Partner Advocate

Money, Politics & Technology

We can't say for certain if there's a correlation between the shaping of technology policy and contributions, but we can tell you how much Microsoft money is being funneled to politicos' coffers.

We're nearing an election cycle in the United States and the European Commission antitrust case against Microsoft is in the news again, with the Court of First Instance dealing Microsoft a loss on appeal.

The combination reminded me of research I did for a piece in the launch issue of our sister publication, Redmond magazine, in 2004. The Redmond staff worked with the Center for Responsive Politics to get federal campaign contribution records from Microsoft employees to figure out which way the company was leaning in the 2004 presidential election.

What we found was that, in contrast to previous elections, Microsoft was spreading its money around to both the Democratic and Republican parties. This was a shift from the late 1990s, when Microsoft had supported Republicans almost exclusively as the company's executives awoke to the seriousness of the antitrust case and the need for political engagement. The 2004 contributions were the sign of a maturing Fortune 500 company-spending a lot of money and giving to Democrats and Republicans alike. Plus, Redmond found that Microsoft placed far more emphasis on political contributions and lobbying than any other tech company, significantly outspending them all.

During my research, I found a page on Microsoft's "Freedom to Innovate" Web site filled with quotes from U.S. Senators and Congressional representatives expressing outrage at the European Commission's 2004 decision. Thinking that I might find a few correlations, I compared the quoted officials to campaign contributions from the Microsoft Political Action Committee (PAC). Of 33 public officials offering statements, 31 had taken money from the Microsoft PAC.

Microsoft is an organization that has run afoul of governments, but generally learns from its mistakes. The company has gotten its U.S. regulatory problems pretty well under control, and it seems to be on the right track with China. However, the Court of First Instance decision indicates Microsoft has some studying to do in Europe.

Why should this matter to partners? Because it's a timely reminder that even for a technology business, there's usually more to your playing field than good technology and a solid -- or even a brilliant -- business strategy. Ultimately, you must keep politics in mind as well.

Are you seeing the whole field? I'd love to hear your insights about business and politics-and about getting your business past government red tape. E-mail me at [email protected].

More Information

You Scratch My Back ...

When the European Commission announced its penalties and fines against Microsoft back in March 2004, a number of Senators and Congressional representatives issued statements in support of Microsoft's position in the antitrust case.

Microsoft posted the comments on a Web page on its Microsoft "Freedom to Innovate" network Web site. Redmond magazine compared this list of quotes to contributions from the Microsoft Political Action Committee.

Below is the text of the Microsoft Web page. We've added a dollar figure next to each name. The figure represents the amount of money Microsoft's PAC contributed to each candidate in the 2000, 2002 and 2004 election cycles. We looked at the three cycles together to make sure we caught at least one election year for each senator.

Elected Officials Speak Out About the European Commission's Decision Against Microsoft

Elected officials from both political parties are speaking out in opposition to the European Commission's decision against Microsoft. Below are highlights from their statements.

Senator George Allen of Virginia (R) $6,000
"By imposing harsh, unprecedented penalties upon Microsoft, the Commission has extended its view of competition and regulation beyond Europe and onto the United States -- to the detriment of U.S. laws, industry and consumers ... If the U.S. Government does not make a clear and strong statement objecting to the EU's extraterritorial approach, we will lose influence and credibility for years to come to the detriment of all U.S. industry, as well as to U.S. consumers."

Representative Brian Baird of Washington (D) $10,000
"[T]he Commission's ruling undermines the U.S. settlement and signals potential danger to the technology sector and consumers at home and abroad ... Microsoft is already subject to a tough regulatory framework that promotes competition and innovation, which European consumers and companies continue to enjoy the benefits of ... [T]he Commission's ruling will not only have an adverse effect on consumers and businesses around the world who demand more, not less features in their operating systems. The negative impact of this ruling will also, I fear, extend far beyond Microsoft to the U.S. information technology industry as a whole."

Senator Max Baucus of Montana (D) $9,000
"The European Union's draconian remedies announced today appear to significantly undermine the U.S. government's authority to regulate its economy and may hamper innovation in the high-tech industry, a sector that has been a significant source of job creation and economic growth for our country for the past decade. The EU's imposition of a restrictive, unprecedented and extraterritorial regulatory regime threatens not only to hamstring an American company's ability to deliver future innovations for consumers and businesses across the globe, but also sets back trade relations between the EU and U.S. -- at a time when we can ill afford that."

