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Oracle CEO rips into Gates
June 28, 2000: 7:11 p.m. ET

Oracle's Ellison has no apologies for covert operations against Microsoft
By Staff Writer David Kleinbard
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NEW YORK (CNNfn) - Oracle CEO Larry Ellison ripped into Microsoft Corp. and its chairman, Bill Gates, saying that the company had funded front groups to help generate public support in its antitrust battle with the federal government and 19 states.

Ellison confirmed that Oracle had hired Investigative Group International, a detective agency, to gather information about organizations funded by Microsoft that had opposed the government's effort to break up the software giant. While Gates and Ellison have been bitter rivals for years, Wednesday's attack by the Oracle chief was unusually bare knuckled.

"It is absolutely true that we set out to expose Microsoft's covert activities," Ellison told reporters gathered at a news conference Wednesday, adding that "Microsoft has been spending a tremendous amount of money," to support research and policy groups that purport to be independent. (159KB WAV)(159KB AIFF)

Ellison cited the names of several groups that were quietly funded by Microsoft (MSFT: Research, Estimates), including the Independent Institute, the National Taxpayers Union, and the Association for Competitive Technology.

"The Association for Competitive Technology didn't exist until the Microsoft antitrust trial began," Ellison said. "It purports to be an independent group that is supporting America, but it was bought and paid for by two Americans -- Bill Gates and Steve Ballmer [Microsoft's CEO]."

"The Independent Institute is neither independent nor an institute," Ellison added.

Ellison claims ignorance of agency

Ellison said that he had never heard of the investigative agency that Oracle (ORCL: Research, Estimates) hired, Investigative Group International (IGI), until Tuesday -- a claim that reporters at the press conference found very hard to believe, given that the Wall Street Journal had published several articles about IGI's covert activities, such as attempting to buy the trash of the Association for Competitive Technology's Washington, D.C. office.

graphicEllison told reporters that he did authorize Oracle's Washington office to investigate Microsoft's covert funding of public interest groups. The company's Washington office hired IGI, he said.

"People like you are supposed to expose this stuff," Ellison said referring to the press. "People like us are just trying to help. I never knew that we were doing any of this stuff, but if Microsoft is creating front organizations, I feel very good about bringing that information to the public."

When asked by a reporter how he would feel if Microsoft went through Oracle's trash, Ellison indicated that Oracle had nothing to hide.

"Microsoft is welcome to come investigate us and so are you guys," Ellison said to the press. "We don't do this kind of stuff. We don't compete that way. We will send all of our garbage to Redmond and they can go through it." Microsoft is based in Redmond, Wash.

Microsoft responds to Oracle

Microsoft issued a statement after the Oracle press conference saying that "the only thing more disturbing than Oracle's behavior is their ongoing attempt to justify these actions."

"This is dramatic evidence that Microsoft's competitors have engaged in a massive and ongoing campaign to unfairly tarnish Microsoft's public image and promote government intervention to benefit themselves," the statement said.

graphic"Oracle's attacks on trade associations and public policy groups are disingenuous and hypocritical," Microsoft continued. "Obviously, Oracle has funded or supported numerous groups that have attacked Microsoft in recent years, such as ProComp, the Progress & Freedom Foundation, the Software & Information Industry Association, and the Computer & Communications Industry Association."

"I think this is just a remarkable black eye for Oracle," Microsoft spokesman Mark Murray told CNNfn's Moneyline. (316KB WAV)(316KB AIFF)

IGI founder Terry Lenzner, issued a statement saying that his company, "abides by a rigorous code of professional ethics, and conducts all of its investigations in a lawful manner ... Our work on behalf of Oracle was conducted in strict accordance with these standards."

The Independent Institute, based in Oakland, Calif., published a book last September titled "Winners, Losers & Microsoft" that supported the software giant in its antitrust battle with the government. In an interview with, David Theroux, founder and president of the Institute, confirmed that it has received funding from Microsoft for the past two years. However, he refused to reveal what other sources of funding his institute may have.

"We don't release the names of who supports us," Theroux said. "We think it is not appropriate to release the names of who supports us because we don't want to bias the research of our scholars. We don't do any contract work, and we never will."

"The IGI investigation uncovered nothing new about us, and the entire campaign by Oracle was to try to smear us," he added.

Ellison calls Microsoft special

Ellison said that Microsoft deserved to be singled out for a covert investigation because the company is "special," having been found by a federal judge to have engaged in a wide range of anticompetitive actions against companies and for using its monopoly power over PC operating systems. (351KB WAV)(351KB AIFF)

"They are the only ones who destroyed the most innovative company in Silicon Valley in the past decade -- Netscape Communications," Ellison said. "They paid people not to ship Netscape's browser. They're special."

The Oracle chief made the statements at a press conference where the company introduced new products, including its Internet Application Server 8i and its Internet Developer Suite. Oracle said those new products complete a project begun five years ago to engineer its entire product line for the Internet. Back to top


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