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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: dybdahl who wrote (67384)	4/16/2002 5:48:33 AM
From: Rusty Johnson	Read Replies (1) \| Respond to of 74651

How Microsoft Conquered Washington By spending lots of money--of course--but also by doing lots of creative lobbying you don't know about. FORTUNE Monday, April 29, 2002 By Jeffrey H. Birnbaum fortune.com After the Justice Department filed its antitrust suit in 1998, Microsoft--a company famous for its disdain of government--undertook the largest government affairs makeover in corporate history. The company now boasts one of the most dominating, multifaceted, and sophisticated influence machines around, one that spends tens of millions a year. It's no great surprise that one of the country's wealthiest companies can bankroll a beefed-up lobbying operation when it faces a crisis. But what few people realize is that Microsoft has reached the very highest ranks of lobbying so quickly. Says David Hart, a lobbying expert at Harvard's Kennedy School of Government: "Microsoft has joined the top tier"--with such longtime heavyweights as Philip Morris, Lockheed Martin, and AT&T. ... To achieve its aims, Microsoft has done many of the things you'd expect. After making some serious missteps in late 1998 and early 1999 (such as trying to deprive the Justice Department of antitrust funding), the company quickly found its footing. It now has 15 high-powered government affairs staffers led by Krumholtz in downtown Washington--three times more than in the average corporation's D.C. lobbying shop--and dozens more in every major state. It retained a dream team of outside federal lobbyists, including Haley Barbour, the former Republican Party chairman, and Jack Quinn, former White House counsel to President Clinton. It began contributing heavily to right-wing, free-market think tanks, such as the Cato Institute and the Heritage Foundation. And Microsoft and its employees gave a whopping $4.6 million to federal candidates and parties, Republican and Democrat alike, in the 2000 election--more money than any other company but AT&T and more than double that of its biggest rival, AOL Time Warner (the parent of FORTUNE). ... But political donations and other trappings of traditional lobbying are just part of Microsoft's formula. The company has also been having immense success in Washington by doing lots of things you don't expect. For example, it has launched a Website designed to ignite grassroots support that's the envy of the influence-peddling world. Microsoft's Freedom to Innovate Network (FIN) started in the summer of 1998 "with five boxes of supportive letters to Bill Gates that we found in a storage room," says John Kelly, the company's director of external affairs. Microsoft solicited additional advocates by putting a link on Microsoft.com, by culling the thousands of e-mails Gates receives each day, and by promoting the FIN at the Comdex computer show in Las Vegas. Today more than 250,000 people are signed up and willing to approach their lawmakers on Microsoft's behalf. In the last two months of 2001 alone, hundreds of e-mails were sent to 30 lawmakers identified by the FIN as key to passing a Microsoft priority, fast-track trade authority, which could help the company increase its sales abroad. On another front, in its last fiscal year Microsoft donated $36.6 million in cash and $179 million in software to good causes--many of which helped the company get cozy with politicians, from Senator Hillary Clinton to House Speaker Dennis Hastert, who support the charities. But Microsoft has found even more creative ways to insinuate itself into legislators' good graces. House Majority Leader Dick Armey is among the many lawmakers who are hopelessly confused by fast-moving tech issues and who eagerly take advantage of regular teaching visits to Capitol Hill by Microsoft experts. "I'd been trying to figure out broadband for a year; I was going nuts," Armey confesses. "So I talked to Microsoft, their technical guys. They helped me understand." In addition to one-on-one sessions, the company conducts brown-bag lunches for Congress' 178-member Internet Caucus and has hosted about 200 lawmakers, aides, scholars, and presidential wannabes at tutorials in Redmond, Wash. ... Despite all this, Microsoft still probably couldn't have done what it says it could have--avert an antitrust suit. That's just arrogance. After all, this emblem of American technological prowess is also one of the most scrutinized companies in the world. But what Microsoft has done in Washington in the past few years just gives it new cause for arrogance--it has created a model for influencing government that other companies are sure to follow. Reporter Associate: Melanie Nayer P.S. I don't think I ever said Linux was just another UNIX. I started the Linux thread. I didn't think it would have much impact on the desktop for years but thought the handheld and server market penetration would be inevitable. And having used Linux on the desktop for years ... I think people may be suprised how many Linux desktop boxes will replace some flavor of the Windows OS in the next five years. Best of luck.