Bill's bedfellows

In DC, Microsoft reaches out to an array of oddball allies.

AS THE CLOCK WINDS down to the February 22nd closing arguments in the Microsoft antitrust trial, the company is up against an array of industry and political foes, not to mention those goons from the Justice Department. But Microsoft has also collected a wide and sometimes odd assortment of allies in Washington, DC, from liberal Massachusetts Congressman Barney Frank to a rich retirees' interest group called 60Plus.

The company's lobbying program has ramped up significantly in the past year (it spent $3.7 million in 1998, according to the Center for Responsive Politics; 1999 dollar figures are not yet available). The company has enlisted some high-profile persuaders to plead its case in Congress, and in the court of public opinion, including former Republican National Committee Chair Haley Barbour and a former chief of staff to House Majority Leader Dick Armey. Microsoft spokesperson Dan Leach, however, says that the company's effort to "make its views known" among policy makers is distinct from the antitrust lawsuit, since there are other policy issues that are important to the company.

Results of the effort so far have been mixed. The company caught hell this past fall for its supposedly ham-handed—not to mention unsuccessful—support for a congressional proposal to clamp down on the Justice Department budget. ("A comical caricature of the thuggish company that Microsoft's enemies believe [it to be]," grumbled The Washington Post editorial writers.)

But the company has also won over a few friends on Capitol Hill (beyond local boosters such as Sen. Slade Gorton). When the federal judge issued his finding last November that Microsoft was a monopoly, a couple dozen members of Congress declared their chagrin, including the House Majority Leader Armey. (Barney Frank, for his part, has stated he does not believe that Microsoft should be broken up.) For the lawsuit itself, Microsoft has hired some pricey heavyweights to make its case to the judge, including two former White House counsels—C. Boyden Gray (the Bush administration) and Lloyd Cutler (Carter and Clinton)—as well as two former US Attorneys—Griffin Bell (Carter) and Nicholas Katzenbach (LBJ).

An amicus brief was also filed by the Association for Competitive Technology, a Microsoft-backed trade group that claims to have 500 members. According to its director Jonathan Zuck, ACT was started by a group of "small-to-medium sized companies who decided their voice was not being heard" in DC and who believed there should be little "government intervention into the technology industry." Zuck has been one of the most visible defenders of the software giant throughout its antitrust trial. Asked how much Microsoft is underwriting the group, Zuck says, "I don't even have a real number on that." (ACT's Web site lists nine members, including Microsoft and Visio, which is owned by Microsoft.)

However, the largest computer industry trade group in the country, the Software and Information Industries Association, is opposing Microsoft in court. It filed an amicus brief on behalf of the government two weeks ago. The SIIA, of which Microsoft is the largest member (paying $125,000 in annual dues), told the judge that the world's biggest software company has indeed engaged in "monopolistic abuses," and the group declared its support for applying antitrust law to the software industry.

Ken Wasch, president of the SIIA, says the decision to file against Redmond was taken by a vote of the 19 board members (who include Microsoft chief operating officer Bob Herbold). In contrast to the board's usual procedure, votes on the antitrust issue have been taken by secret ballot, Wasch says: "The [member] companies prefer it that way." Wasch believes that despite Microsoft's exertions in Washington, "their effort hasn't convinced [many] decision-makers that the case is misguided."

AT THE SAME TIME, Microsoft has found allies among a host of other DC advocacy groups—mostly those who are virulently antigovernment, antiregulation and antitaxation. For example, Citizens Against Government Waste, a group founded by the late chemicals tycoon J. Peter Grace and conservative newspaper columnist Jack Anderson, has been regularly praising Microsoft and railing against the Justice Department. It contends that the suit against Microsoft is a waste of taxpayer money. CAGW's Web site even lists Microsoft among the organizations that are "helping to monitor and reform our federal government"—the only corporation so listed. ("Hit the hottest site on the net and learn about the future of cyber technology!" CAGW enthuses.) Representatives of the organization did not return calls seeking comment.

Organizations such as CAGW are not required to disclose the source of their funding, notes Marianne Holt, a senior associate with the political watchdog group Center for Public Integrity, so it's impossible to know how much money the group might have received from Gates and Co. (Likewise, Holt says, these groups can pay for "issue" advertisements without reporting any of their spending.) A story in The Washington Post earlier this month reported that Citizens for a Sound Economy—a largely corporate-backed, antitax activist organization (chaired, as it happens, by C. Boyden Gray)—received a pledge of $380,000 from Microsoft just months before it joined the call for limiting the Justice Department budget.

Microsoft has enjoyed a sympathetic hearing as well from the Small Business Survival Committee—one of the most aggressive free-enterprise flag-wavers in Washington. ("Anti-Sprawl = Anti-American Dream" is the headline for one of the SBSC's many attacks on environmental regulation.) The SBSC describes Microsoft as "a company that has succeeded by offering its customers good service at competitive prices" and warns that such government activity poses a potential threat to all entrepreneurs.

Microsoft also recently announced a "partnership" with the National Federation of Independent Business—the largest and most established lobbying group for small enterprises, with a membership of 600,000. NFIB spokesperson Mary Mead Crawford says the partnership will give her association a communication line to the hundreds of small high-tech firms that work with, and feed off, Microsoft—a potentially rich source of new membership. Microsoft will benefit as well, of course, if the interests of these companies are better represented in DC. But Crawford emphasizes that NFIB has taken no position on the antitrust suit and does not see this partnership as related to it in any way.

Senior citizens back Bill as well, at least the half-million who belong to the 60Plus Association. 60Plus bills itself as a kind of right-wing alternative to the giant American Association of Retired Persons. Its primary goal is the elimination of estate taxes, which are levied on the wealthiest 1 or 2 percent of Americans. Jim Martin, 60Plus' folksy leader, notes that many seniors are living on fixed incomes and says that "unnecessary rules and regulations help result in higher prices." 60Plus has received no money whatsoever from Microsoft, according to Martin, but he says that when approached, he was "glad to lend my organization's name" to the company's effort.

Microsoft is also trying to sprout some more "grassroots" support, something it has been a bit clumsy about in the past. It has formed a "Freedom to Innovate Network," which encourages "real consumers" to contact their elected representatives about the antitrust lawsuit. With Microsoft backing, Zuck's Association for Competitive Technology has also recently launched Americans for Technology Leadership, which will serve as a counter to those "paternalistic organizations that claim to speak for consumers but don't represent their views," says Zuck. ATL has conducted polls in New Hampshire, Iowa, and nationwide that find, for example, that the majority of Americans "oppose regulations that would slow the pace of innovation in high technology." "We're trying to recruit folks who agree with us and inject them into the public policy debate," says Josh Mathis, ATL's director.

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