A gateway to perdition

By Mic Wright on July 17th, 2012

Steve Jobs throttled Apple’s charitable giving when he returned to the company in 1997. Apple was close to collapse and he didn’t feel that it should be expending resources on anything but its core business concerns. It’s a move that many who compare the Apple boss with his long-time nemesis Bill Gates bring up. “Look!” they say. “Jobs was a swine and Bill’s a legend helping Africa with his billions.”

But let’s look more closely. Firstly, where did the vast wealth Gates can now benevolently spread around the globe come from? Microsoft: one of the most rapacious commercial entities of the late twentieth century. If there is any model that Gates looked to when assembling his leadership style at Microsoft, it was that of a nineteenth century robber baron. He was masterful at out-manoeuvring rivals, cutting them out of markets and turning Windows into the de facto standard operating system for offices worldwide.

While Apple’s activities in China and its relationship with Foxconn are frequently highlighted by the media, Microsoft has such close scrutiny in recent years. But it wasn’t always that way. When Microsoft was still in the hot seat, journalists were more interested in digging into the practices that powered the juggernaut and they were, while legal, not exactly pleasant.

Permanent workers at Microsoft are privy to some of the best treatment going, but there is a vast army of staff that does not get that chance. Redmond has for many years used “permatemps”: employees who effectively work full time but are maintained on temporary contracts to reduce benefit costs and liabilities. Cost-cutting measures at Microsoft have also been very wide-ranging, from slashing medical benefits to not providing towels in company washrooms.

Since as far back as 1989, when the Seattle Times dubbed its HQ the “Velvet Sweatshop”, Microsoft has been accused of over-working employees, encouraging burn-outs. The term “Velvet Sweatshop” was even picked up by some Microsoft staff to describe their own workplace. Providing an example that Google would later follow, Microsoft was one of the first firms to offer virtually everything for staff on-site – free drinks, exercise rooms and showers among the facilities. The freebies are designed to keep people working for longer.

The result of lawsuits challenging Microsoft’s use of permatemps, the most significant of which began in 1992 and was not settled until 2005, is that those contract employees are now prevented from taking part in team-building or other group activities and can only get one-year contracts. At the end of their employment period, permatemps must leave for 100 days before being able to return on the same terms.

While the company has never been as secretive as Apple, it has faced frequent allegations that it engages in public relations and marketing “dark arts”. Veteran technology columnist John C Dvorak claimed in a 2008 column for PC Magazine:

“In the 1980s the company was notorious for keeping Nixonian lists regarding journalists…showing which were ‘Okay’, ‘Sketchy’ or ‘Needs work’. Some believed that those in the last category would be the target of the company in an effort to get them fired.

I myself was on a Microsoft blacklist for some totally unknown reason and was not allowed any information about an early version of Windows, apparently because I was considered uncooperative. I found out because documents were unearthed during the discovery process of the Comes v. Microsoft lawsuit in Iowa.”

Dvorak goes on to suggest that Microsoft was responsible for getting his column pulled from PC Magazine Italy. His claims are supported by Mary Jo Foley, a journalist who has spent much of career writing about the goings on in Redmond, who told Windows Now:

“I was blacklisted by Microsoft for writing a story based on an internal memo…that acknowledged 63,000 bugs were still left in Windows 2000 when the product shipped. I was barred from executive interviews at the Windows 2000 launch as a result of my story. My ‘punishment’ lasted for a few years.”

If Microsoft is still that touchy about bad press, it’s likely that Vanity Fair’s Kurt Eichenwald is now on the black list after his recent story “Microsoft’s Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant”. In the piece, he reveals that a “stack ranking” system in use at Microsoft to tag employee performance as top, good, average or poor has caused a mass staff exodus.

Eichenwald’s story quotes employees who say the system is “the most destructive process” at Microsoft and has “crippled [the firm’s] ability to innovate”. Chief executive Steve Ballmer, who has led the firm for the past 10 years, used a Forbes interview to deny Vanity Fair’s suggestion that the company has experienced a “lost decade”.

He rejected claims of poor management, saying: “More than our investors or our profit and loss or anything else [progress is measured] through the eyes of our users. We have 1.3bn people using PCs today. There was a time in the ‘90s when we were sure there would never be 100 million PCs sold a year. Now there will be 375 million sold this year alone. So, is it a lost decade?”

Steve Ballmer, never knowingly covering all the pertinent facts. This is the man who instantly dismissed the iPhone in 2007: “There’s no chance that the iPhone is going to get any significant market share. No chance.”

So why talk about Bill Gates at all, when Ballmer has been steering the good ship Microsoft straight at an iceberg for the past 10 years? Because, just as Steve Jobs established the culture at Apple, Bill Gates’s DNA built the atmosphere at Microsoft. Gates’s approach has only been strengthened by “Donkey Kong” Ballmer, who sits atop a castle carelessly throwing barrels at his enemies. Gates is still Microsoft’s chairman and the only actively involved co-founder.

