Pride Before the Fall: The Trials of Bill Gates and the End of the Microsoft Era

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Overview

The humbling of Bill Gates and Microsoft is the last great business story of the 20th Century and the first great riddle of the 21st. How did the richest man in the world, the most powerful icon of the New Economy, wind up being pursued and attacked by his own government? And how did a company that had utterly dominated the technology landscape find itself weakened, vulnerable, and under threat of a court-ordered breakup?

John Heilemann's Pride Before the Fall uncovers the secret history of the trial that shook an economy: United States v. Microsoft. Drawing on years of reporting - including extensive interviews with Gates and other top Microsoft executives, Justice Department trustbuster...

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Overview

The humbling of Bill Gates and Microsoft is the last great business story of the 20th Century and the first great riddle of the 21st. How did the richest man in the world, the most powerful icon of the New Economy, wind up being pursued and attacked by his own government? And how did a company that had utterly dominated the technology landscape find itself weakened, vulnerable, and under threat of a court-ordered breakup?

John Heilemann's Pride Before the Fall uncovers the secret history of the trial that shook an economy: United States v. Microsoft. Drawing on years of reporting - including extensive interviews with Gates and other top Microsoft executives, Justice Department trustbuster Joel Klein, superlitigator David Boies, Intel chief Andy Grove, and scores of lesser-known but pivotal players - Heilemann lays bare the chaotic forces that shattered Microsoft's aura of invincibility and the climate of fear that held an industry in thrall.

Packed with rich detail, dramatic scenes, and explosive revelations, Pride Before the Fall tells the stories of the largely unknown men and women who turned their opposition to Microsoft's monopolistic practices into a crusade. It explains how the high-tech kingpins whose businesses Gates tried to destroy or strongarm (Netscape, Apple, Sun, even Intel) worked in secret to help the Feds bring Microsoft down. And it offers a vivid and at times shocking portrait of Gates himself - describing a man who in the early 1990s boasted to his friends, "I have as much power as the President," only to be cast into rage and depression a few years later, when he discovered just how wrong he'd been.

With this, his first book, Heilemann confirms his reputation as one of our sharpest-eyed chroniclers of the information revolution; as a journalist whose skills as an investigative reporter are matched only by his gifts as a writer. More than a gripping business or legal or political yarn, Pride Before the Fall is a powerful tale of human ambition and human frailty—a timely saga of arrogance, ruthlessness, and revenge.

'Special feature! This e-book edition contains the full texts of the landmark legal documents that emerged from U.S. v. Microsoft.

