Microsoft on Trial: After tech hearings, now what?

It was clearly meant to be a watershed event: high-powered technology executives visiting Capitol Hill en masse to remind lawmakers of the industry's impact on the economy and to ask for tech-friendly policies on encryption, Y2K litigation and privacy.

But after three days of hearings in Congress' Joint Economic Committee on the high-tech industry and the economy, many observers characterised the event as largely cosmetic, and not likely to be followed up by substantive legislative action. "It's the equivalent of those Rose Garden photo ops with the president," said Dave McClure, executive director of the Association of Online Professionals trade group. "Everybody loves to have that picture of themselves shaking hands with the president to hang on the wall, but it doesn't necessarily mean anything."

McClure said the hearing was prompted by Republicans eager to make political hay out of the industry's disputes with the Clinton Administration on issues such as encryption. The head of another large industry trade association, speaking on condition of anonymity, agreed that the GOP provided the main impetus for the hearing. He said the results (three days of bland pronouncements from lawmakers and predictable pleas from industry executives) were probably not what they had in mind.

"It's nice that they talk, you know, but so what?" the official said. "The Republicans planned it to be a partisan blowout, and (Microsoft Corp. CEO Bill) Gates wanted it to be a coronation," but in reality it was neither, he said. Gates got a polite response from lawmakers, and the tone of most of the witnesses' comments made it clear that neither the GOP nor the Democrats has an appreciable edge in the industry's affections right now, he said. "I thought the whole thing was a big dud," the official added.

The looming election year and the industry's deep pockets also played a part in prompting the event, other observers said. "There's a major political play going on in Washington for the support of the high-tech industry, but how it's going to play out is unclear," said David Sobel, general counsel at the Electronic Privacy Information Centre.

Noting that the majority of Microsoft's political donations go to Republicans, Sobel said there is increasing competition among lawmakers for donations from wealthy technology firms and individual executives. Others said that while starting a dialogue with Congress on regulation of the industry is a good thing, that dialogue needs to be followed up by action from the companies if they expect anycooperation from Washington.

"The same industry leaders who spoke there this week need to do the right thing among their peers" by supporting strong consumer privacy initiatives, said Russell Bodoff, chief operating officer at BBB Online, the Internet arm of the Better Business Bureau.