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.

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So it came as a shock when in mid April it was reported that Microsoft had withdrawn its longstanding support for a state gay rights bill--under pressure from a local antigay pastor, who has since confirmed that he threatened executives with a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." He and Gates both personally supported the bill, he said, but the company had decided not to take an official stand on it this year.

Cheung and others aren't buying the explanation. "Everything indicates that a conservative pastor had a lot to do with their withdrawal," Cheung says. Openly gay state representative Ed Murray, who sponsored the legislation, accused the company of lying. And Joe Solmonese, president of the national gay advocacy group Human Rights Campaign, sent Ballmer a letter stating that "giving in to threats from a small group fighting to impose their own view of religion on the company and the state will only encourage more such threats. We urge you to work to change this perception."

"Microsoft now has a long way to go to rebuild its reputation with our community," says Darrel Cummings, chief of staff for the Los Angeles Gay and Lesbian Center. Regardless of the reason, the withdrawal of support alone was enough to spur his organization to ask Microsoft to return the Corporate Vision Award it gave to the company in 2001. "When there are issues that are as fundamental as discrimination at stake, a reversal like this sends a very strong message," Cummings says.

Cummings admitted that his organization has benefited greatly from Microsoft's generosity. "But there comes a time when our organizations have to stand on the side of principle," he says.

Begasse says that gays and lesbians should look to the way Microsoft operates, and to its continued support for pro-gay federal legislation, before passing judgment. "Microsoft has always been a leader in offering benefits and providing protection to gay employees," she says. "None of that has changed."