Editorial Reviews

Business Week
[R]eads almost like a thriller'fast-paced and hard to put down.... [O]riginal reporting ... keen insight.
BusinessWeek
[R]eads almost like a thriller'fast-paced and hard to put down.... [O]riginal reporting ... keen insight.
Dan Carney
In Pride before the Fall, Heilemann takes us behind the scenes to show how the anti-Microsoft movement evolved from a few disgruntled Silicon Valley executives into the proverbial federal case. He details the troubles Justice had in getting Microsoft's detractors to testify on the record. And he ushers the reader into many of the bargaining sessions between Justice's lawyers and Microsoft's. Heilemann has taken one of the most complex trials in history and turned it into a book that reads almost like a thriller—fast paced and hard to put down.
BusinessWeek
Esquire
A spectacular achievement of reporting.
Esquire
A spectacular achievement of reporting.
Industry Standard
[Heilemann] had access to the sources with the most interesting stories to tell.... [He found] the juicy bits others missed.
Industry Standard
With Pride Before the Fall...Heilemann has performed the considerable task of finding the juicy bits others missed.
Joseph Nocera
Pride Before the Fall is a reportorial tour de force. —Fortune
Kurt Andersen
This is an absolutely terrific book – smart, tough, fair, knowing, and packed solid with first-rate reporting.
Robert B. Reich
Heilemann...gives us...also a brilliant exposure of the dark side of the bright new economy.
Time
[A] fast-paced account full of big-screen moments.... [A] compelling account of ... the ‘secret history' of the trial....
Time
[A] fast-paced account full of big-screen moments.... [A] compelling account of ... the 'secret history' of the trial....
Time
Time Magazine
A fast-paced account full of big-screen moments...compelling.
Wall Street Journal
A fast-paced, compelling narrative that builds suspense as it follows the efforts of Nestcape, Sun Microsystems and other Gates-bashers.
Publishers Weekly
HNavigating the myriad twists and turns of the landmark antitrust suit against Microsoft, Heilemann forges a gripping, breakneck account of contemporary law applied to business conduct, peopled with rival visionaries, guardians of the public interest and brilliant trial lawyers. A former staff writer for the New Yorker and the Economist, Heilemann covered the case as a special correspondent for Wired in November; this is an expanded version of that extensive article. Having gained the trust of almost every major player, Heilemann vividly depicts the adversaries and their positions. In July 2000, Bill Gates told him, "We believe that what we've done is absolutely pro-competitive, and it's our right to stick up for that." Joel Klein, the Justice Department's assistant attorney general during the trial, is equally forthcoming: "What we found in Microsoft was a serious pattern of practices and behavior that... was predatory, lawless, and indefensible." Heilemann's insight into the legal process and his analysis of Gates's videotaped deposition, overseen by chief government counsel David Boies (now representing Vice-President Gore on ballot issues), are themselves worth the price of admission. Wherever readers' sympathies lie, Heilemann's careful timeline illuminates the points at which the case could have been settled. With journalistic panache, Heilemann explicates the reasons that both sides chose to await the ruling of the U.S. Court of Appeals in spring 2001. (Jan. 23) Forecast: A major marketing campaign including national print and broadcast coverage as well as author appearances in West Coast cities will raise this title's profile. Display alongside U.S. v. Microsoft: The Inside Story of the Landmark Case by New York Times reporters Joel Brinkley and Steve Lohr could draw people to both titles, with the edge probably going to Heilemann's book. Copyright 2000 Cahners Business Information.
Adam Liptak
A beautifully executed example of long-form journalism . . . Heilemann is a perceptive observer and a fine writer . . . Full of sharp portraits of the participants . . . His sense of the legal issues is sure and sophisticated.
New York Times Book Review

Product Details

  • ISBN-13: 9780066621173
  • Publisher: HarperCollins Publishers
  • Publication date: 1/1/2001
  • Edition description: 1 ED
  • Pages: 256
  • Product dimensions: 6.12 (w) x 9.25 (h) x 0.95 (d)

Meet the Author

John Heilemann
John Heilemann is a special correspondent for Wired and a former staff writer for The New Yorker and The Economist. He lives in San Francisco.

Read an Excerpt

Chapter One

The Case That Almost Wasn't

Though no one at the company knew it at the time, Microsoft's troubles with the Department of justice began in earnest in the spring of 1996, with the literary aspirations of two amateur authors in Silicon Valley. Since 1990, when the Federal Trade Commission (FTC) opened the first government probe into the firm's practices, Microsoft had been under the antitrust microscope more or less constantly; not a year had passed without it receiving at least one civil investigative demand (CID) for documents. As one federal inquiry morphed into the next, Gates and Ballmer gradually came to view the investigations not merely as legal scrutiny but as a kind of proxy warfare (and, later, as nothing less than a vast high-tech conspiracy) instigated by their enemies in the Valley and elsewhere. Yet as suspicious as they were about the source of their regulatory entanglements, Microsoft's leaders could scarcely have dreamed that so much damage would be unleashed by a quiet woman who called herself a "law-and-order Republican," a shrill man who was regarded by some as mildly unhinged, and the book they wrote together a book that was never published in any form, and whose contents would long remain shrouded in secrecy.

Susan Creighton and Gary Reback were not, however, your typical wannabe wordsmiths. They were lawyers and antitrust specialists with Silicon Valley's preeminent law firm, Wilson Sonsini Goodrich & Rosati. They were passionate, smart, articulate, and angry. They had been retained by Netscape to tell the world, not to mention the DOJ, about the myriad ways in which Microsoft was endeavoring to drivethe pioneering start-up six feet under. And they were rapidly approaching the end of their rope.

