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In AP Interview, Oracle CEO Larry Ellison defends Microsoft probe

by MICHAEL LIEDTKE on 6/29/00.

With an estimated $47 billion personal fortune, Oracle Corp. chairman Larry Ellison will never be mistaken for a humble civic servant.

But the flamboyant chief executive did his best Wednesday to depict his company's spying campaign against Microsoft Corp. as a public service.

"I feel very good about what we did," Ellison said Wednesday as he defended Oracle's hiring of Investigative Group International Inc., which looked into several groups that publicly supported Microsoft in the federal antitrust case.

"What we were doing was exposing Microsoft's own little Watergate," Ellison said during an interview with The Associated Press. "They were doing all the covering up. We are just the guys that caught the other guys in a break in."

If that sounds a bit surreal, it was that kind of day at Redwood Shores-based Oracle, which had planned a news conference to tweak Microsoft with a new Internet product designed to improve the performance of Web sites.

The event quickly turned into a media circus as reporters only vaguely familiar with Oracle's business flocked to the company's headquarters to find out more about the latest chapter in the bitter rivalry between Ellison and Microsoft Chairman Bill Gates.

Although he said he wasn't directly involved in IGI's hiring, Ellison said he accepted full responsibility for any fallout.

Ellison said the detective work showed Microsoft paid the Independent Institute of Oakland, Calif., and the National Taxpayers Union of Arlington, Va., to influence public opinion in Microsoft's favor during its federal antitrust trial.

The work by IGI allegedly included a $1,200 offer to janitors to get a peek at the trash of the Association for Competitive Technology, a trade group.

"Some of the things our investigator did may have been unsavory. Certainly from a personal hygiene point they were. I mean garbage ... yuck," Ellison, a natty dresser, told reporters at Oracle's headquarters.

But Ellison said he had no problems with any other aspect of the investigation - including the fact that Oracle had leaked its findings to selected media outlets for more than year.

"We weren't engaging in corporate espionage. We were just doing investigative reporting," he said.

Microsoft spokesman Vivek Varma called Ellison's comments "amazing in light of the news coverage. Mr. Ellison is just trying to spin his way out of this embarrassing 'cash for trash' episode."

Josh Greenbaum, a Berkeley, Calif. software consultant who has followed Oracle for more than decade, said the company's conduct "is a little shocking because it brings back memories of the dirty tricks that have brought down presidencies. It really speaks to the bitterness of the competition against Microsoft."

But another analyst wasn't taken aback by Oracle's investigation.

"It's been no secret that Larry Ellison has been gunning for Bill Gates for a long time," said James Pickrel, with Chase H&Q in San Francisco.

Oracle hired the detective agency a year ago to investigate the Independent Institute after it placed full-page ads defending Microsoft in national newspapers. The New York Times has reported that the ad was paid for by Microsoft.

The taxpayers' union at one point issued a study blaming the antitrust case - which Microsoft lost and has appealed - for a loss in value of state pension funds. The Wall Street Journal later reported that the group had received funding from Microsoft.

From Ellison's perspective, Oracle was doing the public a favor by investigating the "covert activities" of Microsoft. He views the groups that issued reports defending Microsoft's business - deemed a monopoly in an antitrust case brought by the federal government - as "front organizations" for the Redmond, Wash.-based software maker.

He also challenged Microsoft to reveal how much it contributed to the groups Oracle investigated. Microsoft officials declined, citing company policy.

A spokesman for the Independent Institute said the nonprofit group never tried to hide its connections to Microsoft. Rob Latham said Microsoft has only been involved with the 14-year-old Independent Institute for the past two years. He declined to identify other businesses backing the institute.

The institute began railing against the government's antitrust laws more than a decade ago, Latham said. "We would have been saying the same things whether Microsoft was involved with us or not."

During the press conference Wednesday, Ellison accused the Independent Institute of issuing "bogus polls and false economic reports."

Ellison also revealed that Oracle investigated another group called Citizens for a Sound Economy.

In the interview, Ellison denied reports that IGI may have been involved in the theft of laptop computers owned by the groups under investigation. "If someone had done that, we wouldn't just fire them; we would prosecute them," Ellison said.

Ellison said he was unsure how much money Oracle paid IGI for the investigation, but he believes it was less than $100,000. Oracle's Washington, D.C. lobbying office, which hired IGI, has an annual budget of less than $1 million, Ellison said.

Ellison's long-running crusade against Gates took on new dimensions this year as Oracle was galvanized by new Internet initiatives.

Oracle stock soared as Microsoft's stock languished in the face of the government's efforts to break up the company. Gates, who is worth about $60 billion, is the only man richer than Ellison, according to Forbes magazine.

Ellison said he has only talked to Gates once in the last several years, but had a message for his rival Wednesday: "It's nothing personal."

"It just a great competition between Microsoft and Oracle. They are the No. 1 software company in the world and we want to be No. 1. But Microsoft has a
problem: We have all the cool technology and they don't."

Ellison said he wasn't disappointed that the news of the Microsoft investigation stole thunder from Oracle's latest Internet product.

"I'm a realist," he said. "I understand this other stuff is more interesting than technology."

On the Net:

Investigative Group International:

Independent Institute:

Association for Competitive Technology:

GRAPHIC: With AP Photos CAPS 101-105 of June 28