WASHINGTON — Microsoft is mobilizing a pervasive lobbying and public relations campaign in an effort to temper the impact of a potentially devastating federal court ruling and generate positive public and political opinion.
The company is spending millions of dollars to retain former lawmakers and top political figures, fill the coffers of both major political parties and mold public opinion in its favor through sympathetic research organizations and ostensibly independent trade associations.
Microsoft has contributed to established research groups with free-market orientations, including the National Taxpayers Union, Americans for Tax Reform and the Cato Institute, which have produced studies and newspaper opinion pieces supportive of the company's legal position. But Microsoft has also created new trade groups, the Association for Competitive Technology and Americans for Technology Leadership, to generate support for the company through Web sites and a sophisticated and largely hidden grass-roots lobbying campaign.
As the company's legal woes have mounted, Microsoft has responded not just with a lobbying blitz in Washington, but in a nationwide, seven-day-a-week program of mass-media advertising, letter writing, petition drives and seemingly random "interceptions" of elected officials at public events.
"It's everywhere, and it's huge," said Ed Black, president of the Computer and Communication Industry Association, a group financed largely by Microsoft critics.
Microsoft's legal and commercial opponents have an aggressive and well-financed lobbying effort as well. They have hired prominent advocates like Robert H. Bork, the former federal judge, and top Washington lobbyists and public relations firms to advance the case against Microsoft. These Microsoft critics, led by Sun Microsystems, Oracle, IBM, America Online and Novell, also are major financial sponsors of several computer industry trade groups that produce a steady stream of anti-Microsoft propaganda. Their reported lobbying expenses last year were more than $11 million, compared with $4.6 million in spending by Microsoft, according to Federal Election Commission records.
"It's Goliath vs. Goliath," said Rick Miller, a Microsoft spokesman. "It's mutual assured destruction."
But in the wake of Judge Thomas Penfield Jackson's order last week that Microsoft be sundered into two companies, the stakes are vastly higher for Microsoft than for its competitors, who got everything they asked for from the court.
Accordingly, the company is mounting an all-out campaign to generate public and political sympathy while denying that it is seeking a solution to its legal woes in Congress or in the presidential campaign.
Miller said Microsoft had been slow to realize that it needed to engage in Washington lobbying and other public relations efforts, but that it had changed course after realizing commercial rivals were successfully portraying the company as a bully. He added that Microsoft now encouraged politicians to support its legal position through campaign contributions, trips to Microsoft headquarters in Redmond, Wash., briefings and other means. But he was quick to say that the company had little hope that Congress would act on its behalf or that the next president would quickly reverse the government's course.
"Microsoft is fully intent on mobilizing our assets and our friends to tell our story," Miller said. "But do we see a legislative or political remedy to the current situation? We really don't. We feel we have a good case on appeal and we're very much focused on fighting the battle in the courts and not in the political arena."
Nevertheless, the company is pouring millions of dollars into both political parties, giving more to parties and candidates in the last 17 months ($2.2 million) than it did in the previous five years ($1.8 million). The company has donated $500,000 to each party's summer convention and is expected to provide a similar amount in free software and computer services. In a sign that the company might be more concerned with the next administration than with the current one, Microsoft officials attended a huge fund-raiser for Gov. George W. Bush in Washington in April and paid $30,000 for a table at a GOP congressional fund-raising dinner in May, but the company was not represented at the $26 million tribute to President Clinton last month.
Microsoft, which made virtually no political donations six years ago, is now the nation's third-biggest corporate contributor, behind only AT&T and Philip Morris.
A former Microsoft public relations consultant said that the company was slow to recognize the value of making friends in Washington and mistakenly believed that it would be judged solely on its products, not its conduct. The company also underestimated the resolve and the wealth of its competitors, he said.
"When I was there, they thought all they had to do was entertain people in Washington, not engage them," this consultant said, speaking anonymously because he is now in a senior government post. "They resented people from Sun and Netscape who lobbied Congress and complained to the Justice Department."
As it has pursued an unrepentant line in the courtroom, Microsoft has mounted a broad but largely invisible national campaign to produce public sympathy and political pressure.
An internal report of Microsoft's grass-roots activities for a single week in March revealed that company generated letters to newspapers complaining about the antitrust case, lobbied a member of the Ohio legislature, contacted a researcher about producing a sympathetic study on the effects of the federal case and met with an engineer from Intel about recruiting people to advocate Microsoft's position. In addition, unnamed advocates of Microsoft's legal position engineered seemingly chance meetings with Bush and Rep. Henry Hyde, R-Ill., at a Republican fund-raiser in DuPage County, Ill. These interceptions took place on March 18 and were duly reported to top officials in Microsoft's legal affairs office.