Diving Into Bill's Trash

If the White House were involved, we'd be calling it Mogulgate. Over the past year, Washington, D.C., lobbying firms supporting Microsoft in its antitrust battle against the Justice Department repeatedly found themselves the victims of what looked for all the world like industrial espionage. At the Independent Institute, a man walked in and asked for directions, then absconded with two laptops. At the National Taxpayers Union, a parade of visitors with fishy stories tried to get into the building. Then a detective using the name of a nonexistent company rented an office near the Association for Competitive Technology and hired a Spanish-speaking woman to offer $1,200 to the building's cleaning crew. What he wanted: ACT's trash.

The janitors reported the incident in May, but it wasn't until last week that the man pulling the strings stepped forward. It wasn't a huge surprise: Larry Ellison, the brazen CEO of Oracle perhaps known as much for his passionate hatred of Bill Gates as for his $230 billion company, owned up to at least the Dumpster diving. At a press conference at his Redwood Shores, Calif., headquarters, he said he hired D.C.-based Investigative Group International, whose founder, Terry Lenzner, has worked for Bill Clinton's lawyers digging for dirt on adversaries like Paula Jones. The goal: expose Microsoft's funding of supposedly independent groups that were filing pro-Microsoft briefs in court and distributing research to reporters. Though Ellison says he didn't authorize the sleazy tactics, he didn't disown them, going so far as to call investigating Microsoft his "civic duty... We got the truth out."

But Ellison isn't out of the woods. Going through trash isn't against the law--once you throw something out, it's not yours anymore. But the victims are considering legal action against both Oracle and Lenzner's PI firm. ACT's lawyers think they may be able to make a case for invasion of privacy, a civil charge that can bring stiff damages. Microsoft is also reviewing its legal options. Spokesman Vivek Varma scoffs at the notion that Ellison "exposed" Microsoft's funding of the advocacy groups, claiming that the company never hid its involvement.

The larger question involves the antitrust case, which is up for possible review by the Supreme Court. Will Mogulgate have an effect? The justices may now be more inclined to believe Microsoft's charge that its competitors have been driving the case from the start, says George Washington University law professor Bill Kovacic. That's a strong motivation for Microsoft to beat the aggrievement drum loudly--more loudly than it otherwise would, considering that spying is not exactly new to the tech industry. "Dumpster diving definitely happens, typically among the largest companies," says Artie Wu, CEO of Vividence, which offers "competitive intelligence." Microsoft itself hired people to go through the trash of a competitor in 1993, when it was investigating software counterfeiting. The lesson? Buy a shredder.