It was Reback who served as the duo's frontman. Throughout the computer business and the government, he was known as a guy who got paid to complain about Gates the rough Silicon Valley equivalent of drawing a salary for breathing. Over the years, Reback had amassed a client roster that included some of the industry's most prominent firms from Apple and Sun to Borland and Novell, though not all of them admitted it and had earned a reputation as Redmond's most relentless and strident critic. The cover of Wired in August 1997 declared him "Bill Gates's Worst Nightmare."

Nightmarish or not, he was a piece of work. A Tennessee-born Jew in his late forties, Reback wore sharp suits, wire-rimmed glasses, and a perpetually pained expression. When he talked about Microsoft which was pretty much constantly his demeanor was fretfulness punctuated with blind outrage. His voice teetered on the edge of whine. "The only thing J. D. Rockefeller did that Bill Gates hasn't done)" Reback would wail, "is use dynamite against his competitors!" Crusader and showboat, egotist and quote machine, he had a taste for avant-garde economic theories and a tendency to level extravagant accusations without much hard proof to back them up. He was, in the strictest sense, a zealot: a man both fanatical and fanatically earnest in his beliefs. Later, when the DOJ decided to go after Microsoft, a government lawyer was assigned to "deal" with Reback. "His heart's in the right place," this lawyer said. "But he's twisted. He leaves me these voicemails in the middle of the night, raving about all kinds of stuff. He really needs some help." History might well have judged Reback a marginal figure, just another Gates-hating ranter, were it not for one inconvenient fact: almost everything he claimed turned out to be true.

In Reback, Microsoft faced an adversary with a rare combination of technical savvy and antitrust expertise. As an undergrad at Yale, he had worked his way through school by programming computers for the economics department; as a law student at Stanford, he had studied antitrust under the late William Baxter, who, as the head of the DOJ's antitrust division under Ronald Reagan, would oversee the breakup of AT&T. Susan Creighton recalled, "Gary liked to tell the story of how Baxter once said, 'We want companies to succeed, and when they succeed so well that they become monopolies, we should give them a tickertape parade down Wall Street and then break them up.' I don't know if Baxter actually said that, and if he did say it whether he meant it literally, but Gary thought it sounded pretty good."

Reback's history with Microsoft was long, tangled, and not without its ironies. In the early 1980s, he secured for Apple the copyright registration for the Macintosh graphical user interface, a copyright over which Apple would eventually wage a nasty and protracted lawsuit with Microsoft. Not long afterward, a bearded, elfin entrepreneur from Berkeley appeared on Reback's doorstep and asked for help in selling his fledgling software company. The company was called Dynamical Systems Research; the entrepreneur, Nathan Myhrvold. After Apple passed up the deal, Microsoft stepped in, buying Myhrvold's start-up and Myhrvold along with it for $1.5 million. Forever after, Reback would be convinced that this transaction had been pivotal to the rise of Windows, in which Myhrvold played a key role. It was a conclusion that filled Reback with no end of guilt.

The lawyer became an anti-Microsoft missionary. As first the FTC and then the DOJ looked into the company, Reback peppered the Feds with briefs alleging a litany of predatory sins. In July 1994, the DOJ sued Microsoft for violating the Sherman Antitrust Act, only to drop the suit shortly thereafter and enter into a consent decree with the company. The agreement contained only a few mild curbs on Microsoft's behavior; Gates himself summarized its effect bluntly: "nothing." At the behest of a clutch of Microsoft's rivals in the Valley, who saw the decree as a Potemkin remedy, Reback spearheaded a spirited, but ultimately futile, campaign in federal court to scuttle it.

