On Friday evening, just minutes after a federal judge declared Microsoft Corp. an out-of-control monopolist that has smothered innovation and stifled competition, the software giant's newfound allies on Capitol Hill kicked into high gear.
House Majority Leader Richard K. Armey (R-Tex.) lambasted the decision as an effort to "exert Washington's regulatory reins across the entire high-tech industry." Sen. Spencer Abraham (R-Mich.) called the ruling "the most successful attempt at government regulation of the technology industry through litigation."
And Sen. Larry E. Craig (R-Idaho) quickly took to the Senate floor to offer a prediction: "I think that we're going to have a federal judge that's going to try to run the technology business of the country and maybe we need to decide to start a new agency of our federal government called the 'U.S. Department of Microsoft.' "
Similar pronouncements came in the following hours and days from House Majority Whip Tom DeLay (R-Tex.), House Commerce Committee Chairman Thomas J. Bliley Jr. (R-Va.) and at least 20 others in Congress, effectively preventing Microsoft's stunning judicial loss from turning into a political rout.
The emergence of such high-profile defenders illustrates how the software behemoth has matured from a bit player in Washington to one of the most aggressive corporate forces in town. The company's goal, according to people familiar with its strategy, is to discourage government lawyers from seeking aggressive sanctions in their antitrust lawsuit--such as a corporate breakup or the forced sharing of the secret code for Microsoft's Windows software.
Jack Krumholtz, Microsoft's government affairs manager, called the flurry of pro-Microsoft statements from Capitol Hill on Friday "a validation of our efforts."
"I think we've really made some headway here," Krumholtz said. "I think we've been smart about how we've done it, how we've approached this Washington."
In the first nine months of the year, Microsoft and its employees made nearly $800,000 in political contributions, almost six times what the company spent in the same period during the last election cycle, according to the Center for Responsive Politics, a nonpartisan research group. The firm has given $331,000 in soft money this year, almost all to Republicans.
Microsoft--which almost doubled its lobbying spending last year, to $3.7 million--also has retained some of Washington's top political consultants, among them former Republican National Committee chairman Haley Barbour, anti-tax activist Grover Norquist, former representatives Vin Weber (R-Minn.) and Tom Downey (D-N.Y.), as well as two former Armey aides. Although Microsoft's lobbying has had little effect on the government's antitrust case thus far, the company is hoping that a chorus of congressional support for its position will pressure the Justice Department and state attorneys general to shy away from asking for stiff "remedies" when the proceedings likely enter a sanctions phase next year. Over the longer run, Microsoft could appeal to Congress to provide legislative protection if it loses in court. The firm also is hoping that its influence will convince the attorney general in the next administration to drop or scale back the case.
Most of the presidential candidates, who are eager for support from the technology industry, have avoided the issue, however, worrying that taking a position would either upset Microsoft's ultra-rich employees or the firm's equally wealthy rivals in Silicon Valley.
Vice President Gore, who has assiduously courted the technology industry and committed three months ago to appear at Microsoft's Redmond, Wash., campus on Monday, has spent the week debating with aides whether he would show up. Although other candidates, including former senator Bill Bradley, Texas Gov. George W. Bush and Arizona Sen. John McCain have visited the campus recently, Gore's aides worried about the reception he would receive after the ruling. A senior Gore aide yesterday called the situation a political "hornet's nest" but said Gore was leaning toward making the visit.
Microsoft officials cast their lobbying about the case as a response to the efforts of its rivals to build support for an antitrust lawsuit against the company. "We were not going to sit idly by and let Microsoft and our corner of the computer industry be defined by our competitors," said Krumholtz.
Many of the company's supporters, who emphasize their positions are the result of long-standing personal opinions and not of Microsoft's lobbying, had their statements ready to be faxed before the judge's ruling was issued at 6:30 p.m. "We were anticipating a negative decision," said Steve Schmidt, a spokesman for Bliley, whose statement said he was "troubled" by the ruling.
Although most of Microsoft's congressional support has come from Republicans and from Democrats who represent the company's home state of Washington, some other influential Democrats have backed the company's position, including Reps. Calvin M. Dooley (Calif.) and Barney Frank (Mass.).
The congressional attacks on the ruling were accompanied by a volley of barbs from "think tanks" and advocacy groups that Microsoft has worked with--and in some cases, funded. Among those organizations that fired off critical comments were the National Taxpayers Union, Citizens for a Sound Economy, the Cato Institute, the Hudson Institute and Citizens Against Government Waste.
Microsoft's rivals, who were clearly overjoyed with the forceful tenor of Jackson's ruling, have largely shrugged off Microsoft's public relations blitz. "Did their considerably expanded presence in all aspects of Washington lead to this smattering of support for their position by people who haven't obviously read the decision?" said Mitchell S. Pettit, the executive director of ProComp, an anti-Microsoft lobbying group. "Yes, but that's to be expected."
ProComp, for its part, has been circulating a summary of the antitrust trial to congressional offices, along with a cover letter offering "a free lunch at a place of our choosing" to recipients willing to read ProComp's materials.
Government attorneys insist their decisions about what remedies to seek will not be affected by Microsoft's lobbying. "If Microsoft thinks they can win in Congress what they can't win in court, they are very sadly mistaken," said Iowa Attorney General Tom Miller. "
Miller noted that even if a new presidential administration decides to exit the case, the states will continue the fight. "We don't intend to give up because of Microsoft's lobbying," he said.
Staff writer Ceci Connolly contributed to this report.
Microsoft Chairman Bill Gates said yesterday that he is "willing to go a long way" to settle the antitrust case, but he said the company cannot agree to limits on how it designs its software.
"Resolving the case would be good for Microsoft and it also would be good for consumers, the industry and the economy as a whole," Gates said at Microsoft's annual meeting in Bellevue, Wash.
Although both sides have held settlement discussions over the past year, the parties have not been able to reach an agreement. Legal specialists believe Jackson's decision could lead to a new round of talks, but they said Gates's refusal to accept limits on software design could prove a deal-breaker.
Government lawyers have objected to Microsoft's inclusion of its Internet browsing software in its Windows operating system and have already asked Jackson to order the company to strip the browser from Windows.
But Gates said yesterday that if Microsoft "can't add Internet support [to Windows], we can't do anything."
"If we can't define the user experience of Windows so that all Windows machines operate the same way, then the Windows brand becomes absolutely meaningless," he told about 2,500 Microsoft shareholders.
CAPTION: Microsoft Chairman Bill Gates told shareholders yesterday that the company could not agree to limits on its software design.