Advertisement
News

Microsoft Takes a Hard Hit

Increased competition -- usually a good deal for consumers -- is in prospect for banking by personal computer, a field on the verge of explosive growth. With the collapse of Microsoft's $2.1 billion plan to acquire Intuit and its popular home-banking software system (Quicken), there could be a fierce scramble in a lucrative market.

For the Justice Department's anti-trust division, Microsoft's uncharacteristic withdrawal from the field of battle is a doubly sweet victory. It helps division morale after being chastised by a federal judge for being too soft on Microsoft in an earlier unfair business practices case. And it may embolden Justice to scrutinize future Microsoft acquisitions that could give that company even greater dominance in its ever-widening fields of operation.

Advertisement

Although there is a general consensus that Microsoft has experienced one of the few setbacks in its 20-year history, its chairman, Bill Gates, is poised to bring new developments to market.

In August it will be launching an electronic on-line service, Microsoft Network (MSN), that is expected to challenge and perhaps outgun such existing on-line services as Prodigy and America Online. At about the same time it will be marketing Windows 95, a software system that with the push of a button will connect on to Microsoft Network. This "bundling" of two different products, even though they have been developed in-house rather than by merger or acquisition, is likely to be bird-dogged by the Justice Department.

Advertisement

Microsoft and Intuit are now competitors rather than partners -- with Microsoft poised to develop a personal-finance system, Money, that it had practically given away when Intuit's Quicken beckoned. Meanwhile, Intuit is on the prowl for other partners with which it can challenge Microsoft.

Such a competitive outcome is precisely what the Justice Department wanted. Yet it may be not quite that simple. Even Mr. Gates may have bitten off more than he can chew by taking on the U.S. banking system before the technology exists to deliver money or take deposits from Quicken or Money customers. But he also may have shown himself to be the ultimate pragmatist by walking away from a deal too often described in superlatives. He also blanched at a law suit that could have taken more than a year -- a period that in his business would seem like a century. It is not for nothing that he is sometimes called the Rockefeller of our era.


Advertisement