Microsoft's lobbying budget 'outstripped Enron's'

According to evidence presented at the Microsoft antitrust case, Microsoft's lobbying budget grew from almost nothing in 1995 to be the largest in US corporate history by the time the antitrust trial was underway
Written by Matt Loney, Contributor

Microsoft's budget for political lobbying exceeded that of Enron, the judge residing over the antitrust case has heard.

The software giant's budget for its Political Action Committee (PAC) increased from about $16,000 (£11,200) in 1995 to $1.6m in 2000, according to Edward Roeder, a self-styled expert on efforts to influence the US government, and founder of Sunshine Press Services, a news agency devoted to investigating money in politics.

Roeder's report was submitted to Judge Kollar-Kotelly at the end of January. Microsoft has been unable to comment.

Judge Kollar-Kotelly heard that total donations to political donations from Microsoft and its employees to political parties, candidates and PACs in the 2000 election cycle amounted to more than $6.1m. During this period, Microsoft and its executives accounted for $2.3m in soft money contributions, compared to $1.55m by Enron and its executives for the same period. Soft money is the term generally given to unregulated corporate and individual contributions that cannot go directly to candidates, but which typically goes to political parties.

The evidence came from a review commissioned by the Computer & Communications Industry Association. Roeder said that although the research was commissioned by the CCIA -- a known critic of Microsoft -- the evidence was based on the "extraordinary public record of Microsoft's political activities during the timeframe of this trial."

Roeder said that his review of the available documents has led him to conclude that over the past five years, Microsoft has engaged in political influence peddling "in many ways unprecedented in modern political history."

The report was delivered in response to the deal unexpectedly reached between Microsoft and the US Department of Justice last year after Microsoft had been found guilty of violating antitrust laws.

"Microsoft's campaign contributions significantly surpassed those of Enron," said Roeder in his report. "It appears Microsoft may have successfully influenced the administration's antitrust policy, with major implications for legal antitrust pecedent." Microsoft insists it did not participate in any "backroom" deals.

Nevertheless, Roeder recommended that the court "undertake an immediate review of Microsoft's lobbying activities surrounding this settlement, with particular attention to meetings with the Justice Department of the White House by Microsoft or its agents."

What makes Microsoft's lobbying throughout the trial so unique is not necessarily the size of political contributions but the scope of its efforts and the speed at which Microsoft went from having almost no political presence in Washington to having one of the "largest and most sophisticated political operations."

In 1995, the company had just a single lobbyist based in Chevy Chase, Maryland; today, it has one of the largest PACs in US corporate history, said Roeder. Microsoft has leapt to the top of the corporate contributor list in soft money contributions.

The size and speed of this leap was staggering. In the seven days preceding Judge Thomas Penfield Jackson's ruling against Microsoft, said Roeder, the company donated more soft money to the national political parties than it gave to federal candidates and political parties in the seven years spanning 1989 to 1996. And during the 1999-2000 election cycle, Microsoft and its executives accounted for some $2,298,551 in soft money contributions. Enron, by comparison, donated $1,546,055 during the same period.

Microsoft's direct lobbying has also grown out of all proportion, so that it now retains more lobbyists than the handful of companies with more than 300,000 employees. Microsoft has just 30,000 employees. Part of the reasoning for extensive use of retainers, says Roeder, citing a Business Week article, is to "suck all the oxygen out". In Washington State, Microsoft has hired many law firms with antitrust expertise to work in unrelated areas.

The strategy was extended to other key states, with the dual benefits of starving the opposition of experienced lobbyists, and achieving political results that have benefited the company's case.

In South Carolina, one of the states originally participating in the antitrust suit, Microsoft contributed $25,000 to attorney general Charles Condon shortly before his re-election in 1998. According to the chairman of the South Carolina Republican Party this was the largest unsolicited donation ever received. Three weeks after Condon won the election, South Carolina withdrew from the antitrust case.

The analysis of donations by political party shows some surprising results. While Microsoft donations favoured Republicans (who got 72 percent of the money from 1995 to 1998), its employees were more inclined to support the Democrats. Democratic PACs received $222,100 from the company's employees, compared to the $42,875 for Republican PACs.

Think it's all over? The antitrust case against Microsoft can still go back the to Court of Appeals, and then there's the European Commission's investigation... See ZDNet UK's DoJ/Microsoft News Section for the latest headlines.

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