THE BEAST from Redmond, Wash., is back. Software giant Microsoft and the U.S. government ended their three-year legal battle with an agreement announced last week.

The Justice Department sued Microsoft in 1998 over antitrust violations, charging that Bill Gates and his boys had acted like a mafia crime family in building up an effective monopoly in the software industry.

The feds won two court decisions in the case--the last one, a 7-0 rejection of Microsoft's appeal by a federal appeals court. But last week's agreement gives up numerous concessions to the Microsoft mob.

The deal effectively allows Microsoft to continue its dominance in the market for Web browsers--even though the government proved that the Gates gang used extortion against rival Netscape.

Some of Microsoft's media minions justified the agreement as a patriotic response to the post-September 11 economic tailspin. But Norman Hawker, a research fellow at the American Antitrust Institute, says that the Bush administration wanted to lose.

"They expected to lose in the Court of Appeals," Hawker said. "When they won, they were put in the embarrassing position of winning a case that they were opposed to from the start…Microsoft, when they saw this settlement, must have thought it was raining pennies from heaven."

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