Profile of Microsoft

compiled by George Draffan

www.endgame.org

 

Basic Facts *
History *
Microsoft Temp Workers Cases *
Prison Labor *
The Microsoft Monopoly: Anti-Trust Proceedings *
1995 consent agreement *
United States of America v. Microsoft Corporation *
Other Anti-Trust Cases *
Proposed Settlement of Private Class-Action Antitrust Cases - December 2001 *
Caldera lawsuit *
Tax Subsidies *
Political Lobbying *
Political Contributions *
International Trade Issues *
Protecting Its Intellectual Property *
Controlling Encryption *
Microsoft’s Role in the World Trade Organization *
Marketing in the Schools *
Environmental Impact *
The Concentration of Wealth *
Paul Allen’s Stadium Election *
For More Information *

 

Basic Facts

State of Incorporation: Washington.

Corporate Headquarters: One Microsoft Way, Redmond WA 98052.

Revenues: 1999 sales of $19.7 billion, 36% higher than 1998.

Profits: 1999 net income of $7.8 billion. This was a 73% increase over 1998 profits. Microsoft’s profit in 1999 was 40 percent of its revenues (compared to an average five percent profit for Fortune 500 corporations).

Employees: 31,396 employees in 1999, a 16% increase over 1998.

 Board of Directors (as of Nov 2004 proxy statement)

 

Past/Present Interlocks

William H Gates III

ICOS Corp

Steven A Balmer

Accenture Ltd

James I Cash Jr

Harvard Business School, Chubb Corp, General Electric, Phase Forward Inc, Scientific-Atlanta Inc

Raymond V Gilmartin

Merck & Co, Becton Dickinson & Co, General Mills

Ann McLaughlin Korologos

Aspen Institute, Benedetto, Gartland & Co, AMR/American Airlines, Fannie Mae, Harman International Industries, Host Marriott, Kellogg

David F Marquardt

August Capital, Netopia, Seagate Technology, Tumbleweed Communications

Charles H Noski

Northrop Grumman, AT&T, Hughes Electronics

Helmut Panke

BMW, UBS

Jon A Shirley

Tandy

Wm G Reed (RETIRING)

Simpson Timber/Investment, PACCAR, Safeco, Washington Mutual

 

History

For list of Microsoft's acquisitions and partnerships, see http://www.vcnet.com/bms/departments/catalog/yrcatalog.shtml

1975 company founded by Bill Gates and Paul Allen.

1977 company moved to Seattle.

1980 IBM chose Microsoft to write the operating system for its computers. Microsoft bought the rights to programmer Tim Paterson's system for $50,000 and converted it to MS-DOS.

1985 Windows.

1986 Microsoft goes public, with Gates retaining 45 percent of the shares (by 1999 he retained 15 percent).

1992 Microsoft defends itself against lawsuit by Apple which claimed the MS Windows system was a copy of Apple's.

1995 consent agreement with U.S. Department of Jusice to stop bundling applications with its operation system software.

1995 Microsoft acquired Bettman Archives, the world's largest collection of historical and news photographs, now integrated into Corbus, a company owned by Bill Gates.

1996 Microsoft made an equity investment of 10% ($90 million) in Wang Labs to settle a lawsuit in which Wang claimed Microsoft's OLE technology infringed their patents. As part of settlement, Wang imaging software is now part of Windows and NT.

1997 Microsoft purchased WebTV for $425 million.

1997 acquired Hotmail for perhaps as much as $400 million and incorporated it into Microsoft Network.

1997 $1 billion equity investment in cable operations of US West.

1997 Microsoft invested $150 million in its rival Apple Computers.

1999 Federal court finds Microsoft to be an illegal monopoly.

1999 $600 million equity investment (4.25% of common stock) in Nextel (cellular telephones and pagers).

1999 Proposed $4 billion equity investment in Cable and Wireless Communications (UK television cable).

 

Microsoft Temp Workers Cases

Vizcaino v. Microsoft (stock discounts)

Hughes v. Microsoft (401(k) and other benefits)

In June 1999, a federal court "rejected Microsoft's request for a new hearing on its May decision that short-term contractors should be treated as regular employees and, therefore, eligible for discount stock purchases. The world's largest software company wanted the judges to re-hear their case in a seven-year-old class action lawsuit filed by a group of so-called permatemps. ‘They wanted another shot at getting the decision reversed and it was denied,’ said Seattle attorney David Stobaugh of Bendich, Stobaugh & Strong (http://www.bs-s.com/msoft.htm), which represents the temps. The workers involved in the dispute may perform 40-hour weekly jobs at Microsoft for up to a year at a time, but are considered employees of outside staffing agencies. So they do not get benefits such as health insurance, stock plans, and 401(k) coverage. Within Microsoft's workforce of about 30,000, between 5,000 and 6,000 people are considered temporary contingent workers. On 12 May, a three-judge panel overturned Seattle US District Judge Carolyn Dimmick's 1998 ruling that narrowed the class to certain employees who worked as Microsoft temps from 1987 to 1989. The class was expanded to include all permatemps who worked on or after 29 December 1986."

The Information Technology Association of America (ITAA) criticized the ruling, saying "it would serve to undermine the information economy and effectively deny the existence of an entire class of workers in this country - temporary workers and employees of firms who specialize in outsourcing staffing needs."

