Bob Kolasky is the managing editor of IntellectualCapital.com. His e-mail address is bob@voxcap.com

Part and parcel with the information revolution is the combination of myth-making and cult of personality that has dominated revolutions throughout the world's history. Every revolution creates heroes and villains, men and women who are larger than life and who exist more as legends than merely human beings. In this late 20th-century bloodless revolution, that has certainly held true -- and no man personifies the phenomenon more than Microsoft founder Bill Gates.

Alternatively seen as a mad genius, a living example of the American dream or just a ruthless businessman, Gates overshadows the entire booming high-tech industry, in ways disproportionate even to the fact that he is in charge of the company with the largest market capitalization in the world. "At some point Gates ceased to be simply a powerful industry figure; he has infiltrated the world's dream life," writes journalist Gary Rivlin, in his recently published book The Plot to Get Bill Gates. Rivlin portrays the richest man in the world as a kind of Moby Dick being stalked by dozens of Captain Ahabs obsessed with bringing down Microsoft.

The government draws blood

Last week, the government did what so few of Gates' rivals have been able to do in the past 15 years: drew blood in their battle against the white whale. Now, emboldened by the release of federal Judge Thomas Penfield Jackson's finding of fact in United States of America vs. Microsoft, the Justice Department (DOJ), believing that it possesses firm evidence that the biggest company in the world is an illegal monopoly, has Microsoft on the run.

The evidence: The 207-page finding of fact which offers a damning opinion that Microsoft is guilty of illegal monopolistic practices. In the finding, the ruthless practices of Microsoft shine through. Jackson's findings demonstrate that whether by bullying or cajoling, blackmailing or sweet-talking, Microsoft is a company willing to use all sorts of corporate chicanery to gain a monopoly in Intel-compatible PC operating systems, maintain that monopoly and then leverage it to win the Internet browser war.

Jackson rejected almost all the arguments made by Microsoft's lawyers in defense of the company. Jackson found that Microsoft distorted competition, hobbled innovation and harmed consumers. "Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products," he wrote.

"I am not surprised by the ruling -- except for the fact that the tone was so very strong," says Bob Lande, a professor at the University of Baltimore Law School. He says the ruling was so strong because "the judge wanted to shock Microsoft back into reality."

If so, it is a reality that Microsoft rejects. "We respectfully disagree with a number of the court's findings," Gates said at a press conference following the release of Jackson's report. Since then, Microsoft's executive leadership -- absent Gates -- has gone on a public-relations blitz, demonstrating that they have no intention of accepting the judge's findings.

Most notable has been Microsoft President Steve Ballmer. In an op-ed for The Wall Street Journal, Ballmer wrote: "We remain committed to resolving this dispute in a fair and responsible way. But we cannot compromise on the government's demands that Microsoft essentially stop listening to the marketplace and cease innovating its products."

Microsoft demonstrates it is largely unrepentant

Ballmer's public statements -- as well as those by other top Microsoft officials such as Chief Operating Officer Bob Herbold -- demonstrate that the corporation is largely unrepentant. While Jackson's findings might have been a victory for the government, Microsoft is sending clear signals that it is not ready to concede defeat.

"The finding of fact hasn't changed Microsoft's opinion," says Rick Rule, an antitrust lawyer for Covington & Burling, who has served as a paid legal consultant for Microsoft.

The only real option

Resolute as ever, Microsoft must decide its next step. It has two clear options: settle the case soon or continue to fight via the appellate process. For longtime observers of Microsoft and Gates, as well as those who have followed this trial through the last two years, the latter is much more likely.

Scenario No. 1 has Microsoft and the Department of Justice reaching an agreement sometime in the next couple of months, before Jackson actually rules on the case. Any settlement would most likely enable DOJ to take punitive measures against Microsoft, either in the form of conduct relief (changing the way Microsoft does business) or in the form of structural relief (changing how the company is set up, and essentially dividing it into several parts). What is not clear is what kind of relief DOJ is interested in pursuing. "The government has been like a sphinx in deciding what to do next," Lande says.

