New Yorker Author Analyzes Microsoft "Trial of the Century"
Bill Gates became the world's richest man by building his company, Microsoft, into one of the most powerful corporations in the world. Those who know Gates say his technological genius and--maybe more importantly--his shrewd business sense, were his most valuable assets along the way.
Journalist Ken Auletta learned about the latter characteristic the hard way.
Auletta, longtime author of the "Annals of Communications" column in The New Yorker magazine, spoke about his new book, World War 3.0: Microsoft and Its Enemies to a large crowd on January 19 in the 900 Room of the College Union. Among the audience was his daughter, Kate, a first-year student at Davidson.
Auletta's experiences with Gates and the Microsoft antitrust lawsuit, which he covered from gavel to gavel, led him to conclude that Gates and Microsoft could have settled the case years ago with relatively little damage to the company by showing more respect for and cooperation with the government.
Instead, Gates displayed the same combativeness during the trial that he did in an encounter with Auletta when the two attended the World Economic Conference in Davos, Switzerland.
Upset over the tough questioning a Microsoft executive received at a panel moderated by Auletta, Gates angrily confronted the journalist during dinner. "Before he sits down, Bill Gates starts berating me," said Auletta. "I'm looking up at this guy thinking 'He's nuts.'"
A little while later on the same evening, Gates grew even more furious during a question-and-answer session when Auletta asked him, "What do you say to people who say that Microsoft often behaves in an arrogant manner?"
"He starts screaming at me," recounted Auletta. "He may be the richest man in the world, but he's crazy," Auletta remembered thinking.
That encounter sparked Auletta's curiosity. He said he began to wonder what would make such a powerful man feel so angry and besieged.
He reveals his theory in his new book.
Netscape, one of Microsoft's fiercest competitors, had developed an easily accessible Internet browser that Gates feared would topple his company's supremacy.
"Gates was crazed about that," said Auletta. "He was really worried."
So worried, said Auletta, that Gates and his company began offering their own browser, Internet Explorer, packaged for free with Windows--two for the price of one.
But, it began strong-arming manufacturers into selling Microsoft's systems instead of Netscape's. In one year, Netscape's share of the browser market fell by more than 50%. Enter the United States Justice Department.
Alleging that Gates had achieved a monopoly over his competition, the government filed a lawsuit with the intent of breaking up Microsoft--and crippling Gates' hold over the computer market. Gates entered the trial with the same arrogance with which he confronted Auletta only four months earlier.
"He basically harangued the Justice Department," said Auletta. "'To heck with Janet Reno,' Gates was quoted as saying."
Auletta followed every aspect of the trail and conducted extensive interviews with litigants on both sides of the case--he event got three exclusive interviews with Judge Robert Penfield Jackson, who presided over the case.
When it was over, Auletta published a 25,000 word recap of the trial in an August 2000 edition of The New Yorker, one of the longest pieces to run in the magazine in more than 15 years. His interviews with Judge Jackson appeared in the January 15, 2001, edition of the magazine, timed to coincide with release of World War 3.0. His appearance in Davidson was one of the first stops on a six-week nationwide tour to promote the book.
Auletta said the government built its case on the contention that Microsoft's domination of the market stifled innovation in the field. But he contends that was a weak argument. "It's not an argument based on fact," he said.
Unfortunately for Gates, Auletta said, the defense's case was even weaker. In a videotape deposition, attorneys grilled a nervous, sweaty, and often agitated Gates for several hours. "His attitude was 'Why are you bothering me with questions?'" said Auletta.
Jackson would later tell Auletta that the deposition was a critical mistake, because it essentially supported the prosecution's contention that Microsoft was arrogant and unfair. The judge had no choice but to rule for the prosecution, splitting Microsoft into two separate companies and handing a decisive victory to rival companies. Microsoft has appealed the ruling to federal district court, which will hear arguments this summer.
Despite losing the case, Gates' attorneys would collect close to $100 million for their services.
"They should be sued for malpractice," said Auletta.
"When I look back on this dance, this trial... I say to myself 'Why did [Gates] not settle? Why did he pout like a child?'"
"I came to a conclusion that I call the 'Human Factor.'" [The defense] ignored things like credibility, intent. They handled it like an engineer would. And they are paying for it."
Davidson is a highly selective independent liberal arts college for 1,600 students. Since its establishment in 1837, the college has graduated 23 Rhodes Scholars and is consistently ranked among the top liberal arts colleges in the country by U.S. News and World Report magazine. Davidson recently launched "Let Learning Be Cherished," a $250 million campaign in support of student financial assistance, academic resources, and community life.