"Microsoft will ask the U.S. Supreme Court to overturn a ruling that expanded the number of temporary workers who can participate in a class-action lawsuit against the software giant. Microsoft plans to file a petition for writ of certiorari by tomorrow, asking the court to reject a May 12 ruling by the 9th U.S. Circuit Court of Appeals in San Francisco. That ruling overturned a lower-court decision that limited the size of the class to a few hundred workers who held temporary jobs from 1987 to 1990. The appeals court ruled that all past and current temps could be included, opening Microsoft up to potentially 15,000 claims… The class-action suit, filed seven years ago, contends Microsoft treats temps as full-time employees except for compensation. The suit seeks millions of dollars in gains from employee stock-purchase plans, which offer workers the opportunity to buy Microsoft stock at a 15 percent discount. The plans were not extended to temps."

"Microsoft has kept files evaluating the performance of temporary workers for several years, a practice that has led one group to suggest the software giant was trying to sidestep state law. While Microsoft denies they are personnel files, documents obtained by the Washington Alliance of Technology Workers (WashTech) show managers criticized workers for everything from lacking focus to comparing pay with co-workers. According to the documents, Microsoft managers used those evaluations to determine whether workers should be given other temporary assignments. WashTech, which is trying to persuade temporary workers to form a union, believes Microsoft is hiding behind the temporary agencies that hire the workers to shield the documents from them. Under Washington state law, workers have the right to inspect their personnel files and request changes or submit a rebuttal to information in the file with which they disagree. ‘A person could be blacklisted and have no idea this file exists,’ said Marcus Courtney, co-founder of WashTech and a former Microsoft temp. Microsoft maintains that it does not employ temporary workers, temporary agencies do. Company spokesman Dan Leach said the files - the company calls them ‘customer-feedback forms’ - are sent to temporary agencies. "We do not keep personnel files on employees of other companies," Leach said."

WashTech wants to legislatively mandate that temporary agencies place the markup rate on contractors pay stubs; one agency charged a client company a markup of 214 percent -- in other words, the agency made more than the worker. Temporary employment agencies supplying workers to Microsoft include Volt Services Group and Kelly Technical Services.

In December 1997, the Washington State Department of Labor announced a new rule that allows high-tech firms to deny overtime pay to workers who earn more than $27.63 per hour. Microsoft contractors earn $15 to $36 per hour. Two-thirds of them have been working at Microsoft for more than a year.

In January 2000, the U.S. Supreme Court refused to hear Microsoft's appeal of the permatemp stock options case, letting stand the two 9th Circuit rulings that thousands of temporary and contract workers were eligible to buy discounted stock. Another permatemp case (Hughes v. Microsoft) based on equal pension and other benefits is still outstanding.

"A federal district judge initially limited the class to just a few hundred workers employed at Microsoft from 1987 to 1990. But the appeals court ruled the class should cover any temporary or contract worker who worked 20 hours per week or more for at least five months in any year since the end of 1986 -- a class that could total well over 10,000 workers... The class-action suit, filed in 1992, claimed that Microsoft treated temporary and contract workers as permanent employees except for compensation. The lawsuit sought millions of dollars in gains from the employee stock purchase plans, which offer workers the opportunity to buy Microsoft stock at a 15 percent discount. The plans were not extended to temporary and contract workers. The Supreme Court in 1998 rejected an earlier Microsoft appeal in the case."

 

Prison Labor

Microsoft stopped using Washington State prison labor, after it was revealed that Exmark, packaging subsidiary of PC Services, packaged products for Microsoft, Costco, Starbucks, and JanSport at the Twin Rivers (Washington) Corrections Center. Exmark also stuffs envelopes for mass mailings for corporations like US West. Exmark pays prisoners the minimum wage, but the prison deducts 20 percent for "the cost of corrections", another 10 percent as a "mandatory savings account", another five percent for a state-administered victim’s compensation fund, and the usual deductions for income tax, social security, and Medicare tax. The prison system can deduct up to another 20 percent to pay court-ordered restitution, court costs, and other debts -- up to 80 percent of the prisoners' wages can be deducted by law. Private companies operating within Washington's prisons do not have to pay health or retirement benefits or workers compensation. Exmark pays the state $1 per month for factory and warehouse space. In 1993 the state legislature mandated the expansion of prisoners in its "Free Venture Industries." In 1994, the state built a 56,000 square foot "industries building" adjacent to the state reformatory, and has so far attracted Elliott Bay Metal Fabrication, which makes microbrew vats and fishing equipment; A&I Mfg., which makes window blinds and wire shelving; and Redwood Outdoors Inc., which makes clothing for Eddie Bauer, Helly-Hanson, and Brooks.

 

The Microsoft Monopoly: Anti-Trust Proceedings

1995 consent agreement

Microsoft Windows software has 86 percent of all PC operating system sales, and the Microsoft Office suite (word processor, spreadsheet, and database) has 87 percent of that market.

In a 1995 consent agreement with the U.S. Department of Justice (DOJ) , Microsoft agreed not to require computer manufacturers who install Microsoft's Windows operating system to also install "separate" products. In the Fall of 1997, with Microsoft ignoring the agreement by continuing to include its Explorer internet browser with copies of Windows 95, the DOJ threatened to impose a $1 million per day fine. In December 1997, a preliminary injunction required Microsoft to cease bundling, "setting the stage for a very long and very public legal battle" which began in May 1998.

