Microsoft's antitrust trial took a holiday on Dec. 7, but there was no ceasefire between the combatants. Microsoft took the offensive, arguing at a high-profile press briefing in the National Press Club that the government has not made its case and that the recently announced merger of America Online and Netscape Communications Corp. shows there's plenty of competition in the computer industry. The company also celebrated the decision earlier in the day by South Carolina Attorney General Charles Condon to drop out of the case.

And it rolled out its big gun -- Chairman Bill Gates. Showing that he doesn't always snarl and slouch on camera, Gates appeared affable and upbeat in a live TV feed for the press that was clearly aimed at reversing the damage the government has inflicted on his image by cleverly using sections of his contentious videotaped deposition.

It was a striking comeback performance by a company that hasn't had too many awe-inspiring days in court since the trial started eight weeks ago. The government has been pecking away at Microsoft's positive image as a high-tech phenomenon -- aided by testimony from its rivals and business partners that, the government hopes, show how the software giant uses its unique leverage to keep companies on its side and foreclose competition.

NO APOLOGIES. This was Microsoft's attempt to regain momentem even before the government has completed its case. To a degree, it worked. Gates opened by harkening back to the company's so-called Internet Strategy Day event in Seattle, held on Dec. 7, 1995. Before then, Microsoft had seemed hopelessly behind in the Internet sphere. On that day, it announced its plans for integrating Internet technology into every piece of software it makes. "I guess we did some of those things too well," Gates quipped. But he argued that it's only Microsoft's competitiors -- not customers -- who are complaining at how quickly the company has become a major player in the Internet marketplace.

Gates made no apologies for his behavior on the deposition videotapes. If he had to do it over again, "I would have smiled more," he said. But he argued that his answers to Justice lead attorney David Boies were accurate -- even if they seemed combative. He said he was prepared to answer questions about Microsoft's decision to integrate its Internet Explorer browser into Windows and about the competitive landscape, but he balked when Boies asked him repeatedly about E-mails he received from lieutenants. He simply didn't remember reading many of the messages, he said, and didn't feel it was appropriate for him to be asked to interpret what the senders meant.

Gates even dove down into the details of some of his hostile encounters with Boies -- seemingly trying to dispel the impression created by the videotapes that he was lying about what he knew about Microsoft's plans. Like he did on a video segment played in court last week, Gates again denied knowing about the early plans for a Microsoft technology called JDirect. The company used JDirect to encourage software developers to adopt Microsoft's version of the Java programming technology -- rather than that of Java's creator, Sun Microsystems. The government alleges this was part of a plan to subvert Java -- which is a threat to Microsoft's Windows. Gates argued that he played no part in it. "This was something that was developed quickly," he said. "As the chief executive, I just didn't know about it."

What makes Gates seem credible in this instance is that the goverment didn't produce any E-mail or memos from Gates himself making reference to JDirect. Whatever import JDirect may have -- his fingerprints aren't on it.

FLIMSIER SUIT. Even if the effort to put a friendlier face on Gates than the one shown in court fails, Dec. 7 may live as a day of infamy in this suit. Or at least a day of damage to the government. With South Carolina dropping out, the case appears weaker and could look far flimsier if other states follow suit. In a press release that Microsoft employees joyfully distributed, Attorney General Condon cited the merger of AOL and Netscape as convincing evidence that there's plenty of competition in the Internet markets and government doesn't need to intercede. Microsoft suggested that newly elected AGs in Michigan, Minnesota, New York, and California might reverse their predecessors' positions and drop out, too.

All this left the Justice Dept. relatively speechless. It issued a one-sentence statement arguing that Microsoft is resorting to PR tactics because it's losing in court. But anti-Microsoft lobbyists tried to make light of Condon's defection. Kevin Arquit, a legal consultant to ProComp, which is funded by Sun and Netscape, said Condon didn't even understand the case. "He would have known better if he had spent even one day in court," Arquit said.

On Tuesday, the action returns to the federal courthouse and to testimony from government witness David Farber, a telecommunications professor at the University of Pennsylvania.

By Steve Hamm in Washington