[ale] FC: Microsoft's Congressional lobbying, from Roll Call (fwd)

[chris at perun.room17.com (Chris Farris)]

I thought this might be of intrest to some people on the forum.

Chris
Forwarded message:
> Date: Wed, 29 Oct 1997 14:39:37 -0800 (PST)
> From: Declan McCullagh <declan at well.com>
> To: fight-censorship-announce at vorlon.mit.edu
> Subject: FC: Microsoft's Congressional lobbying, from Roll Call
> ---------- Forwarded message ----------
> >>
> >>                                October 27, 1997
> >>
> >>LENGTH: 2099 words
> >>
> >>HEADLINE: High-Tech Lobbying
> >>Microsoft Steps Up Its Efforts
> >>
> >>BYLINE: By Juliet Eilperin
> >>
> >>BODY:
> >>   Lobbying Members of Congress on behalf of the richest man in America may
> >>seem like an easy job. But when the billionaire is Bill Gates, things can
> >>get a bit dicey.
> >>
> >>   One Washingtonian retained by Microsoft faced fierce resistance when
> >>pushing for a tax provision. Ways and Means staffers confronted the
> >>lobbyist with a simple question: "Why does Bill Gates need a break?"
> >>
> >>   The occasional Congressional hostility that Gates's staggering financial
> >>success engenders - he doubled his net worth in the past year to reach
> >>nearly $40 billion by Forbes's estimate - makes Microsoft officials careful
> >>about how they approach lawmakers and staff.
> >>
> >>   While other corporate giants like Ford Motor Co. or Coca-Cola sponsor
> >>elaborate receptions and product demonstrations on the Hill, Microsoft is
> >>nowhere to be seen.
> >>
> >>   Which, of course, is exactly what the notoriously DC-averse Gates wants.
> >>
> >>   Microsoft director of federal government affairs Jack Krumholtz, who
> >>established the company's seven-person DC government affairs office less
> >>than three years ago, said Gates only travels to the nation's capital once
> >>a year to join other high-tech executives for the annual Business Software
> >>Alliance gathering. "This is a man who is very focused on his business,
> >>building great technology," Krumholtz said. "He has tremendous respect for
> >>the role of government and Congress, but he's in the marketplace bringing
> >>great products."
> >>
> >>   Negotiating a fine line between making the company's views known in
> >>Washington while trying not to appear too heavy-handed, the company has
> >>quietly scored a number of political wins recently - on legislative fronts
> >>ranging from encryption to taxes.
> >>
> >>   But with the Justice Department seeking a $1-million-a-day fine on
> >>Microsoft for allegedly taking anticompetitive steps to boost its Web
> >>browser, the computer magnate needs to worry about goings-on in the
> >>nation's capital.
> >>
> >>   Gates himself, however, remains disconnected from Congress. "It's
> >>extremely rare to have Bill Gates get involved in a political issue,"
> >>confirmed Rep. Rick White (R-Wash), who represents Redmond, where
> >>Microsoft's corporate headquarters is located.
> >>
> >>   One Member who is an expert on technology issues said it makes sense
> >>that Gates has not cultivated ties inside the Beltway. "He's not a
> >>presence," said the lawmaker, who has never met Gates. "When you've made so
> >>much money without paying attention to DC, it's hard to believe anything
> >>devastating can happen if you keep ignoring DC."
> >>
> >>   But if Gates hasn't yet embraced the CEO's traditional role of lobbyist,
> >>Microsoft has begun to respond to Washington, DC's increasing interest in
> >>its activities, beefing up its lobbying efforts and donating to a range of
> >>candidates.
> >>
> >>   "They've gotten big enough and visible enough that people are going to
> >>have to be made aware of their side of the story," White argued.
> >>
> >>   In a little-noticed move this fall, Microsoft hired former Rep. Vin
> >>Weber (R-Minn) and several of Weber's colleagues at the consulting firm
> >>Clark & Weinstock as lobbyists.
> >>
> >>   The decision to retain Weber, one of Speaker Newt Gingrich's (R-Ga)
> >>closest allies when they served together in the House, and his partner Ed
> >>Kutler, a former Gingrich policy adviser, was widely interpreted on Capitol
> >>Hill as evidence of the company's new determination to win over the other
> >>Washington.
> >>
> >>   Rep. Jennifer Dunn (R-Wash), a prominent ally of Microsoft and GOP
> >>Conference vice chair, said the contract shows that the company's
> >>executives have honed their political skills. "They've been very smart in
> >>investing in people who can communicate with us in Congress," Dunn said.
> >>"Vin Weber is a great example of that."