"Since the beginning of [1998] at least eleven state attorneys general have issued subpoenas to Microsoft regarding the bundling of its Web browser with Windows 95. Moreover, investigators from both the European Union and Japan have expressed an interest in the matter, and on March 2, 1998, twenty-seven states signed a friend-of-the-court brief in support of the DOJ position."

 

United States of America v. Microsoft Corporation

The case is titled United States of America v. Microsoft Corporation, C.A. 98-1232, and State of New York, ex rel. Eliot Spitzer, et al., v. Microsoft Corporation, C.A. 98-1233.

News coverage http://fullcoverage.yahoo.com/fc/Tech/Microsoft_Antitrust_Trial/

Legal documents http://www.findlaw.com/01topics/01antitrust/microsoft.html

In May 1998, the U.S. Department of Justice sued Microsoft for violation of the Sherman Anti-Trust Act, claiming that Microsoft entered into non-competition agreements with computer manufacturers which effectively forced the manufacturers to include Internet Explorer with each new computer shipped with the Windows 95 operating system, and that Microsoft used exclusive agreements with Internet service and content providers such as America Online to bolster their market share and force competitors out. Bill Gates responded that requiring access to competitors' browsers "is like requiring Coca-Cola to include three cans of Pepsi in every six-pack it sells," and forcing the software conglomerate to remove its browser technology from standard distributions of the Windows operating system "is like telling Coca-Cola it must take something out of its formula. This suit is all about Microsoft's right to innovate on behalf of consumers. The regulators complain about lack of choice...Huge numbers of consumers today choose whatever browser they want."

On November 5, 1999, Justice Thomas Penfield Jackson of the U.S. District Court of Washington D.C. ruled that Microsoft was a monopoly. This "Finding of Fact" can be viewed at http://usvms.gpo.gov/findfact.html. Among the court's conclusions:

 

In October 1998, the Consumer Federation of America (CFA) and the Media Access

Project (MAP) released the report The Consumer Case Against Microsoft, charging that Microsoft's "anticompetitive business practices and abusive pricing of computer software have already cost the public hundreds of millions of dollars in excess charges and are threatening to inhibit development of the Internet." CFA, MAP, the Consumers Union (CU), and the Consumer Project on Technology (CPT) urged Congress to promote greater competition in the computer software industry through oversight and legislation. Consumer Federation of America is the nation's largest consumer advocacy group, composed of over 250 state and local affiliates. Media Access Project (http://www.mediaaccess.org) is a twenty-five year old non-profit public interest law firm representing civil rights, civil liberties and consumer organizations dedicated to advancing First Amendment rights. The Consumer Project on Technology (http://www.cptech.org) was created by Ralph Nader in 1995 to address emerging issues in software, telecommunications, intellectual property rights, privacy and access to health care technologies. Consumers Union, publisher of Consumer Reports magazine, is an independent, non-profit testing, educational and information organization serving only the consumer.

Marla Romash, the Al Gore's deputy campaign chair, does PR work for ProComp, an alliance of high-tech companies backing the antitrust case against Microsoft."

 

The antitrust case: a timeline - from Seattle Times, June 29, 2001

Antitrust has been an issue between Microsoft and the federal government for more than 10 years. Here are key points through that history.

1990 June: Microsoft learns the Federal Trade Commission is investigating the development of Windows and OS/2, another operating system.

1993 Feb. 5: FTC deadlocks 2-2 on whether to pursue the case.

1993 Aug. 20: Microsoft learns the Justice Department is assuming jurisdiction over the case.

1994 July 16: Microsoft settles with Justice, signing a consent decree agreeing to alter Windows licensing policies with PC makers.

1995 Jan. 10: Silicon Valley attorney Gary Reback, representing unidentified clients, challenges the settlement, asserting it doesn't curb Microsoft's dominance in operating systems.

1995 Feb. 14: U.S. District Judge Stanley Sporkin rejects the settlement.

1995 June 16: An appeals court overturns Sporkin's ruling; the case is reassigned.

1995 Aug. 21: U.S. District Judge Thomas Penfield Jackson approves the settlement.

1996 August: Silicon Valley companies say they have contacted the Justice Department about Microsoft's unfair practices.

1996 Sept. 20: Microsoft says it has been notified of a new investigation related to Internet access.

1997 Oct. 20: Justice files suit, charging Microsoft with violating the 1994 consent decree by conditioning licensing of Windows 95 on computer makers' including the Internet Explorer browser in their products.

1997 Dec. 11: A Jackson-issued preliminary injunction prohibits Microsoft from forcing computer makers to ship Internet Explorer with each Windows 95 machine.

1997 Dec. 15: Microsoft appeals the preliminary injunction.

1998 Jan. 22: Microsoft agrees to offer working versions of Windows 95 without the browser.

1998 May 12: A three-judge appeals-court panel rules Jackson's injunction does not apply to Windows 98.

1998 May 18: The federal government and 20 states sue Microsoft, accusing the company of predatory practices to protect its monopoly in personal-computer operating systems.

1998 June 23: The appeals court clears the way for Microsoft to package Internet Explorer with Windows 95.

1998 Oct. 19: The trial begins. Government attorneys accuse Microsoft of using its monopoly position to bully, bribe and attempt to collude with others in the industry, while illegally expanding and protecting its Windows franchise.