Table of Contents

Prologue: The Humbling 1
Ch. 1 The Case That Almost Wasn't 11
Ch. 2 The Accidental Trustbuster 27
Ch. 3 The Shadow of the Man 41
Ch. 4 Things Fall Apart 75
Ch. 5 In the Dock 135
Ch. 6 In the Bunker 161
Ch. 7 Showtime 173
Ch. 8 Rough Justice 199

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  • Anonymous

    Posted February 26, 2001

    Microsoft Shrugged

    John Heilemann has written a book critically adulatory of each and every possible competitor of Microsoft, suggesting, in Marxian economic substructure analysis, that the San Francisco Bay area dollar sources supporting him have perhaps produced a certain moral viewpoint here In fact, the strange triumphalism pervading ¿Pride Before the Fall¿ reminds me of how Ayn Rand might have written about Microsoft during some brief hallicinatory experience during which she convinced herself that she was really a socialist. We have all the elements of character-adoration and character demonization, with which the author paints Gates as sort of an anti-Hank Reardon character (whereas the Seattle people would probably endorse Gates as the new Hank Reardon) and then Heilemann goes on to portray the various vicious and petty government functionaries and regulators as larger than life heroes. Very disturbingly, these government crusaders turn out to have all kind of furtive little conference calls and meetings with a very highly organized group of Microsoft-haters, all of whom want to co-opt the federal executive power, to get the United States judicial power to beat up Bill, and with the help of the legislative branch in the form of Orrin Hatch, who pals around with the general counsel of Sun Microsystems, and whose staff guy apparently leaks great scoops to journalists. What this tells you is that politics does indeed create strange bed fellows, and the reporting of the synchronized relationships between Joel Klein, Kleiner Perkins Caulfield & Byers, as well as Apple, Intel, IBM, and various other disgruntled software companies, is incredible. Not only do they concoct and feed the case to Joel Klein, but now (after this book was written) Klein has gone ahead and joined AOL (following AOL¿s recombination with Netscape and CBS, as well as its strategic relationship with Sun Microsystems ¿ and guess what Sun Microsystems does? It passes out a free suite of office programs containing a free browser all of which can run on a free Linux operating system!) Then the only difference between what the AOL/NetScape/Sun people are doing and Microsoft has done better, is that Microsoft has simply done it better. The central flaw in the anti-Microsoft mania started by Netscape is laid bare on page 140 of this book, but Heilemann refuses to understand the point he has made. Heilemann states ¿at the end of 1994, Netscape sales were zero, its capital was evaporating, and it was facing a potentially crushing intellectual-property lawsuit by the University of Illinois.¿ This is a convenient starting point for any analysis claiming Netscape was harmed by Microsoft giving away a browser (and I guess we have to use that point since Sun now gives one away for free as well). Step back from that timeframe for just a few months, and you will step into a world where browers were always free, until Netscape essentially copied what was developed for free at the University of Illinois and put a different name on it, hyping itself into a multi-billion dollar IPO. But the norm for browers before Netscape was always that they were free. But Microsoft must be demonized before being disembowled, and part of the campaign is to accuse Microsoft and its Chairman of having a 'bad attitude.' As if this were junior high and Joel Klein were the principal. An alternative explanation is that this whole legal charade could be more like 'Ferris Buehler's Day Off,' and that Gates may get away with actually producing more functional software for a better price, in spite of his well-connected competitors. So we really have to take this book as a sociological expression of the anti-Microsoft forces, and at that level, it is true to itself, and helpful to anyone seeking to diagnose the forces at work seeking to destroy Mr. Gates. The character profiles and interesting insider information about Senator Hatch, Joel Klein, Gary Reback, David Boies, and John Warden, make

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted April 2, 2001

    Decent Book by John Heilemann

    Recently I read Pride Before The Fall by John Heilemann. The book deals with the trials of Bill Gates and the end of the Microsoft Era. It was a decent book, getting drawn out at times with all the detail on the court proceedings. I also found it hard at times to keep up with all the characters because they were introduced and then referred to on a first-name basis. A character may also be introduced in the first chapter and not mentioned until three chapters later. But the author did a good job of explaining all the steps that were involved in the trial and bringing you, the reader, details about what Microsoft was going through. Overall I found the book pleasing and interesting with all the inside information the author provided. I recommend this book to anyone who is interested in doing some studying on Bill Gates, and certainly to someone who wants the full story on Microsoft. I would not recommend this book to the younger audience because the use of language. Overall I give this book three out of five stars.

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    Posted January 15, 2010

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