This is on the front page of today's Los Angeles Times

                                                   Friday, April 10, 1998

   Microsoft Plans Stealth Media Blitz
   Publicity: Campaign to conjure image of public support called just a
   proposal by firm.
   By GREG MILLER, LESLIE HELM, Times Staff Writers


   S tung by the public relations fallout from antitrust investigations
   of its business practices, Microsoft Corp. has secretly been planning
   a massive media campaign designed to influence state investigators by
   creating the appearance of a groundswell of public support for the
   company.
        The elaborate plan, outlined in confidential documents obtained
   by The Times, hinges on a number of unusual--and some say
   unethical--tactics, including the planting of articles, letters to the
   editor and opinion pieces to be commissioned by Microsoft's top media
   handlers but presented by local firms as spontaneous testimonials.
        The stated targets of the campaign are attorneys general and
   politicians in California and 11 other states that may be considering
   antitrust action against Microsoft, which is already battling a suit
   filed last year by the Department of Justice.
        When asked about the campaign Thursday afternoon, Microsoft
   spokesman Greg Shaw initially said he was unaware of such a plan.
        "I'm not sure what it is," said Shaw, whose name appears
   throughout confidential documents--some of them labeled as draft
   copies--that are part of a large binder of materials distributed under
   Microsoft's name to the campaign's regional coordinators.
        Later in the day, Shaw amended his remarks, acknowledging the
   plan exists but saying it is merely a proposal and "not something we
   are moving on." He acknowledged attending a meeting in Chicago on
   Monday during which the plan was scheduled to be discussed in detail.
        Shaw's characterization of the campaign was also contradicted by
   knowledgeable sources who said it was presented to regional PR firms
   as "a done deal" and that the firms were expected to come to the
   Chicago meeting with detailed plans for their states.
        Even if Microsoft has now decided to abort the plan, the
   documents and the activities they describe reveal a great deal about
   how serious the company considers its plight and the measures it is
   willing to consider to protect its dominance of the software industry.
        The entire effort is "geared to generating leveragable tools for
   the company's state-based lobbyists," positive press clippings that
   "state political consultants can use to bolster the case," according
   to documents.
        In fact, the Redmond, Wash.-based company has taken the unusual
   step of arranging for one of its top media agencies to recruit a dozen
   public relations firms known for their strong political connections in
   targeted states.
        A printed list of regional coordinators includes Jeff Eller,
   former director of media affairs for President Clinton, a firm in
   Michigan run by the former head of the state's Democratic Party and an
   Illinois company that has played a central role in gubernatorial
   campaigns.
        Other states targeted are Arizona, Florida, New York,
   Pennsylvania, North Carolina, Ohio, Texas, Virginia and Wisconsin.
        When told of the planned campaign, state officials said such an
   effort would succeed only in aggravating investigators.
        "I've been battling this type of PR gimmickry for a long time,
   and I can smell it 40 yards away," said Michigan Atty. Gen. Frank J.
   Kelley. "It represents arrogance, and it's personally demeaning to me.
   [Microsoft Chairman] Bill Gates would have been better off if he or
   one of his representatives had picked up the phone and called me."
        Even in the modern world of corporate spin control, the proposed
   plan is unusual in its scope, tactics and targets.
        The campaign is being choreographed by Edelman Public Relations,
   a giant PR firm with close ties to Microsoft. But sources said it is
   designed to appear not as a major thrust by Microsoft or Edelman, but
   as an eruption of grass-roots support.
        "They're trying to plant stories about how wonderful it is to do
   business with Microsoft," one source said. "I just find it outright
   wrong that Microsoft and Edelman are trying to hide their involvement
   in this."
        According to the documents, local PR agencies are scheduled to
   begin submitting opinion pieces to the media next week, followed in
   the coming months by waves of other materials, including glowing
   accounts from Microsoft partners, consumer surveys and studies
   designed to show the company's impact on each region's economy.
