New York Times-June 28, 2000
Oracle Hired a Detective Agency to Investigate Microsoft's Allies
By JOHN MARKOFF and MATT RICHTEL
SAN FRANCISCO, June 27 -- The Oracle Corporation acknowledged
today that it had hired a prominent Washington detective firm to
investigate groups sympathetic to its archrival, the Microsoft
Corporation, an effort that yielded documents embarrassing to
Microsoft in the midst of its antitrust battle with the
government.
Oracle's admission today followed reports linking the detective
firm, Investigative Group International, to an unsuccessful
attempt this month to obtain documents from a pro-Microsoft trade
group, the Association for Competitive Technology, by offering
payments to janitors at the group's Washington office.
Oracle said the investigations on its behalf had established that
the association and two other organizations "were misrepresenting
themselves as independent advocacy groups, when in fact their
work was funded by Microsoft for the express purpose of
influencing public opinion in favor of Microsoft during its
antitrust trial."
Documents from two of the organizations were cited in articles in
The New York Times and The Wall Street Journal showing that the
groups had received financing from Microsoft.
An official of one of the groups said he thought documents that
later showed up in the press were on two laptops stolen from the
group last June. But an Oracle spokesman said the company had
stipulated to the detective firm that nothing illegal was to be
done in the operation.
"When Oracle asked I.G.I. to investigate numerous Microsoft front
organizations, we didn't specify how I.G.I. should go about
gathering information," the spokesman said. "We did, however,
insist that whatever methods I.G.I. employed must be legal." He
said Oracle was repeatedly given such assurances.
Norman Harrison, president and chief executive of the detective
firm, issued a statement saying he had no comment. The firm's
chairman, Terry Lenzner, did not return calls.
The episode indicates the profound bitterness of the
software-industry rivalry between Microsoft and Oracle, companies
headed by two of the world's richest men: William H. Gates of
Microsoft and Lawrence J. Ellison of Oracle.
Vivek Varma, a Microsoft spokesman, said tonight, "This is
further proof that our competitiors have conducted and paid for
and orchestrated a public relations and lobying campaign to
generate government intervention into a industry that is highly
competitive and delivering for consumers."
The detective that Oracle turned to, Mr. Lenzner, a onetime
Watergate investigator, has come to prominence in recent years in
his work for the tobacco industry and the Clinton White House,
gathering information on their accusers. A Microsoft law firm
even hired the Lenzner firm earlier this year to assist in a
software piracy and counterfeiting case.
Oracle said it had retained the detective firm in June 1999 to
investigate the Independent Institute of Oakland, Calif., a
free-market policy institute that had just placed full-page
advertisements defending Microsoft -- signed by 240 academic
figures and portrayed as reflecting independent views -- in The
Washington Post and The New York Times.
In September, The Times, citing internal institute documents,
reported that the Independent Institute's ad was actually paid
for by Microsoft. The Times said the documents had been provided
by a Microsoft adversary associated with the computer industry
who refused to be further identified.
A Times spokeswoman, Catherine Mathis, said it has long been the
paper's policy not to disclose the names of confidential sources.
Last month, an article in The Wall Street Journal reported that
the National Taxpayers Union, which had issued a study blaming
the antitrust case for a loss of value in state pension funds,
had received financing from Microsoft. It attributed the
information to a person familiar with the group's corporate
fund-raising.
"We take it that there has been no suggestion of any improper
activity by The Journal, or any knowledge by The Journal of any
such activity by any of its sources, and we know of none," said
Richard Tofel, a spokesman for the newspaper.
The other group that Oracle acknowledged was a target of the
investigation, the Association for Competitive Technology, is a
pro-Microsoft trade group. According to documents from the
company that manages the association's office space, a woman
offered two cleaning workers cash on two occasions early this
month to hand over trash from the group's office.
The offers were rebuffed. The woman making them had gained access
using a key from another tenant, whose credit application bore
the name of an investigator identified in the past as an agent of
the Lenzner firm.
A Oracle executive said the company knew nothing about that
incident other than what had been reported in the press.
And the executive said Oracle had had no involvement in another
episode, in which Microsoft's support for a free-market lobbying
group called Citizens for a Sound Economy was reported in The
Washington Post.
Both that group and the Independent Institute reported recent
thefts of laptop computers from their offices that they said
might have contained documents that later appeared in the press.
The targets of the Oracle-backed investigation expressed outrage
this evening, suggesting that the company was guilty of the same
dirty-pool tactics of which it has long accused Microsoft.
"It's despicable," said Jonathan Zuck, president of the
Association for Competitive Technology. "I would hope to get a
letter of apology from Larry Ellison and an explanation of how,
in a climate over so much concern over the issue of privacy, he
could think this is an acceptable business practice."
He said he was considering legal action over what he said was a
violation of his employees' privacy in the trash-buying attempt.
"This is not dumpster diving in offices outside the building,
this is bribery," he said. "It's also a security issue."
Repeated requests by phone and e-mail for comment from Mr.
Ellison, the Oracle chairman, were unavailing.
David J. Theroux, president of the Independent Institute, said
Oracle had called into question its own credibility. "Clearly
anybody who stoops to whatever was done here, you can't trust,"
he said.
He asserted that the documents that were cited in The Times
obscured the debate because they implied that the Independent
Institute was a front for Microsoft. Mr. Theroux said the
Institute was advocating free-market policies for years before
Microsoft ever became a supporter.
"It's unfortunate that instead of engaging the issues in a
visible public forum," Mr. Theroux said, speaking of Oracle, "it
was considered to be appropriate to use subterfuge and back-alley
tactics to deal with the issues."
John Berthoud, president of the National Taxpayers Union, based
in Alexandria, Va., said, "It's disappointing but perhaps not
unexpected that Microsoft opponents, who are trying to use the
American judicial system to run down Microsoft, would stoop to
these kind of political tactics against the voices of the free
market."
Mr. Berthoud said he had been approached by reporters contending
they had been given internal financial documents from his group.
But he said he had not seen the documents and could not verify
their authenticity.
He said his group "engages in the rough and tumble of politics,"
but added, "This kind of nonsense is uncalled for and below the
belt."
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Shalom, A Salaam Aleikum, and to all, A Good Day.
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