Moratorium or less

National | Why the Net tax moratorium is likely to give way; Netscape's latest browser gives a glimpse of the new Net; Microsoft goes on the public-relations offensive

Issue: "Back to no future," April 22, 2000

Point-and-click taxation
The political battle over Internet taxation gets hotter and hotter. Congress is slated to vote on three big bills that will keep the hand of government out of the e-commerce till: a repeal of the 102-year-old telephone tax, a permanent ban on Internet access taxes, and an extension of the overall Internet tax moratorium until 2006. But don't expect this will last forever. With the high-tech boom sending millions to the Internet to do everything from banking to Christmas shopping to house hunting, this is literally a new economy in the sense that many taxes normally paid to brick-and-mortar institutions are bypassed online. First and foremost is the state and local sales tax, which has both state governors and traditional retailers up in arms over lost revenue when people cross local jurisdictions with their computers. The National Governor's Association is pitching a concept called "E-quality," which will supposedly even the economic score for all parties. NGA chairman Gov. Mike Leavitt (R-Utah) wants states to create interstate compacts that allow them to collect the money on remote Internet sales. E-commerce is certain to grow by leaps and bounds in the years to come, which makes this marketplace too juicy for governments not to want a piece of the action. Governments may not hit Internet access, but they'll want a piece of Internet transactions, where real money changes hands. It's not a question of whether, but when and how much. The lay of the Netscape
Want to see where the Internet is headed? The new Netscape browser gives some hints. The software that helped start the Web boom is now an underdog trying to keep paddling in waters dominated by Microsoft. Netscape 6 is a leaner, meaner surfing machine. Today's major browsers, Microsoft Internet Explorer (IE) and the last version of Netscape, are a little like bad European cars: heavy, gray, and boxy. This update is a complete overhaul of the old programming, resulting in more functions that run faster and use less disk space. It also runs about the same on Windows, Macintosh, or Linux machines. A funky feature in this version is something called a skin. By changing some files, creative types can design an entirely new look for their browsers. Eventually, users will be able to choose from many choices that fit their whims. Skins will range from designs that promote brand names to looks that fit different motifs and subcultures. But Netscape's corporate parents at America Online have more in store for this browser than just running it on desktop computers. Its market share on desktops is lost to Microsoft, which bundled IE with Windows 98 and received a massive antitrust suit in the process (see below). Eventually, Netscape may help you travel the Net without a typical computer. The new version is made to be adapted to television set-top boxes, cellular telephones, and handheld computers. We won't see such adaptations for some time to come, but it shows that Internet technology is moving toward ubiquity. Cyberspace will give way to real space. "Nothing but an idea"
While the legal system mulls "remedies" for the Microsoft monopoly, the software giant's founder Bill Gates is taking to television with low-key commercials promoting Microsoft as an important innovator. They don't mention the antitrust case. The point is to play off the public's general goodwill for the Redmond-based software company. "Twenty-five years ago, my friends and I started with nothing but an idea-that we could harness the power of the PC to improve people's lives," Mr. Gates says. "Since then, it's become a tool that has transformed our economy and had a profound effect on how we live and how our children learn." Right now the company is in a position where innovation is hard. Much of the high-tech momentum is moving toward worlds beyond desktop PCs. In wireless devices, handheld computers, and video games, Microsoft is up against competitors familiar with the company's tactics and willing to put up a hard fight. No one knows who will win. Another potential problem for Microsoft is more lawsuits from the private sector. The issue here is not that Microsoft is dead or that the technology explosion is over. But the days of the company as a market gorilla may be shortened prematurely, thanks to the antitrust suit. Some permutation of the company will likely be around for a long time to come, but it may be just one power player among many, no thanks to the suit.

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