Gates Gets Slammed

Bill Gates glad-handed his way through the corridors of power in Washington last week. He dropped by the White House for a new-economy conference, where President Clinton lauded him for his "phenomenal" charitable contributions. And he roamed Capitol Hill for meetings with more than 125 members of Congress, including a private chat with Senate Commerce Committee chairman John McCain. The tourists ate it up; the $100 Billion Man attracted movie-star crowds wherever he went. But the whole scene left Microsoft's critics fuming. "It just makes you wonder what for," Senator Orrin Hatch groused. "I certainly hope it's not to discuss the case."

The case, of course, is the government's landmark antitrust lawsuit against Microsoft. And it's a fair bet the case was at least one of the reasons for Gates' congressional group hug. Two days earlier, Judge Thomas Penfield Jackson had issued a toughly worded ruling that did just what everyone expected: it branded Microsoft an "oppressive" monopolist and laid the legal groundwork for imposing what could be draconian remedies in the next few months. It was a sharp blow to Microsoft--the company's shares plunged almost 15% the day of the ruling and helped set off last week's rout of tech stocks.

Microsoft moved quickly to appeal Judge Jackson's ruling--to Congress and to the court of public opinion--and it seemed to be working. Senate majority leader Trent Lott called on fellow lawmakers to investigate whether the Administration had pushed the company too far. House majority leader Dick Armey (dubbed "MS Dick Armey" for his pro-Redmond sympathies) said he'd "rather break up the Justice Department" than Microsoft. Republicans put Al Gore on notice that they intend to make an issue of the case this fall, but Democrats seemed just as caught up as the G.O.P. was in Gatesmania. New Jersey Senator Robert Torricelli lamented that "only the U.S. would consider breaking up a company that has done this much economically to advance our national interest."

Why the Microsoft lovefest? It could be, as Torricelli says, that the company has done a lot of good. But it may also be because Gates & Co., having shunned the political fray for years, have become overnight capital insiders. Microsoft has made $1.7 million in campaign contributions so far this election cycle. It's now the nation's sixth largest soft-money donor, and its lobbying staff boasts four former members of Congress.

Gates' public relations offensive comes just as the gavel is about to crash down. Having found Microsoft guilty, Judge Jackson says he will move quickly--probably in the next three months--to impose remedies to rein it in. Some hawks in the Justice Department are expected to demand a "structural" remedy--breaking the company up into smaller and less dangerous pieces. Microsoft is likely to ask for "conduct" remedies--limits on its future behavior.