1998 Oct. 20: Microsoft strikes back, calling the government's case misguided and erroneous.

1999 Feb. 26: The defense rests. Trial begins a three-month break.

1999 June 1: The trial resumes for rebuttal testimony.

1999 June 24: The testimony phase of the trial ends.

1999 Nov. 5: Jackson issues the first of two rulings, that Microsoft is a monopoly.

1999 Nov. 19: Jackson names Chicago Federal Circuit Judge Richard Posner to mediate a settlement.

2000 Jan. 22: Both sides present final arguments to Judge Jackson.

2000 April 1: Settlement talks before Posner collapse.

2000 April 3: Jackson finds Microsoft violated the Sherman Antitrust Act; Microsoft says it will appeal.

2000 April 28: Justice Department and 17 states propose that Microsoft be split into two companies and be subject to a number of business-conduct restrictions.

2000 May 24: Jackson holds a one-day hearing on proposed remedies, cutting off a Microsoft request for more time.

2000 June 7: Jackson orders Microsoft to be split into two companies and imposes conduct restrictions.

2000 Sept. 26: The U.S. Supreme Court rejects an expedited review, leaving it to a D.C. appeals court.

2001 Feb. 26-27: Both sides argue their cases before the appeals court.

2001 June 28: The appeals court, in a stinging rebuke of Jackson, reverses the break-up order, finds the company did illegally attempt to maintain its monopoly on Intel-based PC operating systems but did not illegally attempt to monopolize the market for Web browsers. It remanded the case to U.S. District Court.

 

 

Other Anti-Trust Cases

Proposed Settlement of Private Class-Action Antitrust Cases - December 2001

"Microsoft Corp. said Tuesday that it will provide more than $1 billion, including about $410 million in cash, to public schools around the country under a proposed national settlement of more than 100 class-action lawsuits. The balance of the settlement proposal includes training, support and software. The suits charged that the Redmond-based software company's products were overpriced. The settlement agreement was signed by the parties on Monday, and must still be accepted by the U.S. District Court in Maryland. The five-year education program, if accepted by the court, provides benefits to more than 12,500 schools and more than 400,000 teachers who work in those schools. A public hearing on the agreement is scheduled for Nov. 27. Microsoft said that the suits were originally filed at both the state and federal level, and that all of the federal cases were consolidated in the District Court in Maryland. Several state-level cases and many of the claims in the federal litigation were dismissed based on a U.S. Supreme Court precedent, the company said. This settlement could end all of the more than 100 class-action cases the company still faces, Microsoft said. The settlement would result in a recognized pretax charge of about $550 million in the current fiscal quarter ending Dec. 31, and the new educational program would be in addition to the company's current philanthropy efforts. Last year, Microsoft said, it gave more than $215 million in cash and software to nearly 5,000 nonprofit organizations to improve technology access in underserved communities, and to expand and diversify the technology work force. The settlement includes a provision under which Microsoft will give $150 million to create a new national foundation to make grants to local foundations and community organizations for purchasing computers and software. The company will provide the foundation with another $100 million to match donations from other sources. The company also will pay $160 million into a separate fund overseen by the foundation to be used for technology support programs to assist schools participating in the programs. Other provisions in the proposal include: The contribution of up to $90 million over the five-year period for training teachers, school administrators and support personnel in integrating technology into the school curriculum and using the technology provided by the program. Establishment of a program in which nonprofit computer refurbishing organizations will be provided licenses and/or software for Microsoft operating systems to be installed on refurbished personal computers. Microsoft will ensure that at least 200,000 Pentium-class PCs and Macintosh computers will be available to eligible schools each year during the five-year settlement period. Eligible schools will have the ability to apply for grants from the new education foundation that would make refurbished machines available at a net cost to them of $50 per unit. During the settlement period, Microsoft will make a wide range of educational and productivity software available upon request to eligible schools for all PCs, laptops or Macintoshes already owned by the schools or acquired during the settlement period. The value of the software will depend on how much is requested by the schools, but the amount may well exceed $500 million, based on Microsoft's academic prices."

"The settlement, which comes before a court hearing today in Baltimore, would end more than 100 private, class-action antitrust cases that allege Microsoft overcharged for its software. Consumers seek billions of dollars in refunds, including up to $6 billion in California alone... In return for settling the cases, Microsoft would provide more than $500 million worth of software to low-income schools, including about 200 in Washington state. It would provide another $500 million for technology training for students, teachers and administrators. After tax considerations, the settlement would actually cost the company $375 million... The settlement was attacked in briefs filed yesterday by lead attorneys in class-action cases in Minnesota, New York, New Mexico, North Dakota, California and the District of Columbia. Also critical was Minnesota Attorney General Mike Hatch, one of nine state attorneys general who are still pursuing the federal antitrust case against Microsoft. "The proposed settlement further entrenches Microsoft's monopoly, does little to benefit the state, confers no benefit to or protection for Minnesota consumers, and usurps Minnesota state court authority over state law claims," he said in a brief."

