The Microsoft Network

Bill insists he wants to avoid politics. Meanwhile, he's waged a quietly massive attack on the other Washington.

Noticeably absent from White House guest rosters, nonexistent on lists of big political contributors, and a man who rarely even visits the other Washington, Microsoft CEO Bill Gates has managed to keep an extraordinarily low political profile.

But Gates' absence from the Beltway belies Microsoft's vast influence there. This past year, he scored a coup with the passage of the Software Export Equity Act (SEEA). The House Ways and Means Committee inserted the measure in the 1997 tax bill, rewarding software exporters with a tax break worth an estimated $1.7 billion over the next 10 years. The SEEA will benefit fewer than 100 companies—with Microsoft by far the biggest beneficiary.

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A small army of lobbyists from both political parties helped Microsoft win the tax break. Chief among them: Grover Norquist, the high-profile head of Americans for Tax Reform. Hired by the company in 1996, Norquist earns a $120,000 yearly salary from Microsoft alone. He is among the best-connected conservatives in Washington, and the nonprofit ATR has been called a virtual adjunct of the Republican Party. (The GOP is currently in trouble for funneling $4.6 million to the group in 1996 for political agitprop.)

Norquist tells Mother Jones that he is merely an "adviser" to Microsoft, dispensing "strategic advice on how to handle political issues." Yet he offers much more than that. He has placed the company's issues on the national conservative agenda and helped rally groups such as the Christian Coalition and the National Rifle Association around Microsoft's causes.

Norquist's ties to pro-family organizations, for example, helped him win his first fight on behalf of Microsoft. Proposed immigration legislation in 1996 would have jeopardized the status of the numerous legal immigrants Microsoft employs. Norquist, despite ATR's reputation as virulently anti-immigrant, helped cobble together a coalition of high-tech libertarians, pro-immigrant conservative family groups, and liberal organizations to successfully fight the changes. It's also worth noting that the new lobbying firm Norquist founded in 1997 with lawyer David Safavian, the Merritt Group, has taken on the American Immigration Lawyers Association as a client. (Ira Rubenstein, Microsoft's senior corporate attorney, is on the AILA's board.)

Such contacts demonstrate the breadth of Norquist's reach. For the past few years, he has hosted a weekly Wednesday morning meeting for leading conservatives at ATR's Dupont Circle office. These legendary meetings are credited in part with creating the strategy for the 1994 GOP takeover of Congress.

In early 1996, according to insiders, Norquist began using the meetings to broach a new legislative issue: opposing a proposed bill limiting software encryption (scrambled coding that prevents copyright infringement). The FBI wants access to encryption codes for national security, but U.S. software companies, including Microsoft, argue that such access would inhibit their ability to compete with foreign firms.

Norquist took great care to explain how the seemingly arcane (and narrow) issue fits into the conservative platform. According to one Wednesday morning regular, Norquist told the NRA that if the government has access to encryption codes, it can get information about gun owners. He also warned the Christian Coalition that its privacy would be violated. Both groups, and dozens of other right-wing organizations, subsequently endorsed Norquist's—and Microsoft's—position. (The bill is currently pending in the House.)

 

Microsoft didn't open an in-house lobbying office until 1995. Before, when Gates needed help, he turned to the D.C. office of Preston, Gates, Ellis & Rouvelas Meeds, whose law partners include his father, William Gates II. It was Microsoft's run-ins with the Justice Department in 1995 over antitrust law that led the company to step up its Beltway operation. Microsoft now lobbies on everything from smut on the Internet to trade with China. The company's total lobbying expenditures in 1996 came to $1.1 million, a fraction of that spent by powerhouses such as AT&T ($8.4 million) but almost twice the amount spent by computer giant Hewlett-Packard ($594,000).

During the first half of 1997, Microsoft unbuckled another $660,000. In addition to its own in-house lobby shop, Microsoft currently has 10 outside lobbying firms on retainer. Between mid-1995 and mid-1997, 72 lobbyists registered with Congress on Microsoft's behalf (see chart). Of those, at least 55 have government experience. Four are retired members of Congress; 41 are former Capitol Hill staffers, 14 of whom worked for current members of Congress; at least six company lobbyists worked for the Senate Judiciary Committee (which oversees antitrust, immigration, and intellectual property policy); three have executive branch experience; and two are conservative activists with links to the highest tiers of the GOP. Norquist is especially tight with House Speaker Newt Gingrich. ("Grover is the easiest line into the speaker's office," says one conservative. "It's the most cost-effective way for Microsoft to do business.") Other company lobbyists with high-level connections include:

 

  • Former New York Rep. Thomas Downey, a Democrat who served for 13 years on the House Ways and Means Committee, greases the skids with old colleagues by making campaign contributions—totaling $26,250 during the last election cycle. And thanks to his longtime friendship with Al Gore, Downey has an open door at the White House.

     

  • Democrat Michael Lewan, a trustee on the Clinton/Gore National Finance Council, worked for 14 years on Capitol Hill, first for retired New York Rep. Stephen Solarz and then for Connecticut Sen. Joe Lieberman. "Lewan has access all over the Hill," says one lobbyist. "Staffers are below his radar screen; he deals with the members directly."

     

  • Kathleen Clark Kies, a lobbyist with Collier, Shannon, Rill & Scott, was hired jointly by Microsoft and Oracle, another big software exporter, for the SEEA effort. She is married to Kenneth Kies, staff director of the Congressional Joint Committee on Taxation and one of the most powerful staffers on Capitol Hill. According to Fortune, Kenneth "ghosted virtually every line" of the massive 1997 tax bill that included Microsoft's tax break. His boss, Ways and Means Chairman Rep. Bill Archer (R-Texas), was a prominent supporter of the SEEA. (Kies told Mother Jones that he recused himself from all discussion of Microsoft because of his wife's lobbying contract.)

    Microsoft helped build support for the SEEA by forming an alliance with Oracle. In addition to jointly hiring six lobbyists, they threw their support behind the now-defunct American Alliance for Software Exports, which mobilized state and regional software associations to support the measure. Former AASE executive director Doug Larkin wouldn't disclose the group's funders. But industry sources confirm that Microsoft was a leading player in the alliance, and a visit to AASE's Washington address reveals that the group operated from Oracle's Beltway lobby shop.

    The SEEA was introduced in the House by Rep. Jennifer Dunn (R-Wash.), who once publicly declared that Microsoft's lobbyists are "on the inside group of advisers that I turn to when I need to discuss regulation issues." Rob Nichols, Dunn's spokesman, told Mother Jones that her office has a "strong relationship" with Microsoft and that the company played a "pivotal role" in mobilizing support for the SEEA by "building grassroots support" for the measure in Washington state.

     

    Ken Silverstein is co-editor of CounterPunch, a Washington, D.C., investigative newsletter. Mother Jones investigative reporter Rachel Burstein contributed to this story.