Lawyers, not Netscape, will be real winners in Microsoft case
By RICHARD WOLFFE and LOUISE KEHOE, The Financial Times. Distributed by Scripps Howard News Service.
WASHINGTON (May 26, 1998 1:03 p.m. EDT nando.net) -- The hearing lasted little more than an hour, but it represented the start of almost a lifetime's earnings for lawyers and lobbyists alike in Washington.
As Microsoft and the government -- plus 20 states -- faced each other in court for the first time in their landmark antitrust battle last week, at least 14 attorneys sat in front of U.S. District Judge Thomas Penfield Jackson.
Behind them -- at the head offices of Microsoft, the Justice Department and state attorneys general -- hundreds of lawyers, consultants and strategists were preparing for the biggest antitrust action in two decades.
The case is turning into the "PR and Law Relief Act," joked one of the people involved in the lobbying efforts.
The states alone have 20 attorneys assigned full-time to the case. For its part, the Justice Department has hired David Boies, a leading trial lawyer, to lead its courtroom battle. Boies has reportedly halved his usual fee of $550 an hour to handle the high-profile case.
To the outside world, the case may seem to revolve around the struggle between Microsoft, the world's largest software company, and Netscape Communications, its rival in Internet software. But to Washington, the case looks rather different.
"Netscape is the direct beneficiary of this case, but the indirect and real beneficiaries are the lawyers, and I am one of them," said Charles "Rick" Rule, a consultant to Microsoft and a former head of the antitrust division under the Reagan administration. "When I was at the Justice Department, we wanted to make the law clear so that businessmen and women in this country could understand it without having lawyers like me being paid inordinate amounts to explain the law.
"Antitrust lawyers went out of business and into other things like environmental law. But when this case was launched, around town you could hear the champagne corks popping from all the law offices and antitrust lawyers."
Microsoft has boosted its in-house legal team to more than 100 lawyers at its head office, according to Brad Smith, general counsel for the company.
It has also been quick to boost its representation in Washington over the last two years. "We have been active in Washington, D.C., on software issues like encryption," said Smith. "But we have not been as active as we might have been in talking just about Microsoft. Instead, we have been talking about the benefits of the software industry as a whole."
According to the non-partisan Center for Responsive Politics, Microsoft has substantially increased its political spending in Washington over the last three election cycles. In 1993-94, the company ranked eighth among computer companies, spending just $106,484 on campaign funds and individual contributions.
In the current election year, it ranks top of the industry, almost tripling its donations to $298,219. That compares well with Netscape Communications, which gave no money five years ago and spent just $34,749 in the current election year.
Microsoft's political tactics are also remarkable within the industry. Oracle, the second largest donor, gave more than 90 percent of its $217,913 to the Democrats, just as Microsoft did in 1992. Two thirds of Microsoft's current spending goes to Republicans, including $99,000 of free computer software donated on March 31. While such figures may be small compared with the size and wealth of Microsoft, they do not include substantial recent donations such as the $100,000 contribution to the Republican National Committee last month.
Bill Gates, chairman and chief executive of Microsoft, has personally donated cash to just two senators. Senate Commerce Committee Chairman John McCain, R-Ariz., was flown to the West Coast for a private demonstration of high-definition television, which Microsoft wants to supply with a compact version of its Windows operating software. The other senator, Patrick Leahy of Vermont, is the senior Democrat on the judiciary committee, which staged the high-profile hearings into antitrust allegations against Microsoft earlier this year.
Both sides of the battle have been courting Republicans carefully. Microsoft has hired Haley Barbour, former chairman of the Republican National Committee, as one of its lead lobbyists. Meanwhile, a coalition of its industry rivals -- including Netscape and Sun Microsystems -- have hired 1996 GOP presidential candidate Bob Dole and former Supreme Court nominee Robert Bork.
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