"Complaints from Apple Computer and other Microsoft competitors must be considered before Microsoft can give $1 billion worth of software and computers to schools to settle a class-action antitrust case, according to the federal judge in Baltimore who is overseeing the case. The settlement proposal also caused U.S. District Judge J. Frederick Motz some concern yesterday when an economist testified he had greatly underestimated the possible consumer overcharges that could be recovered from the company... Keith Leffler, an economist from the University of Washington working for the class-action plaintiffs, caused a stir during yesterday's hearing when he said that the $2.1 billion he had mentioned previously as the amount Microsoft had overcharged consumers should have been $5.15 billion... Along with competitors and industry trade groups, attorneys representing consumers in five states have been critical of the schools settlement. Some of their arguments echo criticism of the proposed settlement of the U.S. Justice Department's separate antitrust suit against the software giant. Nine of 18 states that are plaintiffs in that case have refused to sign the proposed consent decree, saying they will seek tougher remedies to prevent Microsoft from perpetuating its monopoly of personal-computer software. Yesterday, Connecticut Attorney General Richard Blumenthal said he had decided not to sign the consent decree... The agreement, announced last week, would resolve more than 150 class-action suits claiming the company overcharged consumers. The pact would also apply to any pending claims that accuse Microsoft of using its Windows monopoly to charge extra money for the operating system and popular software programs like Microsoft Office. Motz said he would decide by mid-December whether to give preliminary approval to the settlement. Such approval would be followed by a hearing on whether the plan is fair before the judge decided on granting final approval. At yesterday's hearing, Motz asked whether it would hurt competition in the school software market. Apple now has a 47 percent share of the market for U.S. school computers, while Windows powers 53 percent."

 

Caldera lawsuit

Microsoft settled out of court in a private anti-trust lawsuit brought against it by Salt Lake City software company Caldera Inc. for an estimated $150 million. Caldera filed the suit in July 1996, charging Microsoft illegally fought to maintain its dominance in operating systems, seeking more than $1 billion in damages. Analysts said Microsoft was likely to lose the case given recent court rulings regarding Microsoft's monopoly position. "We had always stated that we would prefer to negotiate a fair and reasonable solution rather than pursue a costly litigation process,'' said Microsoft legal spokesman Jim Cullinan.

 

Tax Subsidies

U.S. Rep. Jennifer Dunn (R-WA) introduced the Software Export Equity Act of 1997. The SEEA is giving less than 100 software exporters a tax breath worth $1.7 billion over ten years. Microsoft is the biggest beneficiary.

Microsoft and the California-based Oracle helped create the American Alliance for Software Exports (AASE) to lobby for the tax break. AASE director Doug Larkin now heads the Alliance for a Secure Tomorrow, which lobbies for encryption laws which would benefit the industry.

 

Political Lobbying

Until 1995, Microsoft did little lobbying. Between 1995 and 1997, 72 lobbyists registered as doing work for Microsoft: 4 are retired members of Congress, 41 are former Congressional staff, 6 worked for the Senate Judiciary Committee, and 3 worked for the Executive branch. Microsoft lobbyists include:

 

Bill Gates' father, William Gates II, is a partner at the law firm of Preston, Gates, Ellis & Rouvelas Meeds.

Aside from the usual corporate concern with taxes and regulation, Microsoft's political issues include software monopoly, copyright infringement and other intellectual property issues, Internet taxes, and federal control of software encryption.

Business Software Alliance. Trade association that patrols for violation of software licensing. Heavily funded by Microsoft. In 1997, BSA dropped its lawsuit against the Uruguayan telephone company Antel when it agreed to replace all its software with Microsoft products.

"On September 18, The New York Times ran a breathless front-page account of corporate propaganda. The Microsoft Corporation, we learned, had bankrolled a California think tank---ironically named the Independent Institute---to run full-page newspaper ads supporting Microsoft's claim of innocence in the face of federal antitrust charges. The ads took the form of a letter signed by 240 academic "experts" and purported to be a scholarly, unbiased view of why the government had gone overboard in its case against the company. According to the Times article, Microsoft had not only paid for the ads, but was in fact the single largest donor to the Independent Institute, a conservative organization that has been a leading defender of the company since it first came under fire from federal prosecutors."

Microsoft woos new pals in D.C. By Alicia Mundy, Seattle Times, March 27, 2005.
On Feb. 24, Microsoft Chief Technology Officer Craig Mundie sat in on a "big boys" conference call with the Federal Communications Commission. Others on the line were the chief executives of Time Warner Cable and Comcast and the chairman of the FCC. Three weeks later, the FCC made a major decision regarding cable set-top boxes that favored Microsoft and the cable companies — and rejected months of lobbying by Intel and others in the computer and electronics industry. Five years ago, Microsoft would not have been in on such a call and probably would not have prevailed. But the phone conference with the FCC is one result of a carefully crafted strategy, the culmination of years of work by the company to undo damage from its landmark federal antitrust case and make new friends in the nation's capital. And it needs those friends. As one FCC commissioner put it, Microsoft is back on the "regulatory radar screen"... [F]ederal oversight in the telecommunications arena is extending into software companies such as Microsoft, and the company has been anticipating the change. Positioning itself for new ventures in telecom and entertainment, Microsoft is crafting tactical alliances with other companies and political power brokers and pushing policy positions on critical telecom issues in D.C..."

 

Political Contributions

Microsoft Corp PAC Contributions to Federal Candidates

1999-2000 election cycle as of November 1999:

1997-98 election cycle:

 

International Trade Issues

Microsoft exports xxx

Microsoft’s interests in trade issues include protecting its intellectual property rights, promoting its position on e-commerce taxes, encryption laws, and numerous other emerging trade policies.

