To: Microsoft Top Management
Re: Unsolicited Advice
I am one of the journalists who has embarked on the experiment of working for a software company. I probably speak for all of us when I say that it has been interesting. Recently, it's been especially interesting. A few months ago, everyone I met seemed to think that working for Microsoft was a pretty cool thing to do. Now, strangers treat us like we work for Philip Morris. The company's current legal and public-relations headaches leave me, personally, in an awkward position. I've devoted a good chunk of my career as a political journalist to criticizing the mercenary culture of Washington: influence peddlers, PACs, and so on. Suddenly, I find myself working for a company with big political problems. My bluff has been called. With my own prosperity possibly at stake, would I urge my employer to remain aloof from the Beltway bazaar?
No one else seems to share my disquiet. Ironically, one of the charges leveled against Microsoft of late is that the company has sinned by not playing the Washington influence game forcefully enough. Only now, the analysis goes, is Bill G. realizing his mistake in neglecting to hire lobbyists, dole out huge campaign contributions, and so on. The theme of a recent front-page story in the New York Times was that the failure to flex political muscle demonstrates an arrogance and stubbornness for which Microsoft is now paying the price.
The charge of lacking respect for Washington blurs the issues. It confuses 1) the valid observation that Microsoft often has a haughty attitude in general; 2) the at least arguable contention that it has run afoul of antitrust law; 3) the plausible suggestion that hiring more lobbyists, etc., would be a smart thing to do; and 4) the entirely absurd notion that refusing to pay tribute inside the Beltway amounts to some kind of ethical failing. Sit out the Washington legalized-bribery game? Why, that's downright un-American!
As you know, it's a bit of a myth that Microsoft is only now noticing the other Washington. Since the Justice Department filed suit Oct. 20, the government-relations department has hired no new lobbyists, in-house or on contract. The old roster is intact. It includes such hired guns as Grover Norquist Jr., an adviser to the speaker of the House, and former Reps. Vin Weber, R-Minn., and Thomas Downey, D-N.Y., who happens to be one of Al Gore's closest friends. Norquist and Downey have worked for Microsoft for some time, as have Michael Deaver and his colleagues at Edelman Worldwide, who do PR. Microsoft's D.C. office, with three full-time lobbyists, has been in operation since early 1995. Before that, the company had the help of lawyers in the Washington office of Preston Gates Ellis & Rouvelas Meeds--as it still does. This team has lobbied Congress and the executive branch on all the issues that matter to Microsoft: Internet freedom, encryption policy, immigration for high-tech workers, the tax-deductibility of stock options, extending the R & D tax credit, software piracy abroad, taxation of Internet commerce, and so on.
At the same time, I'm sure you will agree that Microsoft is somewhat diffident about playing politics. AT&T has 50 full-time representatives in Washington to Microsoft's three. AT&T donated $1.25 million in PAC contributions to both parties in the last election cycle. Microsoft gave $43,500. I can't say whether you have kept your political profile low for the right reason--maybe you were just cheap, or lazy, or out of your depth on the other coast. But whatever the cause, I would argue that your relative passivity in Washington is something to be proud of. You haven't tried to corrupt the democratic process by handing out wads of cash. You have done less than any company approaching your size to underwrite the sleazy business of influence peddling. Because Microsoft isn't looking for favors from the federal government, it resists paying a fee to self-appointed middlemen. The company gets no credit for this stance. Mother Jones has a piece in its new issue blasting Microsoft for politicking in Washington, which gives you the distinction of being attacked both for lobbying and not lobbying in the same month.
The practical issue is much harder than the ethical one. Sure, the world would be a better place if there was no corporate money in politics, and no hired-gun lobbyists, as it would if there were no land mines or nuclear weapons. But can one big company disarm unilaterally? Even Charles Lewis of the Center for Public Integrity--the least compromising critic of the revolving door--was quoted in the New York Times suggesting that Microsoft has to do what everyone else does. Other stories have pointed out that competitors are hauling out the big guns. Netscape recently signed, among others, Bob Dole (who couldn't even give his own Internet address correctly on national television) and Greg Simon, Gore's former domestic-policy adviser. Microsoft's competitors see Washington as their salvation. How can you fail to mount a defense?
I can't in good conscience argue that you shouldn't field a team. Modern legislation and regulation are technical and complex. Any big company needs skilled people who can process the implications of proposed changes and argue for its interests. I regretfully acknowledge that it may even make practical sense to have a few hired guns like Norquist, Downey, and Weber around--people of value only for their connections to power, not for any knowledge or talent.
D on't get me wrong--I think that what these people do for a living is slimy. They're not all equally bad, but I have trouble deciding who is worse. Is it the right-wing commissar Norquist, who defied subpoenas from the Thompson Committee about his role laundering campaign contributions for the Republican National Committee (he is contemptuous of the law)? Or is it Downey, a former reformer from the post-Watergate Class of '74 who wants everyone to think of him as a Boy Scout even as he sells his connections to anyone who can pay his fee?
Another quandary: Is it worse for lobbyists to exploit their personal relationships with government officials, or to sell the illusion that they are doing so? After years of covering lobbying, my impression is that the business is about 80 percent con. You never know for sure what you're getting, which, unfortunately, is an argument for ponying up. The company has billion-dollar issues at stake. At $120,000 a year for Norquist and $160,000 a year for Downey, it's a cheap lottery ticket. And odd as it sounds, hiring influence peddlers generates good will on Capitol Hill. In Congress, where people think of themselves as underpaid, there's hostility toward Bill Gates based on the fact that he's got a lot of dough and doesn't share it with people like them. Republican staffers, in particular, see Microsoft as a Democratic-inclined company that is never going to hire them when they're ready to go through the revolving door. This is a pretty venal outlook, but it's built into the Washington operating system the way, say, Internet Explorer is said to be integrated into Windows. Many people think Microsoft can easily separate Windows and IE if it wants to, but nobody would claim that Microsoft can single-handedly re-create the culture of Washington.
There are, however, advantages to not being heavy hitters inside the Beltway. Refusing to pay an unjustified toll may be contemptuous of Washington, but it's respectful of democracy. In a way, I think it has already helped Microsoft's image. You've been slammed for not throwing your weight around in D.C., but would certainly be criticized much more if you did throw it around. Microsoft has been defensive about its low-key Washington role when it could legitimately be boasting about it.
Of course it's hard to brag about your reluctance to hire Washington sleazeballs when you have Michael Deaver on your payroll. Deaver isn't just an ordinary convicted felon. He was on the cover of Time--making a phone call from his limousine--as the symbol of the influence-peddling excesses of the 1980s. I'm sure he experienced a great deal of personal growth during his community service, but he's not the guy to organize a PR blitz around the theme of restraint in playing the Washington game.