of the case without any problems. Meanwhile, it's open season on Microsoft, the world's No. 1 PC software company. Many software developers refuse to talk publicly, fearing retaliation. But some are coming forward with a host of complaints. They accuse Microsoft of using confidential information about competitors, strong-arming companies into deals favorable to Microsoft and punishing anyone who complains or shows independence.

All this, they say, from a company so dominant it cannot be ignored.

"It's scary," said Robert Kleiber, a computer-industry analyst with Piper Jaffray & Hopwood. "There's a knock at the door, and it's Attila the Hun and he wants to have dinner with you. You have to let himin but, at the same time, he can pillage your house."

Microsoft supporters, on the other hand, say the company is aggressive, but fair and ethical. Microsoft has built a market for thousands of companies in the industry whose products go hand in hand with Microsoft's products, they say.

Stewart Alsop, editor and publisher of P.C. Letter, says the complaints should be viewed in the context of an industry where Microsoft has triumphed over others.

"There's a lot of sour grapes," he said.

Microsoft itself denies any wrongdoing.

But on Friday, it acknowledged that the FTC was broadening its investigation to determine whether it has monopolized -- or has sought to monopolize -- the market for several key products. That news battered Microsoft's stock, which tumbled $2.75 to $108.25 in heavy over-the-counter trading Friday.

Microsoft said the FTC is examining competitive practices related to the company's three operating systems. The antitrust probe also includes Microsoft's "mouse" pointing device, the company said.

Concerned that its credibility has been damaged, the company seems willing to eat a slice of humble pie.

"There's a greater sensitivity around here," said Marty Taucher, Microsoft's director of public relations. "Some of our most important customers [outside software developers] are upset with us. We've heard them loud and clear."

Mr. Taucher said Microsoft wants to improve relations with outside developers. The group assigned to assist developers will be doubled, to 40 people, and the company will try to contact people and listen to their concerns. Mr. Taucher said the company has not intentionally been rude to anyone.

"We approach our business with a zeal and a passion," he said. "That sometimes puts people off. I wouldn't characterize it as rude."

To understand the complaints, one must first understand Microsoft's unrivaled power in personal computing.

Microsoft sells both operating systems -- the basic control software for computers -- and applications such as the Excel spreadsheet and the Word word-processing program.

With certain exceptions, such as the Apple Macintosh, the bulk of the nation's personal computers run on the Microsoft operating system, MS-DOS. A graphical enhancement to DOS, Windows, has been a runaway hit, further cementing Microsoft's position. The operating systems are cash cows to finance development of new products.

People writing programs for DOS computers often must deal with Microsoft. Those writing programs for the complex Windows program say they often need technical assistance from Microsoft so their products work smoothly. These conversations, say competitors, give Microsoft a peephole into competing companies and their planning.

Concerns about Microsoft fall into four categories:

* The IBM-Microsoft deal. The FTC will not say why it is investigating Microsoft, but Microsoft says the agency's questions have focused on an agreement it made with IBM in 1989 regarding OS/2, a systems software being jointly developed.

According to Microsoft, the issue is whether Microsoft and IBM were, together, limiting the competitiveness of Windows in order to spur acceptance of OS/2.

To many observers, it's ridiculous today to think that Microsoft restrained Windows. But the FTC is likely examining what the companies' intentions were at the time, their ability to influence the market and what they actually did.

Some who have been contacted by the FTC say the investigation is broader.

They say FTC investigators are likely to hear complaints that Microsoft changed its mind about OS/2, switched its own development efforts to new Windows applications, but continued to tell outside developers that OS/2 was their emphasis.

The question is important because those who saw Windows as the coming software platform could develop products for that system and be first on the market. Because resources are limited, it's hard to place bets on two systems, developers say.

Critics say the proof of Microsoft's bad faith is that Microsoft has relatively few products for OS/2, while it has all the major best-selling applications for Windows.

Mr. Taucher said Microsoft continues to push OS/2, for which it has released two of its most important products, Excel and Word.