 

Protecting Its Intellectual Property

Microsoft funds the Business Software Alliance, an industry association that patrols for violation of software licensing. In 1997, BSA dropped its lawsuit against the Uruguayan telephone company Antel when it agreed to replace all its software with Microsoft products.

xxx german man in prison

 

Controlling Encryption

In January 2000, the U.S. government unveiled new rules allowing software makers to export strong data encryption products overseas. The Alliance for a Secure Tomorrow, which lobbies for encryption laws which would benefit the industry, is headed by Doug Larkin, who used to direct the Microsoft-funded American Alliance for Software Exports (AASE).

 

Microsoft’s Role in the World Trade Organization

Microsoft, Beoing, and Weyerhaeuser headed the Seattle Host Committee for the meeting of the WTO in December 1999.

The Committee sold access to trade ministers.

The Committee failed to raise the funds it promised to hold the meeting, leaving Seattle with debt.

 

Marketing in the Schools

"Microsoft pays some professors $200 each for mentioning or using the company's programming tools in their presentations. The company extends the offer on a World-Wide Web page for the "Academic Cooperative," a Microsoft program for computer- science professors. The Web site is maintained through Idaho State University. Microsoft officials say the speakers' bureau, as it is called, is a well-intentioned effort to help faculty members cover their conference costs. Ethics watchdogs call it an unabashed attempt to turn professors into advertisers."

"Microsoft Corporation has become more and more aggressive in its attempts to sell products on campuses. It has promised broad new licensing deals for colleges, free Microsoft training for computing officials, even advice on structuring university information-technology budgets. Company officials have traveled the country promoting a vision of a "connected learning community" in which colleges are heavily outfitted with Microsoft products."

"Microsoft is ladling out generous helpings of software these days, and colleges throughout the country are lining up for their share. Since July 1995, the company has donated nearly $70-million in software to educational institutions, most of them colleges and universities. That doesn't include $33-million worth of software licenses that the company has granted to 742 colleges as part of its marketing programs… Bellevue Community College, in Microsoft's home state, Washington, has received $1-million in grants from the company over the past few years… Microsoft calculates that the value of software donated to educational institutions in the past two fiscal years is $50.6-million, more than 20 times the $2.4-million the company has given in cash. And by June, when the current fiscal year ends, it will have given away at least an additional $20- million worth of software to colleges, universities, and a few schools, company officials say. The software gifts have reached such groups as the United Negro College Fund, which received $16.7-million in Microsoft software in 1996 to distribute to its 42 member colleges. The Foundation for Independent Higher Education received $3.1- million in software from Microsoft, which asked that the gift be distributed to the foundation's 28 member colleges in North Carolina, where the high-tech Research Triangle region includes a large number of Microsoft employees... Of course, Microsoft is not the only computer company giving away its products to colleges. Oracle, the world's second- largest software company, is offering $50-million in software and discounts to hundreds of community colleges over the next few years. Intel, the world's largest chip maker, last year donated $67.2-million in hardware and software to research universities and plans to give away $17.8-million more before 2000. Apple once was the leader in giving products to colleges, handing over millions of dollars worth of software and computers in the late 1980s, but it has suspended its college-philanthropy programs while it reorganizes itself."

"In the seven years since the company created Microsoft Research, the division has swelled to include more than 200 researchers. It hires two new people every week, with a stated goal of having 600 researchers by 2000… The division is aggressively pursuing basic-research goals of interest to computer scientists everywhere, supplemented by the research of university faculty members with grants from the company… The division also promotes collaboration with academe through grants that it provides to university scholars. Microsoft researchers identify promising projects by attending conferences and keeping tabs on university research in their fields… "Microsoft's strategy is to accumulate as many smart people as it can," says Michael A. Cusumano, a professor of management at the Massachusetts Institute of Technology, who is co-author of Microsoft Secrets. The book, published in 1995, explored the company's research programs. Mr. Cusumano has also done consulting work for the company… Some Scholars Microsoft Research Has Hired From Academe: Richard F. Rashid, a professor of computer science at Carnegie Mellon University who was in line to become dean of the school of computer science when he was recruited in 1991 to become director of Microsoft Research. He recently was promoted to vice-president for advanced technology and research. Roger M. Needham, a professor of computer systems at Cambridge University in England and its pro-vice-chancellor, who was hired last year as director of the Microsoft Research campus in Cambridge, England. James T. Kajiya, one of the world's foremost researchers in computer graphics, who was an associate professor of computer science at the California Institute of Technology when Microsoft hired him in 1994. Today, he is assistant director of Microsoft Research. James Blinn, another highly regarded computer-graphics expert, was a researcher at Caltech's Jet Propulsion Laboratory. He is a graphics fellow at Microsoft Research. Michael H. Freedman, formerly a mathematics professor at the University of California at San Diego, and a recipient of the Fields Medal, mathematics' equivalent of the Nobel Prize. He is a researcher in Microsoft Research's Theory Group."

 

Environmental Impact

Microsoft is the leading purveyor of computer software, which depends on computer hardware, which is manufactured using many toxic chemicals. The groundwater under Silicon Valley in the San Francisco Bay Area is highly-polluted from decades of high-tech manufacturing (visit the Silicon Valley Toxics Coalition website at http://www.svtc.org/).

