October 2, 1997

Mr. William H. Gates
Chairman and Chief Executive Officer
Microsoft Corporation
1 Microsoft Way
Redmond, WA 98052

Dear Mr. Gates:

The customary executive mind receiving a letter such as this would be inclined toward prejudgment and denial, instead of anticipation and affirmation. But as a dominant corporate architect and philosopher of the information highway--note your expressed desire in your book, The Road Ahead, to open the dialogue about how society should shape its future in an age of tremendous technological change--you should be willing to include in that dialogue--Appraising Microsoft and Its Global Strategy.

That, as it happens, is the title of a conference in Washington, D.C. on November 13 and 14, which Essential Information and I are sponsoring and to which you are invited to make a presentation. Let me describe briefly what has led to this unique event.

As you may know, our various groups work in the consumer safety and environmental protection areas with a dual focus on both corporate and government accountability. We also have been pioneers in advancing freedom of information standards in government and widening the access to justice by all citizens. Concentration of economic power, along with its abuses, has long been a concern of ours and we have worked with many people of conscience inside companies, some of whom became effective whistle-blowers. Recently, people in many different kinds of businesses have been expressing fear and criticism about your company's business practices and strategies. At first, we were prone to dismissing such complaints as reflecting envy toward the dominant company. But as the private criticism became more diverse--flowing from downstream commerce well beyond software and hardware companies and from more disinterested scholars, commentators, writers, public officials and customers, it became an incentive toward further public exploration.

Even this accumulated criticism did not suffice to warrant a gathering to explicitly explore the many forays and practices of your company's business strategies, which you must agree, have a range of ambitions and ongoing initiatives in more industrial and commercial directions locally to globally than possibly any business entity in modern history. What tipped the scale was the fear of speaking out by thoughtful people in the business world who otherwise have the position, energy and the resources to do so. Self-censorship brought on by the detailed fear of Microsoft retaliation--itself seen as a many pronged cluster--is not healthy in any economy. Especially when this fear is not imagined but rooted in past and current actions which are described and attributed to your company's high velocity momentum.

On the other hand, you and your associates are described as so fearful of becoming another Digital Equipment or IBM missing a "big bend in the road", as you put it, that you are moving to position yourself as the "new middleman" on every lane of the information highway possible. To some observers, Microsoft playing the insecure and challenged role, as depicted in an article you may have relished on the cover of Barron's (September 15, 1997), assumes an irony of King Kong proportions. Seasoned executives are quaking before the relentless Microsoft wave in such lines of commerce as banking, real estate, insurance, car dealers, travel services, cable television, newspaper media and entertainment. The June 5, 1997 issue of the Wall Street Journal reported a detailed Microsoft strategy memorandum, deepened by interviews with your executives, that foreshadowed the "first a partner then a competitor" approach. Your critics assert that using a bundling strategy, together with tactical free offerings, made possible by monopolistically garnered profits, and a punitive "stick" response to your challengers makes Microsoft a leading candidate for antitrust action if only the enforcement agencies had the up-to-date knowledge, willpower and resources to apply these necessary laws for a free, fair and competitive economy.

The conference participants are among the few who are still willing to speak openly of their concerns, findings and recommendations. Many plead for an open, not closed, architecture, for a digital future that is a patrimony, a commonwealth within which the best and the most consumer-sensitive will have an opportunity to prevail. They seek an information highway that is ungated where they see such a highway increasingly become gated.

You, Steve Ballmer and Nathan Myhrvold have what you believe to be formidable responses to these declarations. Responses that are both specific and that rise to the level of national public policy regarding the information infrastructure in the economy. Focusing on the "Big Kid on the Block"--Microsoft--addresses the core concern directly and avoids the nuanced generalities and abstractions that have no operational realities attached to them.

The agenda for the conference is being completed and includes the enclosed topics with the speakers who have confirmed their presence. Other presenters will be added in the coming days. In the interest of joining the issues, your presentation should come near the completion of the conference on November 14. We intend to have a serious, coherent and consequential conference that will lead to greater public understanding of the trends and the issues that will affect business and the general public as you wrote about in The Road Ahead. Your industry is thrusting toward increasing arcane language, acronyms and specializations that are narrowing the public or lay audience which, ever enlarging, is critical in making this technology serve the broadest of human interest and well-being.

We are inviting Vice President Albert Gore, your friend and information highway colleague, to participate in the conference. Being an open gathering and near his office, his presence would neither entail the cost, time and closed-door nature of his earlier visit to your 100 executives meeting near Seattle. This should increase the likelihood of his acceptance, one might hope.

Should you wish to discuss this invitation further, please call me or John Richard of Essential Information at (202)387-8034. Of course, you may wish to have other Microsoft executives attend the conference and they are welcome to come and absorb the many currents of information and activity, both in the formal sessions and in the informal corridor and coffee break discussions that are often so valuable. While there is a conference fee, there is no outside funding or sponsorship to inhibit or compromise the integrity of the proceedings.

Sincerely,

Ralph Nader

Enclosure