Silicon Valley’s Man With a Mission Faces Off Against Microsoft
Behind the titanic struggle between Microsoft Corp. and the Justice Department stands an enigmatic figure, a Silicon Valley lawyer who may actually worry Bill Gates.
Gary Reback is out to stop Microsoft, a company that, in his eyes, is strangling innovation in the computer and information industries. His weapons? Legal briefs and hardball tactics played out in the media.
The 49-year-old litigator, a partner with Wilson Sonsini Goodrich & Rosati in Palo Alto, maneuvers in the claustrophobic confines of Silicon Valley, where antitrust litigation is hot. His firm is in the thick of it, representing Netscape and several other Microsoft competitors.
Reback has managed to inject himself into the Justice Department’s scrutiny of Microsoft for alleged anti-competitive practices. He persuaded the Justice Department to block a merger between Microsoft and another software company. He succeeded in getting the latest round of investigations moved from the relatively toothless Federal Trade Commission to the Justice Department’s antitrust division.
All in pursuit of restoring an investment environment that existed a few years ago in Silicon Valley. It used to be, Reback said, that an entrepreneur succeeded or failed on the strength of his ideas. “Nowadays, Microsoft picks the winner,” he said. “Microsoft decides early on who they want to buy, and they buy them and all those other companies lose.”
There’s an almost messianic quality to Reback, who appears to feel the weight of the task he’s taken on. Microsoft is big. Really big. It has at least $11 billion cash on hand. Its fourth-quarter revenues tallied $3.59 billion, a 34% increase over the final quarter of 1996.
Microsoft, obviously, doesn’t see itself as the gluttonous corporate monster that Reback portrays. “We don’t comment on Mr. Reback or his activities,” said spokesman Mark Murray.
How did Reback end up in the “Fertile Crescent of modern society,” as he put it, battling one of America’s greatest success stories?
Reback has solid geek credentials. He grew up in Knoxville, Tenn., where his father worked for the Atomic Energy Commission at the Oak Ridge, Tenn., National Laboratory. The younger Reback worked his way through Yale University as a programmer in the economics department, then attended Stanford Law School, passing the California bar exam in 1974.
He returned to the South to clerk in Atlanta before catching on with his first Silicon Valley law firm, Fenwick & West, where he was legendary for his quick temper and outbursts.
“He’s a very complex and enigmatic man,” said Bill Fenwick, his old boss. “He has a great deal of intolerance for anything that doesn’t go in the direction he wants to go in.”
Jim Daley, editor in chief of Net magazine, said the case against Microsoft is “defining” for Reback. He doesn’t have to take it on. He has other clients. “But,” said Daley, “part of him loves to be in the spotlight.”
“Is it important that I talk to the Associated Press?” counters Reback. “Yes. I believe it’s important to my clients. You cannot engage in an effective debate in today’s society without engaging the media. . . . Do I enjoy that? I’ve long since passed that point.”
He would much rather spend time with his family. “But this is very necessary,” he said. “I can’t overstate its importance.”
“Incredibly driven and intense” is the way Peter Detkin described Reback. Detkin, now assistant general counsel at Intel Corp., worked with Reback on a case involving Lotus Inc. and Borland Corp. Detkin told how, as Reback approached the jury, he shouldered two diagrams on poster boards, like Moses carrying the Ten Commandments down Mt. Sinai.
“He wasn’t making a dispassionate argument,” said Detkin. “He was making an impassioned plea for justice.”
It is this passion he has brought to bear on Microsoft. In the beginning, he was just a lawyer representing a client. But now it’s personal, Detkin said, although Reback denied it.
“This is not about me,” said Reback. “It’s not personal; it’s a societal issue.”
And in the Valley, he sees a society askew. Microsoft has broken the chain of innovation by staking out new markets and scaring off potential funding for new companies and technologies, he said. It buys promising companies and absorbs their technology. “And that’s sort of the end of that round of innovation,” he said.
But Reback’s actions are hurting the software industry more than Microsoft is, according to an editor at a popular computer magazine who declined to be identified. Tying things up in court bogs down the industry and stifles innovation, the editor said.
“That’s ridiculous,” said Reback. “Were it the case I was stifling innovation, I wouldn’t have any clients. What I am trying to do is stop Microsoft from deploying products which impede other companies’ ability to innovate.”
He may be getting some help from Congress. Sen. Orrin Hatch (R-Utah) called hearings March 3 to explore issues of competition and innovation in the software industry. Microsoft chairman and CEO Gates testified that his company was not a monopoly and did nothing illegal or improper in its dealings with its partners.
Obviously, Reback disagreed, but he said Gates’ testimony was almost secondary.
“I was heartened by the fact that hearings were held at all,” he said. “We’ve always known how important this is for the future of our society and economy, but the fact that influential people would spend their own time on it . . . that’s a milestone for us.”
By “us,” he means the Silicon Valley technical and investment community, one that Reback identifies with. Perhaps he is protecting the homestead. But he seems stumped when asked why he feels so strongly about Microsoft. He turns the question back onto Microsoft, as he is prone to do when questions get too personal for his taste.
Why is Bill Gates trying to dominate every market in the computer industry, he asked. “It’s not about money anymore; he’s got enough. It’s got to be about power. It’s got to be about the power to affect, and I would say control, people’s lives.
“With my background in computers, I can see what’s happening,” he said, his voice rising. “We’re looking at a monopoly without parallel in the history of the world.”
The old Standard Oil company probably comes closest to the scope of Bill Gates’ influence, but John D. Rockefeller didn’t propose putting himself between you and your bank, said Reback.
“And where is this all going?” he asks. Grocery stores offer discount cards that create a database of everything you buy. Prescription cards create a database of every drug that’s prescribed for you.
“If we get control of online banking, we know every banking transaction you make,” he said. “Now, what about all that data and information under the control of one person?”
Reback said Gates should be concerned not about the power of lawyers or the court, but about the power of the people.
“If people understand the nature of the power [Gates] wields, people will react strongly and viscerally against that,” he said. “He might legitimately fear that.”