High-tech assembly workers are exposed to solvents and other toxic chemicals. Metals, photoactive chemicals, solvents, acids, and toxic gases, toxic coatings, bonding agents, photoresist materials, and radiofrequency and microwave radiation are used in various processes for manufacturing integrated circuits, from electroplating and cleaning to plasma reactions to ion implantation. Repetitive motion injuries resulting from microelectronics manufacturing include carpal tunnel syndrome, tendinitis, peritendinitis, and muscle spasm syndrome.

In February 1998, a wrongful death lawsuit was filed against IBM (and chemical manufacturers Shell Oil and Union Carbide), alleging that for three decades, IBM workers were "willfully and recklessly" exposed chemicals causing melanoma, non-Hodgkins lymphoma, renal cell cancer, breast cancer and cancer of the salivary glands. Another lawsuit against chemical manufacturers, pending in New York since 1996, involves more than 100 plaintiffs, including the families of eleven people killed by cancer. As the lawyer for California plaintiffs stated, "It is disturbing that some of these [toxic chemicals] are closely guarded trade secrets, which is more important than getting to the bottom of their potential for human harm."

Seagate, the world’s leading manufacturer of computer hard drives, has denied responsibility for the health problems of the workers at its assembly plant outside of Bangkok, Thailand, where workers were paid an average of $4.60 per day. The Seagate incident began in 1991, when hundreds of workers started reporting similar illnesses, including respiratory ailments, eye strain, and unusual fatigue, and came to a head when five workers aged between 23 and 28, died of unknown causes. An occupational health doctor sent to the factory by the Thai government discovered that as many as 700 workers per shift were ill, stated that the likely cause was solvent poisoning, and concluded that three of the deaths were "definitely cerebral hemorrhages caused by solvents." Two thirds of the Seagate workers had signs of exposure to phenol, and a quarter of them had blood lead levels 4 to 5 times higher than the general public in Bangkok. Seagate saw the protests as test cases by local labor groups trying to expand their power, fired over 800 workers (Seagate is the second largest foreign company in Thailand, employing over 16,000 workers), and attacked the credibility of the doctor who had investigated the case.

Large quantities of water are used in the manufacture of computer equipment. Water use is a controversial issue in New Mexico, where Intel operates a chip factory. The Southwest Network for Environmental and Economic Justice’s Campaign for Responsible Technology published a report, Intel... Inside New Mexico (Albuquerque, NM: Southwest Organizing Project, 1994).

The expansion of Microsoft's infrastructure has its local impacts as well. In 1991, a trout farm filed a lawsuit against Microsoft, charging that the construction of the Microsoft campus destroyed three streams and dried up their well.

 

The Concentration of Wealth

In 1995, 358 billionaires were worth $760 billion, the same as the poorest 20 percent of the world's people. When he was worth $40 billion, Microsoft chairman Bill Gates (who owns 15 percent of all Microsoft stock) was worth more than the bottom 110 million Americans (40 percent of the population). By 1998, Gates' stock was worth $59 billion; a year later, it was worth $85 billion. Gates is twice as wealthy as the second richest American, Microsoft co-founder Paul Allen (worth $40 billion). Number three rich-man in 1999 was Warren Buffett (chairman of Berkshire Hathaway, and worth $31 billion). Number four rich-man was Steve Ballmer, Microsoft's president (worth $23 billion). Number 5 was Dell Computer CEO Michael Dell (worth a mere $20 billion in 1999).

For more statistics on wealth, see the Primer on Corporate Power on the Endgame website at http://www.endgame.org.

 

Paul Allen’s Stadium Election

Microsoft co-founder Paul Allen paid the state $4 million to hold an unprecedented "private" referendum election, which won by 36,000 votes out of 1,600,000 cast, to provide public funding for a new stadium for Allen’s Seattle Seahawks team. The public will provide $300 of the $430 million stadium and exhibition center, which will be built on the site of the Kingdome (which will be demolished, even though the public still owes $100 million on it). Allen’s corporations on the deal include Football Northwest and First and Goal. First and Goal VP Jim Kelley was a staffer for Washington State Governor Gary Locke, who lobbied heavily for the stadium. Allen’s lobbyists include Forrest "Bud" Coffey.

 

For More Information

Organizations and Websites

Boycott Microsoft website http://www.vcnet.com/bms/ Includes The Monopolist's Cookbook: Microsoft's Market Domination Techniques, and The (Nearly) Whole Microsoft Catalog of software and corporate purchases, joint ventures and equity investments.

Consumer Project on Technology (CPT) on Microsoft http://www.cptech.org/ms/

International Anti-Microsoft Network http://i-want-a-website.com/about-microsoft/amsn.html

NetAction 601 Van Ness Ave, # 631, San Francisco, CA 94102, (415) 775-8674, http://netaction.org/ Founder and director is consumer activist Audrie Krause, former director of Computer Professionals for Social Responsibility. NetAction has a Micro$oft Monitor http://netaction.org/monitor/ and a Consumer Choice Campaign http://netaction.org/msoft/

Open Source Software http://pages.prodigy.net/marko1012/

Silicon Valley Toxics Coalition, 760 N. First Street, San Jose CA 95112, 408-287-6707, http://www.svtc.org/

WASHTECH (Washington Alliance of Technology Workers) http://www.washtech.org 206-323-6966. An affiliate of the Communications Workers of America.