Representative Roy Blunt of Missouri (R) $13,500
"The European Union's ruling represents an attempt by bureaucrats in Brussels to tell an American company how to design its products and how it must interact with its American competitors. And in the process, the ruling appropriates valuable intellectual property owned by a U.S. firm. The European Commission could easily have applied EU competition law in a way that respected U.S. law and sovereignty. Unfortunately, instead of cooperation, the Commission chose the path of confrontation. These actions are unacceptable. The U.S. must defend the decisions of its courts, the protection of intellectual property rights, and the ability of U.S. companies to compete in the European market free of heavy-handed regulations."

Representative Chris Cannon of Utah (R) $10,500
"This ruling might be the single largest non-violent, private property grab ever by any government, and anyone who cares about property rights -- physical or intellectual -- should be outraged. The fact that it was a foreign government and an American company's property is even more appalling. The Western Caucus shares the outrage of all those who care about protecting U.S. sovereignty, the primacy of American jurisprudence, and property rights, and pledges to support the U.S. government's efforts to directly confront the EU on these matters."

Senator Maria Cantwell of Washington (D)
"Microsoft is the world leader in technological innovation and a dynamic force in the creation of jobs in Washington state. Microsoft is an incredible company that will continue to innovate. It's unfortunate that with all the efforts made by Microsoft over the past several weeks to settle the case, including offers to include multiple media players in its operating system, ... the EU has decided to take this action. A global resolution would be a better solution than having different countries with different remedies."

Representative Barbara Cubin of Wyoming (R) $12,500
"I'm curious as to exactly when the European Union embraced the principles of competition. The bottom line is that this intrusion into American affairs will mean higher prices for American consumers. The American people should not be made to pay the price for unjust actions by an activist court in the European Union."

Senator Larry Craig of Idaho (R) $9,000
"I, and many of my colleagues in the Senate, are pushing for free and fair trade in everything from agricultural products, to softwood lumber, to computer DRAM chips. Meanwhile, the trade officials of the European Union have apparently decided -- at least in Microsoft's case -- that hobbling American companies with unworkable marketing restrictions and seizing the intellectual property of successful companies like Microsoft is the path of least resistance. Apparently, they think if you can't innovate then it is okay to expropriate ... Simply put, this decision smacks of protectionism for the EU's feeble software industry. It stinks."

Representative Norm Dicks of Washington (D) $18,500
"I am deeply concerned that the European Commission's ruling will effectively displace the U.S. settlement reached in November 2002 between the Department of Justice, several state antitrust regulators, and Microsoft ... I am concerned that the Commission's ruling will prevent Microsoft from continuing to offer consumers improved operating system products."

Representative Cal Dooley of California (D) $18,000
"The Commission's ruling threatens to disrupt not only years of work by the Department of Justice and the courts, but could also have a profound, negative effect on the U.S. information technology industry ... America's IT industry has been the engine of economic growth in recent years, and we need to ensure that American companies can continue to provide innovative new products and generate new jobs."

Senator Byron Dorgan of North Dakota (D) $10,000
"The European Union's (EU) ruling against Microsoft announced today is very troubling. Not only are the remedies quite severe, but the EU's decision represents a significant intrusion into the U.S. economy. The issues in the EU's case were previously addressed in an agreement reached two years ago between Microsoft and the Justice Department. The EU's action today undermines that agreement, and could hamper our ability to effectively administer the rules of competition here in the United States. I urge the U.S. Justice Department to press the EU for comity on this issue."

Representative Jennifer Dunn of Washington (R) $19,000
"[T]he Commission should have no right to impose constraints on a company's practices outside Europe. The United States has reached its own agreement with Microsoft that has been approved by our courts after extensive litigation. Despite statements to the contrary, the Commission's attitude throughout this process has shown disrespect for the sovereignty of U.S. competition policy. In addition, the Commission held fast to their bizarre demand that consumers be offered a lesser product than they currently receive. I hope the Commission will quickly come to its senses and return to the negotiating table."

Representative David Dreier of California (R) $2,500
"Regardless of one's position related to the merits of the case, having European regulators play the role of appeals court to U.S. anti-trust regulatory and judicial proceedings is a very bad precedent. This effort from Brussels threatens to undermine the integrity of institutions and processes that are key to providing certainty to American businesses operating in an increasingly global economy."