        Letters to the editor are to be solicited from regional business
   leaders. Opinion pieces are to be written by freelance writers and
   perhaps a "national economist," according to one document. The
   writers' fees would be "billed to Microsoft as an out-of-pocket
   expense."
        The campaign, which could cost millions of dollars, is designed
   to generate positive stories at critical junctures in Microsoft's
   legal battles. One round of stories, a document says, "will coincide
   with April 21 oral arguments before U.S. Circuit Court of Appeals on
   Microsoft motion to disqualify Lawrence Lessig as special master in
   Microsoft antitrust case."
        Microsoft is not the only company working behind the scenes to
   influence these antitrust matters. Rivals, including Netscape
   Communications Corp., have cooperated extensively with investigators,
   supplying documents and technology demonstrations designed to show
   that Microsoft is abusing its monopoly position.
        The various investigations center on Microsoft's attempts to
   extend its monopoly in computer operating systems to Internet-browsing
   software. The Justice Department accuses Microsoft of illegally trying
   to bundle the two products, while Microsoft claims it has the right to
   integrate the browser into the operating system as a new feature.
        Sources close to Microsoft said the proposed campaign is an
   outgrowth of the company's growing fears that it is being outgunned in
   the media by rivals and perhaps even hostile state officials.
        One stated goal of the campaign is to counter "negative, reactive
   coverage that is driven by state attorneys general."
        Media experts said many elements of the campaign seem clumsy,
   adding to a perception that for all of Microsoft's prowess in
   software, the company has little skill with public relations.
        "Companies like Microsoft are run by engineering types who don't
   understand the public," said Ian Mitroff, director of the USC Center
   for Crisis Management, who added that base attempts to manipulate the
   media and shape public opinion often fail.
        "It's cynical," Mitroff said. "It assumes we're dumb."
        This wouldn't be Microsoft's first public relations misstep. The
   company was forced to try to soften its image in January after
   suggesting Department of Justice lawyers were incompetent. Microsoft
   also appeared to be thumbing its nose at the court by insisting it
   couldn't carry out an order to separate its browser from its Windows
   operating system.
        As part of a subsequent publicity tour, Gates was unusually
   candid about his family life and stressed Microsoft's contributions to
   schools in interviews with Barbara Walters and other journalists.
        On Thursday, the company began placing ads in a handful of
   newspapers around the country, stating its case against regulators.
   "At Microsoft," the ads read, "the freedom to innovate for our
   customers is more than a goal, it is a principle worth standing up
   for."
        The proposed multistate campaign represents another component of
   this broad media blitz.
        The campaign appears to have been crafted by Rory Davenport,
   Edelman's director of "grass-roots and political programs" in
   Washington. Davenport is listed as an author of confidential
   documents, but in a brief telephone interview Thursday, he would say
   only that "there is no agreement for a campaign like that."
        Another Edelman official whose name appears on the memos, Neal
   Flieger, also responded to questions about the campaign by saying,
   "I'm not prepared to amplify on that at all."
        The Chicago meeting, attended by many, if not all, of the
   regional coordinators, focused on the campaign. An agenda for the
   meeting indicates that Shaw and Flieger were to be key speakers and
   refers to the "Microsoft multistate plan."
        Both men acknowledged they were in Chicago on Monday, although
   Flieger said it was merely to visit family. Other participants said
   the meeting went forward as scheduled and that regional coordinators
   flew in from around the country.
        Shaw said elements of the plan may ultimately be pursued, but the
   company has no intention of targeting attorneys general or states.
        A number of state investigators, who are reportedly considering
   filing within a month a suit against Microsoft for anti-competitive
   practices, said they are prepared anyway.
        "When it comes to knowledge of computer technology, I take my hat
   off to Mr. Gates," said one attorney general. "But if he wants to
   enter the field of political intrigue, I say welcome to my world, Mr.
   Gates, I'm ready to do battle."