Gates Closed? Technology Giant Microsoft Has Found Itself on the Outs with Gays and Lesbians Who Once Praised It as a Leader in Corporate Equality

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Microsoft Corp. has enjoyed a reputation as a leader in corporate equality for gay and lesbian employees. But it's an image that has proved fragile under the weight of a divisive political issue, and now the Redmond, Wash.-based technology giant is fighting to restore it.

Microsoft has received much praise from gay rights leaders for being one of the first large companies to offer benefits to the partners of its gay employees. It has long provided them protections from discrimination based on sexual orientation, and founder Bill Gates has supported AIDS research and gay organizations in a big way through his foundation.

So it came as a shock when in mid April it was reported that Microsoft had withdrawn its longstanding support for a state gay rights bill--under pressure from a local antigay pastor, who has since confirmed that he threatened executives with a boycott. The bill, versions of which have been introduced for the last 30 years, would have made discrimination against gay and lesbian people illegal in Washington State. It failed by one vote in the state senate on April 21.

"We were incredibly disappointed with Microsoft's withdrawal," says George Cheung, executive director of Equal Rights Washington, which helped craft the bill. "We're concerned that some conservative voices have pushed them away from their commitment to diversity."

Not true, says Microsoft. Officials there admit to meeting with evangelical pastor Ken Hutcherson in February but maintain that their decision to pull support for the bill, which many other corporations endorsed, was made before that meeting and was based solely on a decision to limit its focus on state legislation that "supports our business and industry," says Microsoft spokeswoman Tami Begasse. "Reverend Hutcherson asked us to go a step further by coming out against the bill, and we declined his request."

In a highly unusual e-mail response April 22 to a large number of angry employees, Microsoft CEO Steve Ballmer said that he had done "a lot of soul-searching over the past 24 hours. …