Senator John Ensign of Nevada (R) $13,000
Senator Ensign issued his statement in his capacity as chairman of the Senate Republican High Tech Task Force. The Task Force's members include Wayne Allard (CO), George Allen (VA), Robert Bennett (UT), Sam Brownback (KS), Jim Bunning (KY), Conrad Burns (MT), Michael Crapo (ID), Kay Bailey Hutchison (TX), Gordon Smith (OR) and John E. Sununu (NH).
"Information technology is one of America's few remaining competitive advantages ... Reducing competition will stifle job growth and productivity in this country."

The Task Force's statement went on to read: "The Commission's ruling, if allowed to stand, will cost us thousands of jobs here in the United States, precisely when we need them the most. The Departments of State and Justice must stand up to the Commission and defend the American technology industry."

Senator Bill Frist of Tennessee (R) $10,000
"The Commission's ruling also requires Microsoft to sell a version of Windows without multimedia functionality -- i.e., one that cannot play audio or video. Thus, the ruling forces Microsoft to spend its energies not on developing new, innovative products, but on designing a degraded version of Windows -- in short, a product that no one wants or needs. This preposterous demand, by a foreign government, will hurt one of America's most successful companies and harm the hundreds of American IT companies that rely on the multimedia functionality in Windows to offer their own innovative products and services -- companies that are responsible for thousands of high-paying American jobs."

Representative Jim Gibbons of Nevada (R) $9,000
"The EU decision is an affront to U.S. sovereignty and private property rights plain and simple. Microsoft, an undisputed world leader in computer technology, is being judged by a European entity that in this case, no way represents America or our anti-trust laws. The EU's decision is contrary to the ideals of American capitalism, which values innovation and development. The EU has overstepped its bounds with this ruling."

Representative Jay Inslee of Washington (D) $32,000*
"It is commendable that the European Union and Microsoft appear to have reached agreement on the substantive issues in this case, but it is offensive to our system of justice that, when seeking future standards on interoperability and product integration, the European Commission attempts to trump U.S. regulations, burden the U.S. economy, and impose restrictive, anti-consumer standards on a company that leads the world in information technology innovation."

Representative William Jefferson of Louisiana (D) $11,500
"The Commission's ruling will force Microsoft to develop one product for EU markets, and another product for the rest of the world ... In today's globally integrated markets, such an outcome is deeply troubling. It will raise Microsoft's development and distribution costs, which will negatively impact the entire IT industry and end up harming consumers. I am very concerned that the Commission's ruling will create additional trade friction between the United States and Europe -- at a time when the U.S. and EU should be working actively to improve transatlantic relations."

Representative Rick Larsen of Washington (D) $25,000
"The European Commission's final decision is disappointing and unwarranted. By rejecting the settlement offer Microsoft put forth last week, the European Commission consciously chose a path with far-reaching, negative repercussions for high tech companies and jobs in Washington state and across the country. I urge the Administration to condemn the European Commission's ruling against Microsoft and the unwarranted fines and remedies that have been imposed."

Senator Patrick Leahy of Vermont (D)
"Our economy is increasingly global in scope, and it is no longer only the largest firms that can seek customers and suppliers around the world. Advances in computer and communications technologies have made markets of every kind, and every size, available to the small niche manufacturer as well as to the firm with an established national presence. But these advances bring new challenges, and antitrust regulators -- state, national, and international -- all have roles to play in ensuring that competition is maintained and nurtured. With so much change, and so much need for fair and competitive markets, it is time for the Senate Judiciary Committee to consider how those various enforcement authorities are working together, and whether there might be better ways for them to cooperate in order to ensure that consumer interests are protected everywhere."

Senator Blanche Lincoln of Arkansas (D) $8,000
"While Arkansas is not the headquarters of the Microsoft Corp., we are keenly aware of the negative impact that the European Union's protectionist trade actions have on American business and our nation's economic growth and job creation ... I am dedicated to ensuring a level playing field with our trading partners ... The EU's actions, specifically the one taken yesterday, are a significant step in the wrong direction. I encourage the Administration to continue to engage their European counterparts and demand a more cooperative effort."

Senator Trent Lott of Mississippi (R) $5,000
"The European Commission's ruling represents a truly unprecedented intrusion into the U.S. marketplace ... American industry urgently needs this Administration to express its strong disapproval of the European Commission's ruling. In particular, I would urge the Departments of State, Justice, and Commerce to encourage their European counterparts to resolve this case in a manner that does not harm U.S. workers, U.S. consumers, and the American IT industry."

Senator Dick Lugar of Indiana (R) $3,000
"I am troubled by the European Commission's significant ruling today against Microsoft ... Conflicting regulatory obligations imposed by antitrust authorities globally will create uncertainty in the marketplace, reduce incentives for innovation, and create significant risk for U.S. firms seeking to enter foreign markets. The European Commission's ruling is likely to impose significant barriers to transatlantic trade, not only for Microsoft, but also for its many commercial partners in the United States and in Europe."

