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Enron and Microsoft

New Economy industrialists show a common characteristic: disdain for the law. 02/02/24 ReleVents hed: Enron and Microsoft dek: New Economy industrialists show a common characteristic: disdain for the law. by James Mathewson

The story is all too familiar: One of this country’s largest companies spends millions on soft money for the Republican Party and hard money for President Bush’s campaign and earns immediate presidential favors in return. I’m not talking about Enron; that story is perhaps best told by Michael Moore in a recent issue of The Nation.

No, I’m talking about Microsoft. It was no surprise when the Bush Justice Department had no stomach for the antitrust case with Microsoft and worked to quickly settle on Microsoft’s terms. Actually, that outcome had been widely predicted by many analysts (myself included) before Bush won the election, based on the large contributions to the Bush and Republican Party coffers from Microsoft and its executives.

What is surprising is how quickly Microsoft used its pending settlement to further put the screws to the PC makers who depend on Microsoft Windows licenses. As a news story on our site and elsewhere late last week shows, shortly after the proposed settlement was announced, Microsoft went back to the 25 largest PC manufacturers and demanded new licensing concessions. In depositions before lawyers of the nine states that rejected the settlement, Microsoft Vice President Richard Fade (who negotiates these deals) said the companies would not have agreed to the new terms were it not for provisions in the settlement. One such provision–to ensure uniform licensing between PC manufacturers–was supposed to improve the situation for PC makers. But it had the opposite effect, as Microsoft made the licenses uniformly tougher on PC makers.

Even Microsoft buddy Hewlett-Packard complained about a new restriction that would hold Microsoft immune from patent suits, according to Thursday’s Wall Street Journal. Suppose H-P patents a new imaging technology and builds it into its PCs. Now suppose Microsoft finds out about it, copies the technology, and bundles it in with the next version of Windows. Under the terms of the new licensing agreement, H-P would not be able to sue for patent infringement, despite the obvious case. Other restrictions are equally onerous, yet Microsoft’s monopoly position leaves the PC makers with little choice but to sign on the dotted line.

I’ve been covering Microsoft’s monopoly since before the Clinton Justice Department brought the antitrust case against the company. But I’m still amazed with each new revelation of heavy-handed tactics from Redmond. The facts of the case are as plain as Fade’s testimony. Most of the facts were gleaned from a famous deposition by Bill Gates himself. What struck me about these two depositions is that the executives brazenly admitted to doing what is plainly illegal. Yet they adamantly denied that they were doing anything wrong. In fact, Microsoft executives have repeatedly claimed that any law that hinders a company from doing business in whatever way it pleases is bad law.

This is where the similarity between Microsoft and Enron is chilling. Most of us have watched excerpts of testimony by Jeff Skilling and others in which the former Enron executives lie in front of the whole world without a shred of remorse. I’ve puzzled about this since details of the company’s tactics surfaced. I’ve come to the conclusion that Enron executives didn’t think they were doing anything wrong as they defrauded thousands of Americans out of hundreds of millions of dollars. As industrialists, they thought they deserved praise for finding creative ways of moving money around. And they were praised and allowed to buy privileged access to government, until the house of cards collapsed under its own weight.

Microsoft has the same disdain for law that Enron did. It tries to buy political favor whenever it can. It harms millions of Americans, not through out-and-out fraud but by restricting consumer choice. If nothing else, we need to send a message to companies like these that they must abide by the law or face harsh consequences. And we need to send a message to politicians that criminals cannot buy immunity with political contributions.

James Mathewson is editor of ComputerUser magazine and ComputerUser.com.

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