Microsoft dramatically ramped up efforts to influence the federal government in the past year as it became enmeshed in a fierce legal battle with antitrust regulators, newly disclosed reports to the government show.
Microsoft's spending on lobbying efforts in Washington last year totalled US$1.9 million, up 67 percent from 1996. The company spent $1.2 million trying to influence Congress and the Clinton administration in the second half of 1997 alone.
The company's increase in spending coincided with a Justice Department suit against Microsoft filed in October.
While it was stepping up lobbying efforts, Microsoft also increased its spending on federal political campaigns from a paltry $39,000 in the 1992 election cycle to more than $243,000 in the 1996 cycle.
The 1998 election campaign is barely under way, but Microsoft already has contributed $183,000 to party committees and candidates, putting it on track to exceed easily the 1996 election totals. Republicans have received $104,000 and Democrats $79,000 so far.
The figures - compiled for Reuters by the Campaign Study Group from the latest reports to the Federal Election Commission and the House of Representatives - show that Microsoft has hired a bipartisan stable of prominent lobbyists, including four former members of Congress and 32 former congressional staffers or government officials. Microsoft also said it recently hired the firm of former Republican Party Chairman Haley Barbour.
Microsoft's lobbying efforts rank it third in the computer industry behind IBM, which spent $5.2 million in 1997, and Texas Instruments, which doled out nearly $2 million. The efforts of those firms, both large military contractors, were heavily directed at lobbying the Pentagon.
Microsoft rivals led by Sun Microsystems, Oracle, and Netscape also have increased efforts to influence lawmakers in Washington.
Despite annual revenues of just $533 million, compared with Microsoft's more than $11 billion, Netscape ranks fifth in the computer industry with $1.5 million devoted to lobbying expenditures over the past two years. However, not all of Netscape's reports for 1997 were available yet.
Jack Krumholtz, Microsoft director of federal government affairs, said most of the company's recent expenditures have been aimed at deflecting efforts by competitors to derail Microsoft on Capitol Hill. An effective campaign has been mounted to increase congressional pressure on the Justice Department to bring new actions that could limit the software giant's enormous industry power.
Microsoft's recent activities in Washington have been focused on battling portrayals of the company as an "evil empire," exploiting monopoly status to drive out competitors and ultimately gain control of the Internet.
Gates, America's richest man, has donated only $26,100 to political candidates and parties over the past seven years. Not surprisingly, Microsoft's home state lawmakers were the biggest beneficiaries.
And there may be much more giving to come.
"Whatever money they've put into it so far has been pretty marginal given their position in the market," said industry consultant Tim Bajarin. "They're going to have to be spending a lot more time in Washington."
