Network: Bill Gates beware, America's consumer crusader is on to you
Tuesday 18 November 1997
Ralph Nader, the defender of the little guy, has gone to war with Bill Gates, the richest man who ever lived. Mr Nader is going around saying that Mr Gates's Microsoft corporation is the most ruthless, most fearsome monopoly that ever was. He has slain a few corporate dragons in his time, has Mr Nader, but none, he says, has had a more alarming potential to undermine democracy and sabotage market freedom than Microsoft.
"It's like the British empire," he said in an interview with The Independent. "They weren't interested in one country. They weren't interested in one continent. They felt that if they didn't control the world someone else would."
Mr Nader was talking on the eve of a conference last week in Washington to marshall the anti-Microsoft forces in preparation for what promises to be a long-running guerrilla campaign aimed at reining in Mr Gates' imperial powers. Think of Mr Nader's cohorts as George Washington's revolutionaries, then think of Mr Gates as King George III, and you will have a sense of the insurrectionary passions that drive the mighty monolith's American foes.
Rejecting a taunting invitation to the conference Mr Nader had sent Mr Gates, Microsoft wrote back that "for us to participate in this kind of environment would be like walking into an ambush with sharpshooters on every hilltop".
That was dead right. Under the shrewd and watchful eye of the grizzled old campaigner for consumer rights - Ralph Nader is an American legend as famous as any politician except the president - speaker after speaker at the conference took turns to blast Microsoft's stranglehold on the computer software industry as the bane of innovation, the death of choice.
University professors, lawyers, authors, computer industry competitors variously agreed that, unchecked, Microsoft would in time assume a measure of control so asphyxiatingly totalitarian over what will undoubtedly be the 21st century's most important industry that it would become comparable not just with the British Empire, but with the Communist Party in the old Soviet Union.
Scott McNealy, president of Sun Microsystems, noted that manufacturers of personal computers have effectively been reduced to resellers of Microsoft goods. "When you're buying a Compaq or an IBM PC, you're just buying a power supply," Mr McNealy said, explaining that no matter what the brand name might be, PCs always come identically pre-loaded with Microsoft's Windows 95 operating systems, the brains - or the engines - of 90 per cent of computers worldwide.
As Gary Reback, a lawyer from California, put it in a speech to the conference: "Imagine going into a shoe store and being told there is only one shoe you can try on. One size fits all. That's what we have in the desktop computer industry."
Mr Nader's conference, "Appraising Microsoft and its Global Strategy", came on the back of an announcement by the US Justice Department last month that it would be seeking a fine of $1m a day against the company until it changed its anti-competitive practices. The Justice Department's complaint rested on Microsoft's aggressive policy of forcing PC makers to incorporate its own Web browser, Internet Explorer, in the now standard Windows 95 operating system.
Under siege from the government and from Nader's Raiders, as the American media has nicknamed the consumer champion's lieutenants, Mr Gates is feeling the strain. Last Friday, as the Washington conference was winding down, it was Mr Nader who drew first blood. At Microsoft's annual shareholders' meeting in Seattle, the $38bn man revealed that he was not immune to the slings and arrows ordinary mortals endure when, in a rare outburst of wounded petulance, he complained that his company was being subjected to "a witch-hunt".
Mr Nader, 63, has been in the witch-hunt business for close on 50 years. But - depending, of course, on your point of view - he has usually been on the side of the angels. Or of the birds, as was the case when he embarked on his career at the age of 17. History records that the Princeton undergraduate noticed one day that birds were dropping dead off trees sprayed with DDT. He strode to the office of the Daily Princetonian carrying a bagful of bird carcasses and raged, "Shouldn't people know that DDT kills birds and it can harm people, too?"
A star was born. Upon graduating from Harvard Law School in 1958 he set up a legal practice and set about publicly exposing the deficiencies in America's road safety laws. He incurred the wrath of General Motors but his activism concluded triumphantly when President Johnson signed the Vehicle and Highway Safety Acts in 1966. Rubbing salt in GM's wound, he successfully sued the auto giant for invasion of privacy after discovering that it had been spying on him. He picked up $280,000 in damages and promptly established his Centre for Study of Responsive Law in Washington, the first of dozens of consumer watchdog organisations his efforts have spawned since. Last year he ran for president as the candidate of the Green Party, a gesture which reaped few votes but was intended primarily as a means of raising public awareness of the grip corporate America exerts on decision- makers in Washington.