 

Literature

Andrews, Paul. How the Web was Won : Microsoft from Windows to the Web : The

Inside Story of How Bill Gates and His Band of Internet Idealists

Transformed a Software Empire. (Broadway Books, 1999).

Blow, Richard, Lock Your Windows, Mother Jones, January/February 1998.

Burstein, Rachel. Overseas Invasion. Mother Jones, January/February 1998.

Chronicle of Higher Education, A Special Report: Microsoft's Reach in Higher Education, April 24, 1998. http://chronicle.com/data/articles.dir/art-44.dir/issue-33.dir/33a00101.htm

Cox, Ana Marie. Sleight of Hand. Mother Jones, January/February 1998.

Edstrom, Jennifer and Marlin Eller. Barbarians Led by Bill Gates: Microsoft from the Inside. (Henry Holt & Company, 1998).

Ervin, Keith. Microsoft Group Joins Union. Seattle Times, June 4, 1999, pp. C1-C2.

Gatlin, Jonathan. Bill Gates: The Path to the Future. "From his past to your future, the incredible story of America’s greatest entrepreneur."

Gates, Bill. The Road Ahead. (1995 autobiography).

Moody, Fred. Die, Microsoft, Die! Seattle Weekly, April 30, 1998.

Nader, Ralph. Consumer Harm in the Microsoft Case, Address to The Bazaar - An Open Source Software Event, New York, December 15, 1999. http://www.cptech.org/ms/harm.html

Rivlin, Gary. The Plot to Get Bill Gates : An Irreverent Investigation of the World's

Richest Man ... and the People Who Hate Him (Times Books, 1999).

Rohm, Wendy Goldman. The Microsoft File: The Secret Case Against Bill Gates (Times Books, 1998).

Romano, Mike. Microfraud? A Microsoft Executive Accuses the Company of Cooking Its Books. Seattle Weekly, Jan. 7, 1999, p. 7-8. (Discusses the case of Charlie Pancerzewski, who was reportedly paid $4 million by Microsoft to drop a 1997 whistleblower lawsuit he filed after being fired after the reported that Microsoft’s accounting practices violated U.S. SEC rules).

Silverstein, Ken. The Microsoft Network. Mother Jones, January/February 1998.

Wallace, James. Overdrive: Bill Gates and the Race to Control Cyberspace (John Wiley & Sons, 1998).

Young, Robert and Wendy Goldman Rohm. Under the Radar: How Red Hat Changed the Software Business and Took Microsoft By Surprise. (Coriolis Group, 1999).

Zachary, G. Paschal. His Way. Mother Jones, January/February 1998.

Zachary, G. Paschal. Showstopper!

 

Anti-Trust Coverage

Bank, David. Subpoenas Issued in Probe of Microsoft. Wall Street Journal, February 3, 1998, p. A3.

Bank, David, and John R. Wilke. Microsoft Probe by U.S. is Expanded to Cover Issues Related to Sun's Java. Wall Street Journal, March 17, 1998, p. B4.

Bork, Robert H. The Antitrust Paradox: A Policy at War with Itself. New York: Basic Books, 1978.

Bork, Robert H. The Most Misunderstood Antitrust Case. Wall Street Journal, May 22, 1998, p. A16.

Brinkley, Joel. U.S. and 20 States File Suits Claiming Microsoft Blocks Competition over Internet. New York Times, May 19, 1998, p. A1.

Davidson, Joe. U.S. Considers a Second Probe of Microsoft. Wall Street Journal, August 2, 1993, p. B8.

DeLong, James V. Washington vs. Microsoft: Don't Repeat IBM Debacle. Wall Street Journal, March 13, 1998, p. A18.

Dole, Bob. Microsoft Must Obey the Law. Los Angeles Times, November 24, 1997, p. B9.

Dowd, Maureen. Liberties: Revenge of the Nerds. New York Times, January 21, 1998, p. A17.

Gates, Bill. Why the Justice Department is Wrong. Wall Street Journal, November 10, 1997, p. A22.

Gates, Bill. We're Defending Our Right to Innovate. Wall Street Journal, May 20, 1998, p. A14.

Gruley, Bryan, and John R. Wilke. U.S. Sues Microsoft over PC Browser. Wall Street Journal, October 21, 1998, p. A3.

Lopatka, John E., and William H. Page. 1995. Microsoft, Monopolization, and Network Externalities: Some Uses and Abuses of Economic Theory in Antitrust Decision Making. Antitrust Bulletin 40 (Summer): 317-70.

Los Angeles Times. Saying No to Microsoft. Editorial, December 15, 1997, p. A18.

Manes, Stephen. Even Microsoft's Internet Browser Defends Itself. New York Times, January 6, 1998, p. B11.

Markoff, John. Plans Offered to Cut Power of Microsoft. New York Times, April 7, 1998, p. C1.

Murray, Alan. It's Time Gates Placed Trust in Trustbusters. Wall Street Journal, March 9, 1998, p. A1.

Postrel, Virginia. Creative Insecurity: The Complicated Truth behind the Rise of Microsoft. Reason, December 1997, p. 4-6.

Wildstrom, Stephen H. Why I'm Rooting for Microsoft. Business Week, February 23, 2998, p. 30.