Tech companies behaving badly

Japan did it. The United States government did it. And now Microsoft is doing it.

Just a few days before its contempt-of-court hearing, which started yesterday, Microsoft suddenly began apologizing for bad behavior and disrespect leveled at the United States Justice Department and its officials.

Certainly the company had much to be sorry for. Vice president and second-in-command Steve Ballmer had dismissed the U.S. government's antitrust complaints by telling Attorney General Janet Reno to "go to heck." Microsoft chairman Bill Gates openly ridiculed the Justice Department in his keynote address at the world's highest-profile computer trade show. When ordered to remove Internet Explorer from Windows 95 pending the final outcome of the case, the company offered to either cripple the current system or give users a two-year-old version, complete with bugs and inadequacies. Company officials also have intimated that they don't have to worry about the government, because the company can simply outrun it. By the time the case comes up, Microsoft officials have suggested, Windows 95 will be obsolete, as will the government's antitrust charges.

In short, the company has altogether baited, challenged, and thumbed its nose at the judicial process at every opportunity.

Still, the apology was so unprecedented, so out of character for the technology giant that it has left the world puzzling over what it all could mean. Has it finally dawned on Microsoft's lawyers that--since Bill Gates doesn't own a personal nuclear arsenal, yet--the company isn't an equal match to the U.S. government? Doubtful.

The truth is that Microsoft's raw display of hubris isn't aberrant. In the computing industry, as in governments, hubris has played an essential, defining role. The bad boys of technology companies have flouted convention, manners, standards, and sometimes laws, and the result has often been faster processors, cheaper computers, and more plentiful applications. However, another result has been that many technology companies have acted like gifted, spoiled children, taking the ball and going home when the rules don't suit them.

Faced with threatened unionization and tightening environmental controls, Intel and other semiconductor companies in the 1980s moved factories out of the Silicon Valley and into countries and states with more lax environmental standards, leaving behind around 20 Superfund cleanup sites. Intel even went so far as to extract a promise from the Malaysian government, where it located one plant, that it would prohibit unionization of chip plant workers. When the agreement recently expired, Intel threatened to move its plant elsewhere if Malaysia didn't extend its union-free promise. The government complied.

For my money, the motive for Microsoft's recent contrition was stated clearly by Chairman Gates in his spring Consumer Electronics Show address, when he said he wanted to "soften this thing up a little bit," so that Microsoft could just get back to business as usual. Microsoft is learning it must master the fine art of working the system, to be more subtle in achieving the same aims.

Microsoft's efforts may be too ham-handed and too late for the company in its current imbroglio over whether it may be allowed to ship Internet Explorer as part of the Windows95 operating system. In yesterday's hearing Judge Thomas Penfield looked askance on the company's contention that it was getting conflicting instructions from the court and the Justice Department. However, this is hardly the last contact the company will have with the rule of law.

In some ways, the Microsoft apology is like the passing of an era, call it an age of innocence when technology companies were young, loud, and brash. Just as Microsoft has led the industry in so many other ways, the company is leading it once again--only this time, not with its chin.

Whether Microsoft wins or loses this contempt hearing, one thing is certainly clear: the company won't be changing its spots, just hiding them more carefully from now on.