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  Microsoft Targets Funding for Antitrust Office

By Dan Morgan and Juliet Eilperin
Washington Post Staff Writers
Friday, October 15, 1999; Page A1

Microsoft Corp. lobbyists and allies are aggressively pressing Congress to reduce next year's proposed funding for the Justice Department's antitrust division, the giant software company's accuser in a storied court battle.

Microsoft representatives have urged House and Senate members to cut President Clinton's proposed funding for the division by about $9 million this year. And nonprofit organizations that receive financial support from the company have also urged key congressional appropriators to limit spending for the division when they begin their final negotiations on the Justice Department budget, possibly as early as Monday.

The nonprofit groups made their request in a letter last month after an all-expenses-paid trip to Microsoft headquarters in Redmond, Wash., where they were entertained and briefed on an array of issues facing the company.

Microsoft's latest efforts on Capitol Hill will have little or no impact on the department's antitrust case against the software giant, and for that reason they seem somewhat unusual. While companies regularly ask lawmakers to block federal agencies from implementing specific policies, it is more uncommon to seek an across-the-board cut in a department's budget, especially in the middle of a major court battle.

But company officials said they want to send a strong message to the antitrust division. "It's no secret we really have some serious concerns about some of the Department of Justice's conduct during the course of this litigation," said Jack Krumholtz, director of federal government affairs for Microsoft.

Krumholtz cited recent news reports that Justice officials encouraged foreign governments to file suit against Microsoft. Assistant Attorney General Joel I. Klein has declared that those reports are false.

The Clinton administration is seeking $114.3 million to cover the salaries of 360 attorneys now in the antitrust division and to fund the hiring of about 18 more legal staff members. That would be an increase of about 16 percent over the previous budget. While Senate appropriators have proposed a budget of $112.3 million, the House figure is only $105.2 million -- and the Senate has come under pressure to give way to the House.

While the division's Microsoft work is done, administration officials said the higher figure is urgently needed to cope with a 30 percent increase in corporate merger activity in the past year and to investigate criminal price-fixing.

Support for the antitrust division's work remains strong in Congress. House Judiciary Committee Chairman Henry J. Hyde (R-Ill.) called the division "one of the best-run departments in the government." Wisconsin Sen. Herb Kohl, the top Democrat on the Judiciary Committee's antitrust subcommittee, said "it would set [a] terrible precedent to alter the division's budget based on one case alone."

But Sen. Slade Gorton (R-Wash.), whose campaign has received about $51,000 from Microsoft or its employees since 1997, has been an outspoken supporter of a cut in the antitrust budget.

Such an action would "express total dissatisfaction with the way Justice is handling the case against Microsoft," said a spokeswoman for Gorton. She added that Gorton, a senior member of the Senate Appropriations Committee, is "pretty confident he will be able to get [the Senate] number lowered closer to the House number."

Microsoft, a latecomer to the Washington scene, has been sharply increasing its lobbying, political donations and support of a network of "think tanks" to counter the political and lobbying activities of its adversaries.

Last month, a dozen handpicked representatives of influential Washington-based policy organizations traveled to Redmond for three days of briefings that included tickets to a Seattle Mariners game and dinner and entertainment at Seattle's Teatro ZinZani, according to an itinerary.

Groups represented included Citizens for a Sound Economy, the National Taxpayers Union and Americans for Tax Reform, whose president, Grover G. Norquist, received $40,000 in lobbying payments from Microsoft in the last six months of 1998.

Erick R. Gustafson of Citizens for a Sound Economy said only an hour or so was spent discussing the government case against Microsoft, and that the antitrust division's budget did not come up.

But two days after returning from the trip, the three organizations and three others sent a letter to House appropriators urging that funding for the division be held to the lower House level.

The same day, Microsoft lobbyist Kerry Knott, former chief of staff to House Majority Leader Richard K. Armey (R-Tex.), met with Rep. Dan Miller (R-Fla.), urging him to press for the lower funding level in negotiations with the Senate.

Miller wrote Rep. Harold Rogers (R-Ky.), who chairs the House Appropriations Commerce, Justice, State and judiciary subcommittee. "It would be a devastating blow to the high-tech industry and to our overall economy if the federal government succeeds in its efforts to regulate this industry through litigation."

Miller said that while he objects to the funding increase on fiscal grounds, he had not focused on the issue until Knott and Citizens for a Sound Economy spokeswoman Christin Tinsworth, a former Miller staffer, made their pitch just off the House floor.

© 1999 The Washington Post Company

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