It ain't over til it's over, as the American expression goes, and it sure ain't over yet in the battle of the browsers, despite the agreement reached between Microsoft and the US government regarding Microsoft's Internet Explorer (IE) browser last week.

In a last-minute agreement with the US courts, Microsoft promised to remove the IE icon from the Windows 95 desktop, which had made IE the default browser for anyone buying a computer with Windows 95 installed (about 85 per cent of the PC market).

Rival browser maker, Netscape, had complained that this gave a separate Microsoft product a competitive advantage.

US Attorney General Janet Reno took a look at the situation and decided last October that Microsoft was violating the consent decree it had signed in 1995 (in response to a US federal antitrust investigation) which stated it would not use its operating system dominance to leverage other Microsoft products. Reno imposed a $1 million (£709,000)-a-day fine until Microsoft pulled IE; Microsoft refused to do this, stating the browser was an integral part of Windows 95; and contempt hearings were launched in Washington DC in December. Closing arguments were set for Thursday last week, but the night before, lawyers for both sides announced they'd reached an agreement. The icon would go but if users chose to install IE rather than Netscape Navigator or Communicator, special files contained in Windows 95 could work with the IE browser in complementary ways.

Microsoft saved some face, as it could spin the agreement to argue that the government had conceded that there were parts of Windows 95 designed to work with IE which could not be removed from Windows 95 without crippling it. On the other hand, analysts and the media widely saw the agreement as a backdown by Microsoft. In the wake of the agreement, Netscape immediately announced it would give away both its browser and more intriguingly, its source code, the computer code which developers need in order to design products and add-ons which will work with Navigator and Communicator. In doing this, Netscape is matching Microsoft's policy of, effectively, letting outside developers enhance its core product.

Certainly, the agreement gives Netscape some competitive breathing space. But many original equipment manufacturers (OEMs) say they will still offer IE as a default browser. OEMs can offer whatever package they want to consumers. It will take time to see whether Netscape can retain its current market leader position in the browser business or perhaps gain back share lost to Microsoft.

But all this is a sideshow. By signing an agreement last week, Microsoft avoided the risk of being told definitively by the court to thoroughly detach IE from Windows 95. As any Microsoft-watcher knows, Windows 95 is now just an appetiser for Windows 98, which by all accounts will indeed blend browser and operating system into a whole.

After this skirmish in the courts, Microsoft's lawyers will go away and begin girding their loins for the real battle sometime next year over whether IE is a stand-alone product or an element of a larger product.

Yet, Microsoft has at least for the present, lost a crucial, if less tangible battle for the hearts and minds of its customers. If 1997 was the year when Bill Gates became a household name and Microsoft was the company Americans most admired, 1998 has quickly become the year in which Microsoft (mostly due to the unfathomable, flippant courtroom "strategy" of its lawyers and key management) has seemingly alienated everybody.

In the US, Microsoft is now widely compared to that most loathed and disbelieved industry, the tobacco conglomerates. Interestingly, just as US tobacco companies are under attack from attorneys general in a number of states, it turns out that nine states are considering anti-trust action against Microsoft.

A general tide of anti-Microsoft feeling may buoy the numerous anti-trust investigations against the software giant, currently under way in those states, in the US Department of Justice and in Japan.

In the end, the legacy of the last two months may be a public all too happy to see a wise guy put in his place. It ain't over til it's over.