UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                  SCHEDULE 13G

                   UNDER THE SECURITIES EXCHANGE ACT OF 1934
                             (AMENDMENT NO. 7)*  


                             MICROSOFT CORPORATION
         -------------------------------------------------------------
                                (Name of Issuer)

                                 COMMON STOCK
              ---------------------------------------------------
                        (Title of Class of Securities)

                                   594918104
                   -----------------------------------------
                                 (CUSIP Number)


Check the following box if a fee is being paid with this statement [_]. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).

*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).

                       (Continued on following page(s))

 
                                        13G                
                                                         
  CUSIP NO. 594918104
 
- - ------------------------------------------------------------------------------
      NAME OF REPORTING PERSON
 1    S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
      William H. Gates III

- - ------------------------------------------------------------------------------
      CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 2                                                              (a) [_]
                                                                (b) [X]
                                                 
- - ------------------------------------------------------------------------------
      SEC USE ONLY
 3
 

- - ------------------------------------------------------------------------------
      CITIZENSHIP OR PLACE OF ORGANIZATION
 4    
      U.S.A.

- - ------------------------------------------------------------------------------
                          SOLE VOTING POWER
                     5   
     NUMBER OF            141,108,310
 
      SHARES       -----------------------------------------------------------
                          SHARED VOTING POWER
   BENEFICIALLY      6
                          0    
     OWNED BY
                   -----------------------------------------------------------
       EACH               SOLE DISPOSITIVE POWER
                     7    
    REPORTING             141,108,310   
 
      PERSON       -----------------------------------------------------------
                          SHARED DISPOSITIVE POWER
       WITH          8
                          0
- - ------------------------------------------------------------------------------
      AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 9  
      141,108,310 SHARES

- - ------------------------------------------------------------------------------
      CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
10                  
      NOT APPLICABLE
 
- - ------------------------------------------------------------------------------
      PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
11    
      23.9%

- - ------------------------------------------------------------------------------
      TYPE OF REPORTING PERSON*
12
      IN      

- - ------------------------------------------------------------------------------


 
                                  Schedule 13G

CUSIP NO.:  594918104

Item 1    Name of Issuer:
          Microsoft Corporation
          One Microsoft Way
          Redmond, WA 98052
          
Item 2(a) Name of Person(s) Filing:
          William H. Gates III
         
Item 2(b) Address of Principal Business Office:
          One Microsoft Way
          Redmond, WA 98052
    
Item 2(c) Citizenship:   U.S.A.

Item 2(d) Title of Class of Securities:  Common Stock, $0.00005 per share

Item 2(e) CUSIP Number:  594918104

Item 3    Not applicable

Item 4    Ownership

          (a) Amount Beneficially Owned:  141,108,310 shares

          (b) Percent of Class:  23.9%

          (c) Number of shares as to which such person has:

              i)   sole power to vote or to direct the vote 
                   141,108,310

              ii)  shared power to vote or to direct the vote
                   0  

              iii) sole power to dispose or to direct the disposition of  
                   141,108,310

              iv)  shared power to dispose or to direct the disposition of 
                   0

Item 5    Ownership of 5% or Less of a Class:  N/A

Item 6    Ownership of More than 5% on Behalf of Another Person:  N/A

Item 7    Identification and Classification of the Subsidiary Which Acquired the
          Security Being Reported on By the Parent Holding Company:  N/A

Item 8    Identification and Classification of Members of the Group:  N/A


 
                                 Schedule 13G

Cusip No.:  594918104

Item 9    Notice of Dissolution of the Group:  N/A

Item 10   Certification:  N/A


                                   SIGNATURE

          After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

Date:  February 7, 1996


Signature:   /s/ William H. Gates III
             ----------------------------------------------
                 William H. Gates III