from Mother Jones magazine, January-February 1998

   The Microsoft Network

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

   Plus: Washington Wide Web: Microsoft's lobbyists and their power ties.

   by Ken Silverstein

   [INLINE] 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.

   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.

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