Hatch vs. Gates

Senator says Microsoft demanded more sympathetic voices at next week's hearing -- or Bill Gates wouldn't show.


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Marcia Stepanek
February 15, 1998 5:07PM (UTC)

WASHINGTON --

Senate Judiciary Committee Chairman Orrin Hatch, R-Utah,
has, in recent weeks, emerged as one of Capitol Hill's most outspoken
critics of Microsoft -- and one of Washington's most strident advocates of
government regulation of the Internet.

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In a speech Feb. 5, Hatch urged the formation of an
"Internet Commerce Commission" to regulate online commerce -- if Microsoft
were to achieve "control" over the medium.

Now, Hatch wants Microsoft to answer to Congress.

Next Tuesday, Hatch will convene a hearing by his powerful
committee to probe allegations by Microsoft rivals that the company
exploits an operating-system monopoly to reduce choice in the marketplace.
The software giant has also been fighting the Justice Department in a
dispute over its compliance with a 1995 antitrust settlement.

Microsoft chairman Bill Gates and his arch rivals, Jim Barksdale,
president of Netscape, and Scott McNealy, president of Sun Microsystems,
are scheduled to testify at the hearing, to be titled "Market Power and
Structural Change in the Software Industry."

In an interview outside Senate chambers with Salon, Hatch said Gates
threatened to boycott the hearing -- unless Hatch allowed two other
pro-Microsoft witnesses besides himself to defend Microsoft before the
committee: "Gates complained the original panel was too unbalanced against
Microsoft," the senator said.

According to committee sources Wednesday, Gates has requested that
Michael Dell, CEO of Dell Computer, and Doug Burgum, chairman of Great
Plains Software, appear with him before the panel to defend Microsoft
against the complaints.

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McNealy, Barksdale, Gates, Dell and Burgum would make up one of the
wealthiest panels ever to appear before a Senate committee. The value of
Gates' Microsoft stock alone approaches $44.4 billion; Dell is a
multibillionaire too. The anti-Microsoft contingent isn't quite in the same
league: In a survey conducted last September by a Forbes publication,
McNealy's fortune was estimated at $417 million, and Barksdale's at $198
million.

The Judiciary Committee has been collecting documents from Microsoft as
part of an investigation of anti-competitive practices in the software
industry. Hatch's home state of Utah is home to Microsoft competitor
Novell.

Salon interviewed Hatch Tuesday, outside Senate chambers.

The Justice Department has been investigating Microsoft for months.
Why are you holding these hearings, and why now?

We have the oversight responsibility of antitrust, and we've had many
complaints from the various software producers in Utah, Massachusetts and
California. Many people are intimidated to speak out against Microsoft
publicly, and this hearing is simply to lay things out in the open and give
oversight to the whole antitrust matter.

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Why, in your view, are these people intimidated?

Because Microsoft owns the underlying computer operating system, so
therefore some feel Microsoft has used that monopoly to unfairly prejudice
competition in other ways. Now, I'm not sure that is so. But the antitrust
division of the U.S. Justice Department is certainly concerned about it,
and we're naturally concerned about it, too. So we're going to have a
hearing where basically three people will testify, basically, for
Microsoft's position -- which we're happy to do -- and two will testify, I
presume, against Microsoft. I don't know exactly what they'll say, and I'm
not precisely certain of who the two other people besides Gates will be to
testify on Microsoft's behalf.

Is Gates confirmed to attend? Netscape says its president, Jim
Barksdale, won't testify without Gates in the room.

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Yes, Gates will be there. You have to have both sides at a hearing like
this. But I must say, it wasn't certain we would have all sides. We
originally invited Gates, Barksdale and Scott McNealy, the president of Sun
Microsystems. Barksdale and McNealy are big rivals of Microsoft. Well, Bill
Gates called and complained that he felt the hearing seemed unbalanced. I
said fine, we'll balance it up. And Bill suggested we also have these other
two people speaking on behalf of Microsoft. I said fine. I don't care. In
fact, it's probably better to have it overbalanced his way, since he's the
one that is being looked at by Justice.

What makes Microsoft different in your view from, say, any other
company -- an oil company, for example? Or is there no real difference?

Well, of course, there's a considerable difference, business-wise. But
from an antitrust standpoint, there's no reason for anybody to have
unlawful tie-ins or predatory conduct or to use a monopoly to interfere
with freedom of competition. So if, in fact, Microsoft is doing that, then
something has to be done to stop that. And that's what the Justice
Department is looking into. And that's what we, too, as part of our
oversight responsibility, are trying to figure out. We want to figure out
what's going on here for ourselves.

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You've been quite outspoken in your criticisms of Microsoft's
methods of marketing its software. You've called for the formation of an
Internet Commerce Commission to regulate the software industry if Microsoft
doesn't change its marketing methods. Is there any doubt in your mind
what's going on?

I haven't made any judgments. I'm just saying we have plenty of
complaints from many other companies about Microsoft. Microsoft complains
back. In this hearing, we'll let the two sides vent their feelings.

OK, but why hold a hearing now? The Justice Department has been
looking into these allegations for nearly a year. You've got some Microsoft
rivals in your district, in Utah. They've been urging you to hold a hearing
like this for a while now. Why haven't you, as chairman of the Judiciary
Committee, acted sooner?

I have to say that it's true -- I've been late looking into this. We
should have looked into this a long time ago. We've been getting increasing
numbers of complaints from competitors of Microsoft. I'm personally
concerned about hundreds of such companies in my district. We, in Utah,
have one of the three software valleys -- in addition to Silicon Valley and
the software valley in Massachusetts. I'm a strong supporter of our
industries and businesses in Utah. But we're also getting an equal number
of complaints from companies in the other two software valleys, in
Massachusetts and California. And a lot of the complaints are by people who
are afraid to speak out because they're afraid that Microsoft would use its
monopoly power to hurt them. I don't think there's any one company that has
caused us to look into this.

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What is the exact nature of these complaints, and how will you focus
your inquiry during the hearing?

We plan to detail all of this at the hearing, and not before. Our
committee has been investigating some of these complaints for weeks, and we
plan to issue a report on our findings, probably the morning of the hearing,
on March 3.

You just said the Judiciary Committee is late looking into these
allegations against Microsoft. Why is that?

It's something that deserves being looked into. The question is, has
there been any violation of the antitrust laws? Some say yes. Microsoft
says no. Netscape is concerned about it, and Sun Microsystems is concerned
about it, but they're competitors, and you have to look at both sides.
We've had complaints for a long time, rightly or wrongly, and I have to say
that we didn't jump right on them.

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But why is that? There's been intense interest among those in the
high-tech industry in the antitrust investigation of Microsoft. But
Republican Sen. Slade Gorton, Washington state's senior senator and a
defender of Microsoft, said your Judiciary Committee hearing next week
isn't even on the radar screens of most of the nation's senators. Is that
true -- is that why it hasn't been a higher priority for you?

Partly. I think part of the problem is that antitrust law is difficult
to understand. It takes a lot of work to fully understand it, and the
senators are relying on us on the Judiciary Committee to do proper
oversight. That's what we're here for. It's become clear that if we didn't
look into this, perhaps no other Senate committee would have. So we're
having this hearing.


Marcia Stepanek

Marcia Stepanek is a national affairs correspondent for Hearst Newspapers. She previously interviewed the White House technology chief about "Internet 2" for Salon.

MORE FROM Marcia Stepanek

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