Pro-Microsoft Ads Were Funded by Software Giant

Newspaper advertisements in which a California research institute supported Microsoft Corp.’s position in its antitrust trial were actually paid for by the software giant, the company and the institute acknowledged Friday.

The full-page ads, which appeared in the New York Times and the Washington Post in June, were presented as the unbiased conclusions of the Independent Institute, an Oakland-based think tank, even though Microsoft paid the bulk of the advertising cost.

The ads, which included signatures of 240 economists, are the latest example of the quiet--and some allege underhanded--ways the giant software company is trying to combat the public relations fallout from its ongoing trial.

Microsoft officials argued there was nothing improper in the company’s decision to finance the advertisements, which disputed the government’s allegations that Microsoft has violated antitrust laws by using its monopoly position to bully other companies in the high-tech industry.

“We were aware of the letter, and we were pleased to support making that letter visible,” said Greg Shaw, a Microsoft spokesman. “This is a position they endorsed irrespective of who paid for and placed the ad.”

Last year, documents obtained by the Los Angeles Times showed that Microsoft was considering a range of behind-the-scenes public relations maneuvers, including submitting letters to the editor and opinion pieces presented as independent testimonials but solicited and paid for by Microsoft.

David J. Theroux, the founder and president of the Independent Institute, acknowledged Friday that Microsoft was the only outside contributor to help pay for the ads. He said he did not recall how much money Microsoft provided but insisted the company’s financial support had not influenced the institute’s position.

“The implication that [Microsoft] had any influence is ridiculous,” Theroux said. “It’s like saying that if you buy a book you somehow have an influence on the author.”

But at least one of the economists whose signature appeared in the ad, Simon Hakim of Temple University, has said he would not have participated if he had known Microsoft’s financial role. “It’s not right,” Hakim told the New York Times, which first published the story in today’s edition.

Microsoft’s public image has been battered throughout the antitrust trial taking place in Washington, D.C. Federal prosecutors have portrayed the Seattle-based company as an unfair competitor that has used its monopoly position to squash rivals, such as Netscape Communications Corp., which was recently acquired by America Online Inc.

Indeed, sources familiar with Microsoft’s public relations strategies said the company has recently approached other firms to conduct marketing research on how it might best respond from a public relations strategic standpoint if it loses the trial.

Shaw said Friday the company remains confident it will prevail in the case, but acknowledged that it is preparing for any outcome. “Microsoft, being a well-managed company, certainly prepares for any scenario,” Shaw said.

The ads placed by the Independent Institute, Theroux said, stemmed from a book the organization recently published called “Winners, Losers and Microsoft.” The book argues that the government’s case is based on flawed economic reasoning, and that Microsoft has been so successful largely because its products are superior.

Theroux said the underlying research for that book began more than a decade ago, well before Microsoft became a major contributor to the institute. During the last year, however, Microsoft has become one of the organization’s largest donors, accounting for about 8% of its $2-million annual budget, Theroux said.

Asked why the institute did not simply state in the ad that it been paid for in part by Microsoft, Theroux said he did not believe that was relevant. “The work we do is independent of anything other than science,” he said.