Settlement is unlikely for many reasons. For one, not just the federal government is pursuing Microsoft. Nineteen state attorneys general are co-plaintiffs in the case, and each of them would have to sign a settlement deal for it to end the trial. The state AGs are a "roving wolfpack" out for blood, says James DeLong, the vice president for the National Legal Center for the Public Interest, and they likely will take a much firmer stance than the federal government.

"The states make it more difficult to settle," says Steve Salop a professor of economics at Georgetown.

Another reason is that with Microsoft's position unchanged, it is hard to imagine DOJ capitulating and offering terms satisfactory to Microsoft. The government's lawyers, after all, have the upper hand following Jackson's findings.

Thirdly, a herd of Microsoft competitors are eager to sue for damages should Microsoft admit wrongdoing -- and even though a settlement likely would allow the company to avoid a legal admission, it certainly would cast a pall over its actions and embolden potential claimants.

Bill's world

Nothing in Gates' character indicates he'll stop fighting

Microsoft is unlikely to settle for another reason, too: It is not in Gates' character. When assessing what Microsoft does next, you must give prime consideration on what Gates will do next. All the myths and lore surrounding Gates do not diminish the fact that as much as any corporation in America, Microsoft and its chief executive officer are one and the same. Those who have studied Gates predict that nothing in his character gives any reason to think he will stop fighting the government's lawyers.

"Given what I know, and what I have read about Bill Gates, his personality and control of the company, I can't even begin to imagine Microsoft settling on terms that the government would accept," says Paul Schindler, the editor of WinMag.com. "For Microsoft and for Gates, it's not about the money. It's about winning."

"I can lay out a logic for settling," Rivlin said in an interview. "But I don't think it will happen. ¿ Both (Microsoft's) strength and weaknesses lie in the fact that they always think they're right." He added: "Right about now Gates probably has disdain for the government and for their stupidity. He undoubtedly feels like they are out to get him."

Those who follow Microsoft will tell you that for the company, business is personal. This lawsuit is no different, so it is hard to imagine it offering a truce on government terms.

The appeals process

So the government should be prepared for an appeal. "An appeal is inevitable," says Rule.

What will come from such an appeal? Here, there are also a number of scenarios. The most likely is that, depending on what relief the judge recommends, the appeals court will place an injunction on any sanctions against Microsoft while the appeals process continues. That process which will likely last two to four years could ultimately reach the Supreme Court.

A lot will change in two to four years. For one, the technology market, and Microsoft's role in it, are sure to be different. Issues being debated in Jackson's courtroom could be largely irrelevant by then, and so could the government's recommended relief. Microsoft's monopoly in the operating system could dissolve by then -- being overtaken by some combination of open-source operating systems such as Linux, middle-ware application providers and some yet unknown innovations.

The political climate, too, undoubtedly will change. In 2001, a new president will take office, and if it is Republican George W. Bush (or John McCain or Steve Forbes), the new lead DOJ lawyers -- appointed by a Republican president -- may decide this is just excess government meddling. (There is precedent: In 1982, after Ronald Reagan took office, DOJ decided that it was time to end its pursuit of IBM.)

Even disregarding changes in political and technological circumstances, there is the real possibility that the appeals court or the U.S. Supreme Court will find Jackson's eventual ruling to be legally inaccurate. So, as Rivlin explains, for those who would like to see Microsoft fail, "there is still plenty of time to be disappointed."

A sausage for every computer?

Still, Microsoft is reeling as much as any time in recent memory. Jackson's findings -- combined with the facts that the Internet has created new high-tech behemoths, that Microsoft stock has performed less than stellar this year and that several top Microsoft executives have resigned -- have contributed to a sense that the company's aura of invincibility is diminishing.

However, as most everyone will tell you, it is a mistake to count Microsoft out. As Mitch Stone, the editor and publisher of Boycott Microsoft, explains, "Microsoft has so much momentum, it could start making sausages, and [it would] be successful for a number of years."