Oracle Defends Its Spying on Microsoft as ‘Public Service’

Oracle Corp. on Wednesday defended as a “public service” its decision to hire a detective agency to investigate groups supporting Microsoft Corp., an arrangement that nevertheless appears to have stretched the boundaries of corporate espionage in Silicon Valley.

Oracle’s admission added new intrigue to the behind-the-scenes corporate maneuvering that has long surrounded the Microsoft antitrust trial. In an effort to discredit groups supporting Microsoft, Oracle hired a detective agency that uncovered financial links between Microsoft and its supposedly independent allies.

The assignment alone raised eyebrows, even among Oracle supporters. But the detective firm Oracle hired, Washington, D.C.-based Investigative Group International, also used controversial tactics, including attempting to purchase from a janitorial service the office trash of one pro-Microsoft advocacy group.

Executives at other prominent investigative firms said that attempt crossed an ethical--though probably not a legal--line, with one executive saying it was uncomfortably close to bribery.

But Lawrence Ellison, Oracle’s chief executive, defended his company’s investigation as a crusading effort to expose what he termed his archrival’s underhanded business methods.

“All we did is try to take information that was hidden and bring it to light,” Ellison said Wednesday at an unrelated news conference for a product release. “I don’t think that was arrogance. I think it was a public service.”

In a written statement, Redwood Shores, Calif.-based Oracle said it “discovered that both the Independent Institute and the National Taxpayers Union were misrepresenting themselves as independent advocacy groups, when in fact their work was funded by Microsoft.”

‘Unsavory’ Tactic

Ellison said that Oracle had made it plain that it expected the investigation to be conducted in a legal manner. Still, he acknowledged that he was not informed of the details until recently and that going through a company’s trash was an “unsavory” tactic that he doesn’t approve.

Microsoft, itself often accused of using underhanded means to influence the course of the antitrust case, took the opportunity to scold its fierce rival.

“Oracle has lost a lot of credibility throughout the industry as a result of these incidents and raised a lot of serious privacy concerns,” said Microsoft spokesman Rick Miller.

The Justice Department had no comment Wednesday on the revelations. But a source close to the government said the Justice Department did not obtain, or introduce at trial, any documents from Oracle in prosecuting the Microsoft antitrust case. “This has nothing to do with [the] Justice” Department, the source said.

Oracle decided to launch the investigation about a year ago, and it was run by the company’s Washington public affairs office, Ellison said. The company hired IGI to probe pro-Microsoft groups including the Independent Institute, an Oakland-based think tank, and the National Taxpayers Union of Arlington, Va.

The Independent Institute was subsequently skewered in the media for taking out full-page ads in national newspapers supporting Microsoft’s position without plainly disclosing it was getting much of its funding from the company.

David J. Theroux, founder of the institute, said he now believes IGI obtained the institute’s financial records and leaked them to the media. “This kind of Nixonian, back-alley subterfuge is exactly what people are turned off by,” Theroux said.

He added that he does not know how IGI obtained the institute’s financial records. He said a laptop computer containing that data was stolen from the institute’s office last year.

IGI, which declined to comment Wednesday, also probed a pro-Microsoft lobbying group called the Assn. for Competitive Technology in Washington, D.C. Jonathan Zuck, president of ACT, said IGI attempted to purchase the organization’s trash. He said the $1,200 offer was made by a representative of a dummy corporation that rented an adjacent office suite.

Zuck said his organization’s attorneys are exploring whether IGI employees violated privacy laws or misrepresented themselves as licensed investigators.

‘Black Eye for Oracle’

“I think this has got to be a black eye for Oracle and its employees. It’s just over the line,” Zuck said.

Even some Oracle allies agreed. One executive at a Silicon Valley company who played a leading role in pushing the government to file an antitrust action against Microsoft said, on condition of anonymity: “I just sort of shake my head and wonder at the Oracle people.”

But the lines of corporate espionage are not clearly defined. There is debate in legal circles, for instance, about when a company’s or an individual’s trash becomes “abandoned property,” essentially free for the taking.

Most investigators say they believe collecting trash is legal and a standard surveillance technique in Silicon Valley.

Kroll Associates, the giant investigations firm, has thousands of high-tech clients, said Henry Kupperman, director of the western region. “One of the first things we ask clients is, ‘What do you do with your trash?’ ”

But even those who acknowledge that sifting through dumpsters is a standard tactic said that attempting to buy it might be going too far. “That is a very aggressive move,” said one executive, who asked not to be identified. “In my mind, that’s a bribe and I have a problem with that.”

Oracle’s disclosure comes at a time when detective agencies are finding a booming market in the high-tech industry, an economic sector built on intellectual property that is difficult to safeguard.

Kupperman and other executives said the vast majority of their assignments involve helping companies protect their technologies and strategic plans from theft, or probing possible leaks in investigations that often lead to current or former employees.

The Oracle investigation was unusual both in its targets and its tactics. Still, several investigative executives said they probably wouldn’t have turned down the job.

“That is a very legitimate request, to know who is really behind these groups,” said Tom Cowley, co-founder of Noesis, an investigations firm that does extensive work for high-tech clients. “They call themselves the Independent Institute. How independent are they? That’s a legitimate exercise.”

Microsoft pointed out that its rivals have financed their own network of organizations in Washington to lobby against the software titan.

The latest revelations about Oracle’s investigation reflect deep animosities between the two companies, the No. 1 and 2 software companies in the world, run by two men who are neck and neck atop the list of the world’s wealthiest executives.

Asked whether Oracle would welcome investigative scrutiny from its rival, Ellison joked, “Microsoft is welcome to investigate us. We’ll send all of our garbage to Redmond.”