Microsoft political donations seen as trial ploy

Microsoft gave US$900,000 in software and US$100,000 in cash to the committee hosting the convention, landing the world's largest software maker among the event's top contributors. The company is the second largest campaign donor this election, giving US$4.3 million to both parties, records show. Only AT&T has given more.

The Microsoft donations, a 20-fold increase over 1996, are part of a strategy to curry favor with lawmakers in general, and the GOP in particular, analysts say, in the belief that a Republican president would be more eager to settle the antitrust case without the breakup ordered by a U.S. judge.

"It's not a coincidence they've dramatically escalated their political giving" since the Justice Department filed its antitrust case two years ago, said Scott Harshbarger, president of the campaign watchdog group Common Cause. "Microsoft is inclined to believe they would get a better reception from a Republican president who appoints a Republican attorney general."

Microsoft chief operating officer Robert Herbold, the company's top supporter of likely Republican nominee Governor George W. Bush, declined to specifically discuss the antitrust case. He did say Republicans are supportive of the software industry and Microsoft's right to "innovate," a word the company uses when arguing its side in the antitrust case.

"We think (George Bush) is good for the U.S. in favoring innovation and the free market system," Herbold said in a brief interview. "And the notion of innovation versus litigation and legislation is very important to this industry and the country."

Microsoft spokesman Rick Miller denied that the company makes political donations to influence the outcome of the antitrust trial. The case was sent to the Supreme Court, which is likely to decide in September whether to take the case or refer it to the U.S. Court of Appeals for the District of Columbia.

"We think this case belongs in a court of law, where we think we can be ultimately successful," Miller said.

The antitrust case was filed in May 1998, and the company was found guilty of antitrust violations and ordered split in two by federal Judge Thomas Penfield Jackson. Microsoft is appealing.

Microsoft's US$1 million donation to the Republican convention, and a similar contribution to the Los Angeles Democratic convention, is just the beginning.

So far this year, Microsoft has donated more than US$2.3 million to candidates and the two parties, more than triple the contributions of the second-largest technology company, America Online, according to campaign records analyzed by the Center for Responsive Politics, a campaign watchdog group.

Microsoft also spent more than US$4 million this year hiring Washington lobbyists, according to FECInfo, which tracks political donations. The software giant has retained some of Washington's top lobbyists, including former Republican National Committee chairman Haley Barbour and Thomas Boggs, a partner at Patton, Boggs & Blow, a top Democratic consultant, lobbying records show.

Microsoft donated millions of dollars to think tanks that include Americans for Tax Reform and the Cato Institute, and has funded two new groups, the Association for Competitive Technology and the Freedom to Innovate Network, that release pro-Microsoft research. The company has confirmed the contributions.

"This is part of a broad political and public relations campaign, which makes a lot of sense for Microsoft when you assess the political and legal climate," Harshbarger said.

A Microsoft spokesman defended the donations, saying that they are necessary to counter the millions spent by competitors and are needed to ensure that its views are heard in Washington.

"We recognize that government is spending more and more time on issues that are important to the technology community," Miller said. "We think it's important to be part of that process."

It's certainly an escalation. Microsoft made US$256,000 in contributions in 1996, the Center for Responsive Politics said.

Microsoft is one of dozens of companies, including Motorola, Oracle and others that are contributing to the committees hosting the Democratic and Republican conventions. At least 10 other companies, including General Motors and AT&T, gave more than US$1 million to the Republican convention, according to a list of donors.

The Philadelphia committee has raised more than US$50 million, most from corporations, co-chairman David Cohen said. He said most companies' donations were based more on "civic pride" and marketing opportunities rather than to gain access and influence political leaders.

"Microsoft gets to promote themselves as the provider of software for both the Republican and Democratic conventions," said Cohen, former chief of staff to former Philadelphia Mayor Edward Rendell, a Democrat.

The donations are unregulated, letting companies make unlimited contributions for the event. The conventions have 60 days to report donations after the event ends, Cohen said.

That, critics say, gives companies and political action committees another way to circumvent campaign laws that limit the amount donated to a political candidate.

"Giving to the host committees is just another innovative way companies have found to 'pay to play'," Common Cause's Harshbarger said. "They're making sure they're going to be known by whoever controls Congress and the presidency."

The convention donations also have another benefit. The host committees are set up as 501(c)(3)s, Cohen said, meaning the donations are tax deductible.