Oracle hired detectives to investigate Microsoft allies

Chairman challenges software giant to do same

June 29, 2000

REDWOOD SHORES, Calif. - The chairman of Oracle Corp. owned up yesterday to hiring private investigators to look into the "covert activities" of Microsoft Corp. and insisted his company was only doing its "civic duty."

"I feel very good about what we did," Larry Ellison said, confirming that his software company hired Investigative Group International Inc. to investigate allies of rival Microsoft.

He said the detective work showed that Microsoft paid trade and policy groups to influence opinion during its antitrust trial.

The corporate spying allegedly included a $1,200 offer to janitors to get a peek at the trash of the Association for Competitive Technology, a trade group.

"Some of the things our investigator did may have been unsavory. Certainly from a personal hygiene point, they were. I mean, garbage ... yuck," Ellison told reporters at Oracle's headquarters.

Ellison challenged Redmond, Wash.-based Microsoft to conduct a similar investigation of Oracle: "We will ship our garbage to Redmond, and they can go through it. We believe in full disclosure."

Oracle said earlier that the investigation showed that the Independent Institute of Oakland, Calif., and the National Taxpayers Union of Arlington, Va., "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."

One analyst called it a Watergate-style dirty tricks campaign.

"This is a little shocking because it brings back memories of the dirty tricks that have brought down presidencies," said Josh Greenbaum of Enterprise Applications Consulting in Berkeley.

Another called it standard procedure. "Many companies in the Silicon Valley do this on some level," said James Pickrel, with Chase H&Q in San Francisco.

Details of the incident were first reported yesterday in the Wall Street Journal and the New York Times. Oracle said it told the agency nothing illegal was to be done during the investigation.

"This is a sad day," said Mark Murray, a Microsoft spokesman. Oracle is "basically trying to justify these inappropriate actions, and it's unfortunate that Oracle won't admit that it's wrong."

Oracle said it retained the detective agency a year ago to investigate the Oakland free-market policy institute after it placed full-page ads defending Microsoft in national newspapers. The Times has reported that the ad was paid for by Microsoft.

The taxpayers union at one point issued a study blaming the antitrust case - which Microsoft lost and has appealed - for a loss in value of state pension funds. The Journal later reported that the group had received funding from Microsoft.

The Journal also reported yesterday that Oracle hired a Washington public relations firm, Chlopak, Leonard, Schechter & Associates, to disseminate potentially damaging information about Microsoft to the news media. That work included suggestions that a company headed by political consultant Ralph Reed - a top campaign strategist for Texas Gov. George W. Bush - was trying to persuade the presidential candidate to support Microsoft.

The company, Century Strategies, later apologized for encouraging "a small number of individuals" to lobby Bush. The company said Reed never asked Bush to take a position on the court case.

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