Microsoft chairman Bill Gates and president and chief executive SteveBallmer, in a full-page ad appearing in the Wall Street Journal, the NewYork Times and other major newspapers, argued that splitting the company intwo would hurt consumers and punish innovation. "The dismantling ofMicrosoft would also send a signal that companies in America that are 'too'successful will be punished harshly-a signal that will be welcomed byforeign competitors seeking to overtake America's global leadership intechnology," they wrote in an open letter addressed to "Our Customers,Partners and Shareholders."

Bob Garfield, the Washington-based advertising critic for industry bibleAdvertising Age, said it was not surprising that Microsoft was taking itscase directly to the public. "It's crazy not to try to manage public opinionby emphasising all their contributions to the e-culture - contributionspast, present and future," he said. "However, in the end, it doesn't mattera great deal, because this case will be determined not in the court ofpublic opinion, but in the US Court of Appeals." Still, Kevin Lynch, aprincipal in HLB Communications, a Chicago public relations firm that servestechnology start-ups as well as Fortune 50 companies, said Microsoft'sattempt to tell its side of the story was important from a public relationsperspective.

Lynch said that while Microsoft may hope to influence, and perhaps mobilise,its shareholders to actively oppose a break-up, a more critical audience forthe advertising is its own employees. "If Microsoft employees feel thattheir future success with the company is jeopardised, there are a lot ofopportunities to go searching in other directions," he said. "Having theright, bright people is Microsoft's key asset. That has to be protected atall costs."

The newspaper advertising was the second such appeal to the public. Thefirst appeared prior to Friday's proposal by the US Justice Department andstate attorneys general that the Redmond, Wash., company be split into twoentities for violating federal anti-trust law. On Sunday, Microsoft alsolaunched the second of two 30-second television ads. In the spot, Ballmer,like Gates in a previous TV ad, does not mention the anti-trust case.Instead, he talks about the importance of technology to the US economy andMicrosoft's plans to improve its products. "We're still focused oninnovating, delivering value and listening to customers," Ballmer said ofMicrosoft. Like Gates, he concludes: "The best is yet to come."

Dan Leach, a spokesman for Microsoft, said the ads are part of a corporateimage advertising campaign. "The company's been in the news so muchobviously that Steve wanted to speak to customers," he said. Microsoft'sadvertising agency is the McCann-Erickson Worldwide unit of the InterpublicGroup. The company has until May 10 to respond to the government's break-upproposal, and the Justice Department then has a week to respond, prior to aMay 24 court hearing. An appeal of the anti-trust verdict is expected tolast at least a year.

"It sounds like a fairly blatant effort to appeal to the court of publicopinion in the hope that in the next election there will be a change ofadministration and that they will be able to persuade the new administrationto drop the case," said Harry Davis, an anti-trust attorney at the New Yorklaw firm Schulte Roth & Zabel. He compared the case to an anti-trust suitagainst International Business Machines Corp. that dragged on for yearsbefore it was eventually dropped by the Reagan administration.

However, Mark Popofsky, a partner in the Kaye, Scholer, Fierman, Hays &Handler law firm in Washington who was senior counsel to Assistant USAttorney-General Joel Klein and a member of the Justice Department teamlitigating the Microsoft anti-trust case, said that was an unlikely outcomein the current case. He cited Klein's comment over the weekend that theproposed break-up of American Telephone & Telegraph was initiated under oneadministration, prosecuted another another and accomplished under a third.

"Once you get to a certain stage, it's impossible to drop the case," hesaid. "If we (the Justice Department) won and it's on appeal, it's very verydifficult for the government to dismiss a case."