Congressman Jim McDermott of Washington (D) $5,500
"I'm from Seattle and I have a good neighbor named Microsoft. A while back, they got out of line. The European Union said so. Microsoft said so. Both sides have been negotiating to reach a just and fair settlement. It looked like good faith negotiations would lead to a common good solution. But, the decision issued by the EU falls short in my judgment. At best, the EU leaves the matter unresolved with more legal action a certainty. At worst, consumers across Europe face confusion, and perhaps even fewer choices than anyone intended in a settlement. We can do better. The EU should find a way to re-visit its decision."

Senator Patty Murray of Washington (D) $10,000
"This ruling is yet another example of the EU assaulting a successful American industry and policies that support our economic growth. While I recognize the Administration's efforts to support a settlement, our government must now engage the EU immediately and seek a negotiated settlement to the Microsoft case. American jobs and economic interests are threatened by the actions of the EU."

Senator Ben Nelson of Nebraska (D) $1,000
"The EU's finding against Microsoft amounts to a hostile act against an American company with severe consequences for the global economy and information-based markets around the world. The EU is treading on dangerous ground here. The ruling essentially curtails Microsoft's creative authority and discourages innovation in computer technology. As a result, this stifling ruling could have a negative impact economic growth in the high technology sector ... It is now time for the Administration to step in and engage the EU to find a workable compromise that allows market competition but does not put U.S. jobs in danger by blocking market access and severely undermining the business operations of one of our largest corporations."

Representative George Nethercutt of Washington (R) $17,500
"In addition to the damage inflicted on transatlantic relations, the European Commission's ruling strikes at the heart of America's economy: innovation. The ruling has the potential to harm a range of American companies besides Microsoft -- and in doing so the ruling threatens the jobs of American workers and America's current economic recovery."

Representative C.L. "Butch" Otter of Idaho (R) $6,500
"Throughout history there has been a chorus of complaint whenever someone has the inspiration and initiative to succeed beyond the ability of others. I'm stunned, but unfortunately not surprised, by the gall of the European Union in dictating the limits of capitalism to an American entrepreneur and innovator that has literally changed the face of worldwide commerce. This decision serves only to inhibit the cause of freedom, progress and opportunity in the marketplace. It tells the next generation of business leaders they needn't bother with big dreams or to be rewarded for excellence. That might be the European way, but it's not the American way."

Senator Rick Santorum of Pennsylvania (R) $9,000
"The European Commission's ruling against Microsoft should serve as a wake-up call for lawmakers on both sides of the Atlantic. We need to work together to find a common approach to enforcing antitrust that benefits consumers, industry and the competitive marketplace. The EC should be urged to continue looking for ways to bridge the gap on issues that affect everyone who benefits from technology."

Representative F. James Sensenbrenner, Jr., of Wisconsin (R) $8,850
"The EU's imposition of punitive measures against Microsoft for conduct deemed permissible by American antitrust authorities violates the spirit of comity that should be accorded to United States antitrust adjudications. The EU decision also threatens to undermine the intellectual property rights of a United States firm. Finally, I am troubled by EU Commissioner Mario Monti's contention that the EU presently has authority to impose antitrust penalties that are global in scope."

Representative Adam Smith of Washington (D) $30,000
"[The] ruling by the European Commission is based on protectionist policy, not on sound economic principles. This ruling is an unprecedented action on an American company and it will force Microsoft to disclose to its European competitors its most valuable intellectual property assets, thus severely reducing the impact of research and development, which has helped to fuel our nation's gains in technological innovation in recent years."

Senator Gordon Smith of Oregon (R) $11,000
"Open trade policies have helped lower barriers for businesses all around the world. The EC ruling against Microsoft shows that we now need to take the next step. Our global economy will greatly benefit from streamlined, uniform and fair antitrust enforcement. The United States and Europe need to work toward this goal just as Microsoft and EC competition regulators should look for a way to resolve their current dispute."

Representative John Tanner of Tennessee (D) $12,000
"Under principles of international comity, it is essential that there be consistency between the European Commission and the United States in their treatment of globally shipped products like operating systems ... Inconsistent remedies will create uncertainty in the marketplace, reduce innovation, chill investment and lead American companies to be more risk-averse -- exactly the opposite direction that U.S. and EU policy should be heading at this time."

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.


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