> >>
> >>   According to lobbying disclosure reports, Weber, Kutler, Andrew Goldman,
> >>Diedre Stach, and Kent Knutson will cultivate "support for Microsoft's
> >>position across a wide range of issues, including intellectual property
> >>rights, taxes, encryption, and other matters affecting the
> >>computer-software industry."
> >>
> >>   No matter what the issue, however, Republicans are more inclined to
> >>listen to an old friend like Weber than lesser-known government relations
> >>officials.
> >>
> >>   "Vin Weber is somebody we have a high regard for," Dunn said. "He'll be
> >>very useful to them in whatever they're doing legislatively."
> >>
> >>   According to informed sources, Microsoft retained Weber because
> >>officials are worried the company is seen as " Democratic" and they hope to
> >>build
> >>relationships on the Republican side of Congress. Ideally, Weber is
> >>supposed to dissuade Members from joining Justice's attacks against
> >>Microsoft.
> >>
> >>   But Weber is not alone in representing Microsoft. In addition to having
> >>its own DC office, according to lobbying disclosure reports, the company
> >>has retained nine separate lobbying firms.
> >>
> >>   These firms are registered to lobby on a profusion of issues, including
> >>copyright matters; immigration rules; most-favored-nation trade status for
> >>China; educational technology grants; tax credits for research and
> >>development; patent reform; tax simplification; the Federal Communications
> >>Commission's implementation of the Telecommunications Act; and the proposed
> >>Federal Trade Commission probe into competition in the Web browser market.
> >>
> >>   These firms boast a veritable who's who of prominent Congressional
> >>types, including ex-Rep. Tom Downey (D-NY) of Downey Chandler, Inc., a
> >>former Ways and Means subcommittee chairman; former House Sergeant at Arms
> >>Werner Brandt of Preston, Gates, Ellis & Rouvelas, Meeds (the same
> >>Seattle-based firm, where, incidentally, Gates's father is still a name
> >>partner); and Americans for Tax Reform head Grover Norquist, another
> >>Gingrich confidant.
> >>
> >>   In addition to hiring four new firms this year - Arthur Anderson, Clark
> >>& Weinstock, the Michael Lewan Company, and Washington Counsel - Microsoft
> >>spent 33 percent more on lobbying compared with last year's total.
> >>
> >>   In 1996, according to reports, the corporation spent nearly $1.8 million
> >>on Hill lobbying. During the first six months of 1997, by contrast, the
> >>company has already spent $1.2 million on lobbying.
> >>
> >>   Microsoft has also retained the services of Washington powerhouse
> >>Edelman Public Relations Worldwide to spread its message on the East Coast.
> >>
> >>   Krumholtz said the company, which is seeking "outside advisers that
> >>really run across a spectrum of different perspectives," is devoting an
> >>increasing amount of time to explaining highly technical issues to Members
> >>who may be unfamiliar with technology.
> >>
> >>   But Microsoft is less poised to become prominent in the traditional
> >>route of access to Members: campaign giving.
> >>
> >>   The company has donated three times as much money to the GOP in soft
> >>money and individual contributions this election cycle, according to
> >>figures compiled by the Center for Responsive Politics, but the total is
> >>still minuscule for a company of Microsoft's behemoth status: $39,000 in
> >>1997 soft money and individual contributions to Republicans and $13,200 to
> >>Democrats. Its PAC has given only a paltry $9,000. During the 1995-96
> >>cycle, its total donations amounted to less than $236,000.
> >>
> >>   White, who co-chairs the Congressional Internet Caucus, has received
> >>roughly $16,000 from Microsoft officials and its PAC during the past two
> >>election cycles. At one Seattle fundraiser this summer, for example, nine
> >>Microsoft executives placed money in White's campaign coffers, including
> >>Gates himself.
> >>
> >>   But that was Gates's only personal contribution so far this year and
> >>last cycle he gave a total of only $5,150 to six Members.
> >>
> >>   "They're beginning to invest in the election process," insisted Dunn,
> >>who has received $5,000 from the company's PAC and its officials in the
> >>past two and a half years.
> >>
> >>   Several Members of Congress have encouraged CEOs like Gates to get more
> >>involved politically.
> >>
> >>   "I don't think they're very good at it yet," White acknowledged, adding
> >>that computer companies were virtually silent during the telecommunications
> >>reform debate in the last Congress. "Number one, you've got to go out and
> >>talk to Members of Congress. I've told (Microsoft) you need a 435-Member
> >>strategy."
> >>
> >>   Along with White and Dunn, Rep. Billy Tauzin (R-La), chairman of the
> >>Commerce telecommunications, trade, and consumer protection subcommittee,
> >>is one of the few Members who has met privately with Gates.
