Microsoft Corp. dramatically increased efforts to influence the federal government in the past year as it became enmeshed in a legal battle with antitrust regulators, newly disclosed reports to the government show.
Microsoft spent $1.2 million trying to influence Congress and the Clinton administration in the second half of 1997, nearly double the $660,000 the software giant spent during the first six months of the year. Microsoft's total spending on Washington lobbying efforts last year was $1.9 million, up 67 percent from 1996.
The figures -- compiled for Reuters by the Campaign Study Group from the latest reports to the Federal Election Commission and the House of Representatives -- are the first to show Microsoft's lobbying effort for all of 1997.
The company's spending increase coincided with a Justice Department lawsuit against Microsoft filed in October. The company also faces the possibility of a broad new antitrust action that could affect its forthcoming Windows 98 operating system.
While it was stepping up lobbying efforts, Microsoft also increased its spending on federal political campaigns from $39,000 in the 1992 election cycle to more than $243,000 in the 1996 cycle.
The 1998 election campaign is barely underway, but Microsoft already has contributed $183,000 to party committees and candidates, putting it on track to easily exceed the 1996 election totals. Republicans have received $104,000 and Democrats $79,000 this election cycle.
The reports show that Microsoft has hired a bipartisan stable of prominent lobbyists, including four former members of Congress and 32 former congressional staffers or government officials. Microsoft also said it recently hired the firm of former Republican Party chairman Haley Barbour.
Microsoft's lobbying efforts rank it third in the computer industry, behind International Business Machines Corp., which spent $5.2 million in 1997, and Texas Instruments Inc. at nearly $2 million.
Microsoft Chairman Bill Gates and other executives have acknowledged that the company has been slow to recognize the need to be represented in Washington.
"We should have stepped up our activities there a little bit sooner, particularly in light of the fact that our competitors were giving a lot of political donations and spending a lot of time back there," Gates said last month.
Indeed, Microsoft rivals, led by Sun Microsystems Inc., Oracle Corp., and Netscape Communications Corp., also have increased efforts to influence lawmakers in Washington. Despite annual revenues of just $533 million, compared with Microsoft's more than $11 billion, Netscape ranks fifth in the computer industry, with nearly $1.7 million in lobbying expenditures over the past two years. But not all of Netscape's reports for 1997 were available.
Jack Krumholtz, Microsoft director of federal government affairs, said the company's recent efforts have largely been a response to competitors. Microsoft's rivals have mounted an effective campaign to increase congressional pressure on the Justice Department to bring new actions that could limit the software giant's enormous industry power.
Most of Microsoft's recent Washington activities have been aimed at battling portrayals of the company as an "evil empire" exploiting monopoly status to drive out competitors and gain control of the Internet.
"I think that as our industry and products become more of a staple in the mainstream of American life, and with the advent of the Internet, there are a whole host of new public policy issues that are much more top-of-mind than they were in the past," said Krumholtz, who heads a five-person office that Microsoft maintains in the Dupont Circle neighborhood.
Gates has donated only $26,100 to political candidates and parties in the past seven years. Two of those donations were $5,000 to a joint fund-raising committee that benefited Sen. Patty Murray (D-Wash.) and $2,350 to Sen. Slade Gorton (R.-Wash.)
Microsoft's $3.04 million in lobbying expenditures during 1996 and 1997 included payments to Preston Gates Ellis & Rouvelas Meeds LLP; Swidler & Berlin; Downey Chandler Inc.; Grover G. Norquist; Clark & Weinstock Inc.; Collier Shannon Rill & Scott PLLC; Apco Associates Inc.; Arthur Andersen LLP; Michael Lewan Co.; and Washington Counsel PC.