Pride Before the Fall: The Trials of Bill Gates and the End of the Microsoft Eraby John Heilemann
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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 frailtya timely saga of arrogance, ruthlessness, and revenge.
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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.
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Meet the Author
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.
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