Ever battling against what he believes to be a fundamentally corrupt status quo, Mr Nader has been credited directly or indirectly with initiating laws which have improved environmental protection, purified America's water, knocked down walls of official secrecy, provided for safer work- places and made meat and poultry healthier to eat.
Along the way he has done battle with some formidable opponents, but never has he encountered anything quite like Microsoft. "Historically you've seen the aggressiveness of people like John D Rockefeller in oil, Andrew Carnegie in steel; in banking you've seen Citicorp. But you've never before seen the ruthlessly brazen tactics that are used by Microsoft."
As an example, he cited the company's reaction to the news that the Justice Department was suing it. "On the day of the announcement, Steve Ballmer, the number two guy to Gates, comes out of a conference to a battery of press and says, `I say heck to Janet Reno', the [US] Attorney General. As for the ruthlessness, you see it in Microsoft's ambition to penetrate more and more industries. Rockefeller wanted control of oil, this company has elevated corporate paranoia to a business strategy, by which I mean that it has this zero-sum mentality that if it does not control everything, or strives to, it may control nothing."
Not content to exercise such control over the computer industry that last year Mr Gates was personally earning at an average of $40m a day, Microsoft is forging alliances with such giants as Disney, Time-Warner and big banks. The plan is "to extend the oligopoly", in Mr Nader's words, to include publishing, the travel business, electronic commerce, cable television. "It points down the road to Microsoft exercising severe control of pricing and innovation. You don't want to wait till it plays out because it'll become more and more difficult to challenge and stop. Already you see you don't have much innovation any more in spreadsheets and word-processing, for example. Venture capital doesn't exist for potential Microsoft competitors any more. They have a choke-hold. They control the standard - that's a euphemism for monopoly."
More chillingly, in Mr Nader's opinion, Microsoft has the Big-Brotherish potential to control "content", meaning words, thoughts, ideas. "Just imagine the data possession this company will have, the invasion of privacy potential. Imagine the influence over government. Domination, ever-growing, is the goal. It's almost fascinating to behold. An octopus may have a few tentacles. This company has dozens of tentacles, and then off each tentacle there are lots more mini-tentacles."
The persuasive tactics Microsoft employs to achieve its commercial ends combine the sophistication and terror of a well-oiled mafia machine, Mr Nader believes.
"These people retaliate, they engage in reprisals but they will also deceive, they will seduce. People all over say `we've never met such tough competitors before'. They raid the talent of competitors and give huge up-front bonues to bring competitors to their knees and hollow them out. They warn companies friendly to Microsoft to shun other companies that pose a challenge to them. They have that capability because of that huge slush-fund of monopolistic profit they have that allows them to undercut rivals and hire all their talent. They'll buy into other companies by making them offers they can't refuse."
The only president of a computer company to attend Mr Nader's conference last week was Mr McNealy, a famously outspoken cavalier individual whose Sun Microsystems provides the only significant operating system alternative to Microsoft in the PC market. Many other industry bosses were invited but, Mr Nader says, they were all afraid to turn up. "We talked to the head of a company that grossed $800m last year in an area that Microsoft has no interest in at all. We asked him, `What do you think of the conference?' He said, `Terrific'. `Can you come?' `No. I don't dare be seen there, because in six months Microsoft could wipe us out'."
All roads, Mr Nader believes, lead to Gates. "To understand Bill Gates is to understand maximum feasible expediency and opportunism. He's very flexible. He will not draw his sword if he can offer his carrot."
How to defeat the wily Goliath is a question to which none of the participants in last week's Washington conference have the final answer. For now the plan is to elevate public consciousness of the perils that lie in wait if the giant's progress goes unchecked. But Mr Gates, if he is as clever as his billions suggest he is, will not be complacent. In Mr Nader he has met a tough, incorruptible rival whom his sword cannot wound, for whom the Microsoft carrot holds no temptations.
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