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MS making up for bad behavior

In a major shift in its PR strategy days before its contempt-of-court hearing, Microsoft says it's sorry for being arrogant and disrespectful.

In a major shift in its public relations strategy before its contempt-of-court hearing Tuesday, Microsoft (MSFT) sent out its executives this week to tell the press that it's sorry for being arrogant and disrespectful in the face of the Justice Department's antitrust lawsuit.

The "kinder, gentler" campaign surprised industry observers, See special report: MS-DOJ case in court who questioned whether the company will be successful in patching things up in Washington, D.C., as well as head off any user discontent that may stem from the company's approach to the case to date.

For example, in an interview with Business Week for its January 19 issue, Microsoft CEO Bill Gates stuck to the company's long-standing guns on the court dispute: "I don't know what Microsoft is unless we have a clear right to design with new features, including things we've sold separately in the past."

Today, however, the admissions of untoward behavior from executive vice president Steve Ballmer, chief operating officer Bob Herbold, and other company brass formed a blitz of niceness.

"One thing we have to do is first of all respect the Department of Justice and respect the judge, and we're sorry if we have made any statements that would suggest we do anything but respect them," Herbold said today.

Although the corporate apologies appear to reflect a completely new campaign tactic for the software giant, nevertheless they were successful in getting Microsoft's message into the mainstream press days before Judge Thomas Penfield Jackson is scheduled to rule if the company is in contempt of his order to give PC makers an Explorer-free version of Windows 95.

Public relations and "crisis management" consultants have mixed reviews about this softer approach, and it remains to be seen if the latest publicity, as the saying goes, will turn out to be good publicity.

Microsoft's response to the court's temporary injunction, issued back in December, was to offer PC makers a choice of the latest Windows 95 version with the browser; the latest Win95 with the code stripped out, which would render the system inoperable; or a two-year-old version of the operating system. The company claims it was forced to follow through in this manner to abide by the letter of Judge Jackson's ruling; the DOJ called Microsoft's offer contemptuous.

"We thought we should get out and reassure people that we do respect the DOJ," said Mich Mathews, general manager of Microsoft public relations. "Reporters have been following the legal back-and-forth, but what's been lost is that we've been representing the facts in a straightforward way."

One longtime public relations consultant thought Microsoft's move was in the right direction. "They're doing all the right things--it's just a bit late," said Cathy Cook, who worked with Steve Jobs when he formed Next Software.

Microsoft, however, remains adamant that it has received an unfair shake not only by its rival software companies but also by the media. "The things that have been written in the press have painted a picture of Microsoft as a defiant company, and that couldn't be further from the truth," Mathews added.

Since the DOJ announced its lawsuit in October, Microsoft has called into question the technical expertise of the agency, as well as the fundamental right of government to oversee what the company feels is its right to innovate. Now that Microsoft has pledged to be more cautious, it has to stand by its promise for the sake of its credibility, said one expert often called in to do PR damage control.

"In the next month or so, people will start asking 'Where's the beef?'" said Tim Conner, president of the Conner Group, a crisis management and media relations firm in Greenwich, Connecticut. "If you're going to say stuff like that, you have to back it up with behavior."

Even with the sudden change in tune, Microsoft's messages remain jumbled. While Herbold said the company might tone down its rhetoric without compromising its actions, Ballmer hinted that the company might change its famously aggressive business practices in an interview with the San Jose Mercury News.

"There's more fear and maybe more of a need for us to be fair, not just even in our dealings, but overly sensitive," he told the paper.

Meanwhile, Yusuf Mehdi, the company's director of Internet client marketing, said in a visit to CNET's offices that he had polled information technology professionals just before the holidays and had seen a "negligible" effect of the DOJ case on the company's reputation or business.

About 40 percent of interviewees weren't following the case closely and less than 1 percent said it might affect their purchasing decisions, according to Mehdi.

The company hasn't conducted any focus groups, said Mathews, but in informal conversations with technical people and "CIO audiences, it's first thing people are talking about," he noted. "It's been higher on people's agenda in the last month."

Another communications specialist with 20 years experience in crisis management, including antitrust cases, said the target of the message isn't necessarily the company's consumers.

"Even if there are no bottom-line problems with people who buy their products, they might find the public perceives them as arrogant and overbearing," said the specialist, who asked not to be named. "Their previous stance, which was unusual in its aggressiveness, wasn't resonating with the public."

Washington also comes into play. The Senate Judiciary Committee, led by the openly critical Sen. Orrin Hatch (R-Utah), held hearings on Microsoft last fall, and the case had a profile high enough to merit an appearance by Attorney General Janet Reno at the DOJ's first press conference. (One of Hatch's largest constituents is Microsoft competitor Novell.) One of the daily papers granted an interview by Ballmer was the Washington Post, not normally a bastion of high-tech coverage.

"This seems to be a well-orchestrated media tour," the specialist added.

Nonetheless, the company isn't backing down on several fronts, including its opposition to the court's appointment of special master Lawrence Lessig as a technical consultant. Microsoft, which questioned the DOJ's technology expertise, now objects to Lessig's "scope of power" in the case and his alleged bias against the company. In email exchanges with a fellow professor as well as Netscape executives, Lessig described his difficulties in installing Internet Explorer and compared the process to "selling his soul." (See related story)

Not surprisingly, one of the rivals Microsoft worries about doesn't think the company is handling the situation well.

"First, the leader of the company needs to publicly present himself and outline with true conviction what he believes is the problem and how to correct it. The person to handle this is Gates, not Ballmer," said Alan Kelly, president of Applied Communications, which represents Oracle. "Second, they have to mean it. I think Microsoft is ultimately pretty comfortable with who they are and what they've done."

The DOJ-Microsoft case is also a benchmark for the burgeoning impact of the high-tech industry upon the rest of society, according to PR consultant Cook.

"Microsoft is known as arrogant, but there's a lot of hubris in the tech industry in general. People live in a bubble and don't always understand the impact technology has on society; they're always working under the assumption that they're making the world a better place to live, and that's not necessarily true."

Reuters contributed to this report.