The corporate evolution is several versions behind that of its software, but this latest evidence of the company's ability to reinvent and reposition itself commands respect. The whole saga of American business presumes a life cycle in which companies run out of energy as certainly as aging humans do. When familiar brands - Montgomery Ward stores, American Motors cars, Wang computers - go out of business, we're tempted to view this as a natural process of decline. The established companies that avoid this fate are therefore more interesting than startups, like Catherine Deneuve or Clint Eastwood versus their starlet counterparts.
In the 1970s, General Motors was the symbol of bloated, indifferent American manufacturing. In the 1990s it restored its dominance, in part by making itself an "info-tech" company through its OnStar system. In the 1980s, IBM was being humiliated by upstarts. Now it is back as the single greatest force in the technology-hardware business. At the beginning of this decade, the cloud over Microsoft was not just the antitrust action but also the increasing sense that the company had lost its edge, could not attract the brightest talent, was in middle-aged decline. That Microsoft could have made such judgments seems naive - while at the same time learning to compromise rather than fight its way out of its legal difficulties - will rank as one of its great survival achievements.
Microsoft's reemergence, arguably stronger than ever, is part of the modern process through which the tech economy has become divided into a handful of superpowers, each with its associated states. Through MSNBC, Microsoft is allied both with the NBC television empire and the Newsweek-Washington Post print operation. AOL is of course allied with the powerful Time Inc. magazines, Warner Bros. studios, CNN and others. Rupert Murdoch's News Corp. holdings, Michael Eisner's Disney - increasingly they divide the world of media and technology amongst them.
In such a world the rules for competition are especially important, to keep the great powers from ganging up on each other or from preemptively squashing future aspirants. Six months into the Bush era, only one prominent administration official has addressed this subject. That is Michael Powell, Bush's chairman of the Federal Communications Commission, and about the time of the appeals court ruling he made a speech in Washington revealing some of his thoughts about high-tech competition.
Powell had been stung by press reports suggesting his views were an unnuanced version of laissez-faire, in which whatever result the market produced was by definition good. His speech was an attempt to offer refinements. Even this presentation had its unnuanced aspects. For instance, Powell said nothing whatsoever about the central competitive issue now before the FCC: the charge that regional Bell companies are trying to stamp out new competitors, especially DSL firms like Covad, by deliberately making it hard to use the Bells' local phone lines.
But Powell did suggest there was reasoning and not just reflex behind his views, and he even suggested that there were circumstances in which the market might fail. We could think of this as Version 2 of his philosophy of competition. The tech world looks forward to Version 3.
James Fallows is also the national correspondent for the Atlantic Monthly.