> >>
> >>   Tauzin, along with Sens. Don Nickles (R-Okla) and Jay Rockefeller
> >>(D-WVa), dined with Gates and other computer executives in June at the
> >>Halcyon House in Georgetown.
> >>
> >>   He may be the country's richest man, but Congressional gift rules
> >>prevented Gates from picking up the tab at the elegant Georgian-style,
> >>204-year-old mansion built by the nation's first Secretary of the Navy:
> >>lawmakers had to pay $80 a person for the meal.
> >>
> >>   Tauzin, who sat next to Gates at the dinner, described him as "an
> >>extremely intelligent, focused-type individual who didn't know a lot about
> >>politics and if he didn't need to, he didn't want to."
> >>
> >>   "He'd much rather be in Washington running his business," Tauzin added,
> >>"though he probably realizes he needs to be here from time to time."
> >>
> >>   Gates himself has personally lobbied Members on at least one issue this
> >>Congress, according to White: killing a proposal by Commerce finance and
> >>hazardous materials subcommittee Chairman Mike Oxley (R-Ohio) allowing the
> >>FBI immediate access to encrypted messages without informing the user.
> >>
> >>   Most software companies feared they would lose the vote. But after
> >>mounting a campaign which included a wave of e-mails to lawmakers, protests
> >>by privacy groups, and personal calls by executives like Gates, Oxley's
> >>amendment was defeated in the full committee, 35 to 16.
> >>
> >>   According to Information Technology Association of America (ITAA) vice
> >>president John Englund, the outcome of the debate also demonstrated that
> >>high-tech executives can have an impact when they become politically
> >>active. "I did nothing else in my life for about a month," Englund said,
> >>adding that CEOs called and e-mailed him constantly. "It was a massive
> >>educational effort."
> >>
> >>   The concept of "education" is one frequently invoked by computer
> >>industry advocates. Companies like Microsoft have complemented their formal
> >>lobbying networks by supporting non-profit groups and Member organizations
> >>like the Congressional Internet Caucus.
> >>
> >>   The Internet Caucus, which was founded in the wake of the Communications
> >>Decency Act's passage, has now mushroomed to 99 Members. The group, whose
> >>activities are coordinated by non-profit groups and funded by high-tech
> >>companies, has exposed a slew of lawmakers to the industry's views.
> >>
> >>   "Any group or entity that contributes to providing a forum for this
> >>discussion of high-tech industry advances the interests of the industry as
> >>a whole," Krumholtz said.
> >>
> >>   This is one issue on which Microsoft and its adversary in the Web
> >>browser fight, Netscape, apparently agree.
> >>
> >>   Netscape's global public policy counsel Peter Harter - whose company
> >>helps fund the Center for Democracy and Technology, the Progress and
> >>Freedom
> >>
> >>Foundation, the Electronic Privacy Information Center, and the Cato
> >>Institute - said these groups help the company advance its legislative
> >>interests.
> >>
> >>   "Groups like CDT definitely play an important role in terms of lobbying
> >>for the high-tech industry," Harter said.
> >>
> >>   The high-tech industry has also established several powerful coalitions
> >>- including the ITAA, the Business Software Alliance, and the Software
> >>Publishing Association - that boast both Microsoft and Netscape as members.
> >>
> >>   During the battle over the foreign sales corporation tax this year, in
> >>which Microsoft eventually got the same tax treatment for software exports
> >>as movie and music exports, these trade associations marshaled a grassroots
> >>response spanning all 50 states.
> >>
> >>   As one lobbyist said of the effort, "I would love to have that on other
> >>projects."
> >>
> >>   Despite these lobbying forays by his company, Gates still remains
> >>virtually invisible in Washington.
> >>
> >>   Tauzin, who calls Gates "the rock star of the computer industry,"
> >>observed it would be difficult for the tycoon to move through the halls of
> >>the Capitol unnoticed. "He would attract a large crowd if he walked into
> >>the middle of a Congressional hearing," he said.
> >>
> >>   Even Netscape's Harter acknowledged that Microsoft's CEO holds a unique
> >>position in the high-tech arena. "Gates certainly is a large persona," he
> >>said. "If I were Microsoft's lobbyist, that would be a factor to consider."
> >>
> >>   But Krumholtz argued that Microsoft was no different from other
> >>high-tech giants, including IBM, Intel, and Oracle. "It's an industry that
> >>has a lot of big powerful players in it," he said. "It's not just
> >>Microsoft."
> >>
> >>LANGUAGE: ENGLISH
> >>
> >>LOAD-DATE: October 27, 1997
> >>
> >>
> >>
> 
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