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WASHINGTON - The chairman of Oracle yesterday admitted hiring detectives to investigate Microsoft and defended the effort, including a cash-for-trash offer, as a means to force "full disclosure" of Microsoft's financial ties to allies.
Larry Ellison acknowledged authorizing Oracle lobbyists in Washington to "investigate" Microsoft, but added that until Tuesday he had never heard of the private detective company that was hired.
Nevertheless, he said, those efforts were justified because they revealed Microsoft's payments to industry groups that released studies and polls favorable to Microsoft in its antitrust battle with the Justice Department and 19 states.
"It is absolutely true that we set out to expose Microsoft's covert activities," Ellison said in a news conference at the software company's Redwood Shores, Calif., headquarters.
Among the "front organizations" funded by Microsoft, he said, were the Independent Institute of Oakland, Calif., which published pro-Microsoft advertisements in newspapers, and the National Taxpayers Union of Arlington, Va., which issued a study blaming the Microsoft antitrust case for devaluing state pension funds.
Oracle's spy was Investigative Group International (IGI), a cloak-and-dagger agency headed by a former Watergate investigator and renowned for its work for the Clinton administration. It was linked to a recent offer to pay janitors at the pro-Microsoft Association for Competitive Technology $1,200 for garbage from the pro-Microsoft trade group. The janitors declined the offer.
Separately, the Independent Institute and another pro-Microsoft group, Citizens for a Sound Economy, reported that laptops stolen from their offices contained information later revealed in news reports. But Ellison insisted that his company had told IGI to do nothing illegal.
"Some of the things our investigator did may have been unsavory. Certainly from a personal hygiene point, they were. I mean, garbage . . . yuck," Ellison said. But he remained unrepentant, refusing to rule out future industrial espionage. "Are we again going to help Microsoft with their full-disclosure problem? Absolutely."
The targets of Oracle's actions expressed outrage at the company's tactics.
"The only thing more disturbing than Oracle's behavior is their ongoing attempt to justify these actions," Microsoft said in a statement.
Microsoft called Oracle's accusations "disingenuous and hypocritical." Oracle has funded groups that have assailed Microsoft's competitive tactics, including ProComp, the Progress & Freedom Foundation, the Software & Information Industry Association and the Computer & Communications Industry Association, the statement said.
Jonathan Zuck, president of the Association for Competitive Technology, chafed at being called a front group and noted that Microsoft is one of nearly 1,000 members of his organization.
Oracle's actions are not likely to help the company on Capitol Hill, where staffers and members of Congress criticized corporate espionage as a lobbying tactic. It was Oracle's government affairs unit, which also lobbies Congress on high-tech issues, that hired IGI.
"I think all Americans are repulsed by the idea of somebody snooping through your garbage to find out information against you," said Sen. Patty Murray, D-Wash. "I sincerely hope that it is highly unusual."
The combative Ellison invited Microsoft to retaliate.
"We're not out there hiring fake organizations who are doing lobbying for us. Microsoft is welcome to go investigating us," he said. "If Microsoft wants to go through it, we'll ship them our garbage."
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