Oral arguments in the federal government's antitrust case against Microsoft began on Monday. Anyone reading the two new books about the battle would have to conclude that the case never would have been brought without the political intervention of some powerful Silicon Valley companies that chose the political, rather than the business, arena to fight a tough competitor. Prominent among these complainers were Netscape (now part of AOL-Time Warner), Sun Microsystems and Oracle Corp.
Oracle's interest in bringing the full weight of the government down on Microsoft isn't surprising. As I wrote on TechCentralStation last July: "Larry Ellison and Oracle sell very expensive database software products. Bill Gates and Microsoft sell very inexpensive database software products. This looks like trouble to Larry Ellison, so rather than using guts and creativity to respond in the marketplace, he whines to the government that his company is being victimized by Microsoft."
But he went further. Press reports in June revealed that in 1999, Oracle hired Investigative Group International, the Washington, D.C., private investigation firm that had earlier helped the tobacco industry and President Clinton with its hardball tactics. IGI, as The Wall Street Journal reported, "promptly went trash-hunting"—literally prowling through dumpsters containing the garbage of trade associations and other groups friendly to Microsoft.
Ellison's response to this sleaze: "I feel very good about what we did," he told the press. "All we did was to try to take information that was hidden and bring it into the light. I don't think that's arrogance. That's public service."
This sordid history came to mind last week when Bill Clinton—who, in quite another sense, has done some dumpster-diving on his own—gave a speech Feb. 19 at an Oracle applications conference in New Orleans. Clinton and Ellison are made for each other.
The president received an estimated $100,000 for his appearance, and it had to be a welcome honorarium. It put Clinton back into the speaking game after a disastrous start.
Clinton, of course, has been in the spotlight lately for some controversial pardons, primarily of Marc Rich, who fled the United States 17 years ago to avoid federal charges, including racketeering and tax evasion. Clinton also pardoned a cocaine trafficker and a notorious fraud artist, at the recommendation of his brother in law.
The former president's first outing on the lecture circuit did not go well. When word got out that he would be appearing for $100,000 at a Morgan Stanley Dean Witter high-yield bond conference in Florida, many of the firm's clients were outraged. A few days after the talk, Philip Purcell, the MSDW chief executive, apologized to his customers. Then, two weeks ago, UBS Warburg, a division of the Swiss financial firm UBS, AG, cancelled a speech by Clinton for fear of similar controversy.
But Ellison, undoubtedly grateful for the Clinton administration's aggressive action against his arch-enemy Microsoft, stood firm. Ellison had earlier hired Joe Lockhardt, the presidential press secretary, as an Oracle executive.
Does all of this look a little sleazy? It does to me.
Thomas A. Schatz, president of Citizens Against Government Waste, put it well: "The government's case against Microsoft has been about favoring individual competitors rather than impartial application of the law. At the very least, this speech creates the appearance of impropriety and further illustrates the former president's tin ear for ethics."
The former president has one tin ear; Larry Ellison has the other.
In fact, Oracle's stock fell to $22 in late November, then rallied to $33 in January but then fell again to $22. Oracle's peak, last September, was $46.
Milton Friedman said two years ago that Silicon Valley companies would "rue the day" they brought the government in to solve their problems with Microsoft. Judging from their stock performance, I would say that was an accurate prediction. My guess is that the higher court will rule in Microsoft's favor. That's what I would like to see: the software company defeating a dangerously flawed view of antitrust law on the merits, rather than calling on the Bush administration to do it a favor.
Bill Gates and George W. Bush can teach Larry Ellison and Bill Clinton a thing or two about class and integrity.