Microsoft last year did change its strategy to reflect the market reality that customers wanted to stay with DOS, Mr. Taucher said. The change was communicated publicly. DOS and OS/2 are now expected to have "coexistence, perhaps infinitely," he said.

IBM, meanwhile, reportedly has been upset with what it viewed as Microsoft's inadequate support for OS/2. IBM last fall assumed a greater share of OS/2 development and recently announced a deal in Utah with Provo-based Novell to promote an OS/2 version of Netware, a computer networking product that would compete against Microsoft's LAN Manager program.

* The "Chinese Wall." Microsoft insists that it does not use its peephole into outside software developers to benefit its own in-house developers.

The industry press refers to Microsoft's "Chinese Wall" between systems people and applications developers. Critics, however, say information does pass back and forth, formally through the ++ company's electronic-mail system or informally at social meetings, like a company softball game. If the wall exists, they say, several senior executives, particularly Mr. Gates, freely walk on both sides.

One software executive, who asked not to be named, said his company was the victim of "date rape." He said his company developed a product for Windows and showed it to Microsoft, which promised not to copy it. Later, Microsoft came out with a competing product.

"They tricked us and took advantage of us," he said.

Cameron Myhrvold, manager of Microsoft's developer-relations group, said his group hears little that would be considered confidential. Outside developers share few secrets, he said.

Moreover, it would be foolish for Microsoft to betray those confidences, he said, because it is in Microsoft's interest to promote outside developers. "From the systems-software perspective, more is better," said Mr. Myhrvold.

Connie Waite, director of marketing for Redmond's hDC Computer Corp., which makes a utility program for Windows, said Microsoft does learn confidential information about her product by seeing it early and learning hDC's market plans. But she said she trusts Microsoft not to abuse its position.

Without Microsoft, there would be no hDC, she said.

* The carrot and stick. Critics say Microsoft tries to intimidate dissidents by various means, such as withholding vital technical assistance.

This is what Frank Yeh, vice president of Z-Nix Co. Inc. of Pomona, Calif., said happened to him after Microsoft tried to pressure his company to accept a financial arrangement he rejected.

A year ago, he said, Z-Nix reached agreement with Microsoft regarding running a Z-Nix mouse on Microsoft's Windows system software. Everything, including royalty payments to Microsoft, was set in writing, but the papers had not been signed, he said.

As Z-Nix moved forward with plans to release the mouse, he said, Microsoft abruptly said it wanted to double the royalty payment.

When Z-Nix objected, Mr. Yeh said, Microsoft held off releasing a master kit that Z-Nix needed to legally release the mouse. The delay cost him $1.5 million in sales, he said.

Microsoft denies Mr. Yeh's version of events. There was no agreement on royalties because Microsoft first wanted to resolve its complaint that the Z-Nix mouse violated a Microsoft patent, said Mr. Taucher.

Z-Nix filed a lawsuit in the case. The next day, Microsoft's lawyers flew down and settled. William Neukom, Microsoft's vice president for law and corporate affairs, said a news release jointly released by the companies validated Microsoft's patent claims. The release said that Microsoft had "legitimate" claims against Z-Nix.

* Ethics. Supporters say Microsoft will push any competitive advantage but not cross the ethical line. Critics say it's a fuzzy line.

Pete Peterson, executive vice president of WordPerfect Corp., maker of the nation's dominant word-processing program, recalled the time in 1988 when his company was visited by an IBM executive, Michael Maples, who got a briefing on his product. A few weeks later, Mr. Maples became vice president of applications at Microsoft. Microsoft is aggressively pushing its Word to compete with WordPerfect.

"Did Mike Maples know he was going to work for Microsoft when he asked those questions? I don't know," Mr. Peterson said.

Mr. Maples has a different version. He said he was approached by Mr. Gates about a job sometime in May after the February WordPerfect meeting.

The meeting was only about 90 minutes, with Mr. Maples encouraging Mr. Peterson to develop software for OS/2. Nothing he learned about WordPerfect at that meeting was shared with anyone at Microsoft, nor would he act on any information learned then, Mr. Maples said.