REDMOND, Wash. — When Apple Computer Inc. transformed the digital music scene in April 2003 by selling songs over the Internet, the richest man in the world was not amused. Microsoft Corp. Chairman Bill Gates had struggled for a decade to get his software into consumers' home entertainment systems. Now the digital media party was finally starting, and he wasn't invited. But the blow gave Gates new insight, motivation and some needed humility — and it intensified work on what might prove the turning point in his quest to extend Microsoft's supremacy from the office into the living room. Just weeks after Apple's seismic announcement, Gates and new AOL Time Warner Inc. Chairman Richard Parsons settled America Online's claim that Microsoft had crushed its Netscape software subsidiary with illegal monopolistic behavior. More important, Gates and others said in recent interviews, the settlement led to a new relationship that has changed the course of Microsoft's fractious dealings with Hollywood. Since then, the Warner Bros. studio has guided its movie industry peers in quietly meeting Microsoft halfway on a range of contentious issues, setting the stage for the software giant to play gatekeeper for the home video business of the future. The alliance with what is now Time Warner Inc. "is quite an amazing thing, given that they had a lawsuit against us and we were really mostly in conflict," Gates said in a recent interview. "We have a great, ongoing dialogue with them, including them guiding us on the concerns of other content companies." Gates' battle to succeed in video where he failed in music is far from over. For one thing, the movie studios and television broadcasters are more prone to internal disagreement than were the record companies when Apple signed them up. That makes it trickier for Microsoft to forge content deals. Read the rest of the article at the L.A. Times.
