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Did Google Score a Win Against M$?

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Anyone who follows technology knows Bill Gates and his company, Microsoft, want to squish Google. Who can blame them? Microsoft may still be the biggest, most powerful software company in the world, but Google, seemingly overnight, has emerged as a credible challenger. The search company may only be a tenth Microsoft's size in terms of revenues, but its profit margins are equivalent, and in the hypercompetitive scrum for the best minds in high tech, it looks like Google is winning.

All this animosity peaked last week, as lawyers for the two companies squared off in a Seattle courtroom over Google's recruitment of Microsoft vice president Kai-Fu Lee last summer. Google hired Lee, a celebrity in the Chinese engineering community, to open and operate its new China office, and be one of seven vice presidents of engineering. Microsoft immediately sued, citing Lee's non-compete agreement. Microsoft's lawyers sought to convince King County Superior Court Judge Steven Gonzalez to issue an injunction that, in effect, would stop Lee from working for Google until a trial in January-or until Lee's contract expires in mid July.

Instead, in a ruling issued Tuesday, Gonzalez said that Lee could begin working for Google in China immediately, albeit with strict limitations. The judge stipulated that Lee can't be involved in anything technical at Google for at least the next four months, and he can't have any budgetary or hiring authority during that period. However, he can use his knowledge of China's business community to help Google find the best space for its operations, he can use his deep contacts in China's government and its top universities to help Google recruit top flight engineers, and he can give promotional speeches about Google in China. Lee told FORTUNE these activities "will keep me busy" for at least the next four months.

Even so, both sides claimed victory from the decision. Microsoft deputy counsel Tom Burt said that his company was pleased because Judge Gonzalez's order limits what tasks Lee can perform. Burt noted correctly that, for the moment, that Lee is "the highest paid human resources director in history," referring to the fact that Google agreed to pay him $10 million over four years.

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