Sunday, July 2, 2000


Chesley leads pack pursuing Microsoft

        Interviewing Stan Chesley is exasperating. Two hours of sitting around produces 25 minutes of interview, on tape. The phone rings, he answers it. Someone steps in, he talks to them. Phone rings, he kicks me out for 10 minutes.

        The issue this day is Microsoft Corp. U.S. District Court Judge Thomas Penfield Jackson's finding that the company violated federal antitrust law has drawn lawyers like flies. More than 100 civil cases seeking damages from Microsoft have been filed nationwide by more than 170 law firms. The company is sitting on $21 billion in cash and another $21 billion in investments.

        Mr. Chesley, the Cincinnati lawyer whose forte is class-action lawsuits (that, and raising money for Democrats), is co-chair of the lead counsel committee consolidating many of these cases in federal court in Baltimore. And he wants Microsoft to pay.

        For what? For using its monopoly power to overcharge customers for its Windows operating system, and to quash competition and new technology.

        "I want you to assume that somewhere over the last 10 years, in little garages around America are new Bill Gateses," he said. "They have been held back."

        OK, let's find a Bill Gates wannabe and cut him a check. Is that possible? If the Department of Justice succeeds in breaking up Microsoft, why do we need these lawsuits?

        Because Judge Jackson's decision could be overturned on appeal, and if George W. Bush is elected president, the Justice Department's policy could change, Mr. Chesley said.

        "Guess what? The federal judiciary is not vulnerable in a civil case to the whims of Congress or the White House," he said. "The law says consumers are entitled to recovery from damages, treble damages. That is what we are pursuing."

        About the same time, Tim Schigel of Cincinnati's Blue Chip Venture Co. was one of 50 VCs (that's venture capitalist) at a conference hosted by Microsoft.

        The location - San Jose, rather than headquarters in Redmond, Wash. - was symbolic of the company trying to meet people halfway. Microsoft's aim was to find out how it can be more accommodating when working with startups.

        One VC likened working with Microsoft to a proctological exam. When it finds a young company doing interesting work, Microsoft wordlessly examines it inside and out. In the end, Microsoft might say it's in exactly the same business - a death sentence for the young company. The software giant has also been accused of stealing technology.

        Startups looking for guidance have found Microsoft hard to navigate, Mr. Schigel said. To change that, the company has created an eBusiness Solutions group, with 150 employees. Coming off the antitrust case, Microsoft realizes it has to be friendlier. "This was their first effort to do this," he said.

        In the end, "it remains to be seen whether they'll back all that up," Mr. Schigel said. He said he proposed that Microsoft publish engagement guidelines, and set up a VC advisory committee.

        Microsoft can change on its own. If it can't, Stan Chesley has a few thoughts on the matter.

        E-mail John at or call 768-8377.


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