A corporate approach to charity

The little run through Microsoft history I’ve presented here is intimately related to Gates’s new role as a philanthropist, because the ruthless culture he instituted at Microsoft has been ported to his charitable work. Underpinning the good work the Bill & Melinda Gates Foundation does, there lies the same arrogance that led Microsoft to believe that once it was on top it would stay there through sheer force of will.

Gates’s desire to leave a legacy beyond millions of Windows installation discs in landfill is not a new phenomenon. Joseph Pulitzer endowed the Columbia Journalism School and leant his name to the Pulitzer Prizes to celebrate worthy journalism. (Pulitzer himself, of course, was tabloid to the core, responsible for pushing “yellow journalism” in his battle with William Randolph Hearts’s New York Journal. He loved human-interest stories, scandal and sensationalism. We like to think he would have loved The Kernel.)

An better analogy for Gates is the creation of the Nobel prizes by Alfred Nobel. Nobel’s career was extremely varied. He had 355 inventions to his name. Of them all, dynamite was the most famous. When his brother died in 1888, a French newspaper accidentally published Alfred’s obituary instead with the headline “The Merchant of Death is Dead”. Suddenly Nobel got worried about how he would be remembered and he changed his will to make provision for the creation of the prizes.

It would be disingenuous to suggest that Gates’s Foundation is not doing good. But there are significant issues with its focus, approach and effects and it has a reputation in the charitable sector for being peculiar. The Foundation keenly targets Aids, tuberculosis and malaria in sub-Saharan Africa. Yet reports, including a major investigation by the LA Times, have suggested that the Foundation’s presence there is a mixed blessing.

The report claimed that Foundation’s focus on those particular health issues has increased demand for specially trained, higher-paid clinicians and reduced the number of medical professionals focused on basic care. The suggestion is that staff shortages have led to an increase in deaths from more mundane causes, such as diarrhoea.

Probably the most arresting of the Times‘s claims is that because there is still a lack of attention paid to nutrition and transportation, many patients provided with medicine by the Gates Foundation’s work end up vomiting up their pills for lack of food while others cannot afford the bus fare to reach their local clinic.

That the Bill & Melinda Gates Foundation’s work has led to improvements in healthcare is undeniable. Malaria, measles and Aids deaths in Africa are starting to level off and the investment is obviously welcomed by the countries it is bestowed upon. In 2007, as the Foundation’s work was starting to take effect, Lesotho’s health minister commented that the changes would have been impossible “if it were not for the money from Bill Gates”.

Questionable investments

Away from the ground level, there are serious questions around the Gates Foundation’s investment strategy. Like most investors, it focuses on maximising return on its money. That means it can sometimes take questionable ethical decisions and put money into companies that have been criticised for increasing the very conditions that the Foundation is intended to fight.

In response to media criticism in 2007, the Foundation announced a review into the social responsibility of its investments. However, it subsequently cancelled the process, claiming it would secure institutional change by using its voting rights to influence corporate behaviour.

That explanation doesn’t quite wash. The Foundation’s methods are public-private partnership writ large. Monsanto, the chemical giant and enthusiastic genetic modifier, is a Gates Foundation partner for its global agricultural charity work. Organisations like Monsanto don’t tend to look too favourably on things that affect their bottom line, such as local seed exchanges.

Meanwhile, the Foundation’s vaccination work is supported by GlaxoSmithKline, a corporation that had a significant hold on the pricing and delivery of those medicines worldwide. Both the Gates Foundation and the Gates family own stock in these partner corporations.

When it comes to organisations the Foundation invests in, there are even larger conflicts. Nigerians who have been helped by Gates Foundation vaccination drives also complain about the fumes from oil plants operated by Italian petroleum firm Eni, whose investor list includes the Bill & Melinda Gates Foundation. The Foundation’s corporate investments are held in a blind trust – the trustees are Bill and Melinda Gates – and supported by its tax-free lobbying activity.

The three Rs

Back in the USA, the Foundation’s moves to reform education have been subject to harsh criticisms. Diana Ravitch, an education and former US Assistant Secretary of Education under George H W Bush, wrote:

“I have never believed that the Gates Foundation or the Gates family puts profits above the public interest…I believe that Bill and Melinda Gates want to establish a legacy as people who left the world a better place. But I think their efforts to ‘reform’ education are woefully mistaken.”

Ravitch goes on to note the Foundation’s support of “astroturf” groups that advocate the privatisation of public education, spurn job protections and do not want to be represented by collective bargaining. They are all perfectly defensible political positions, but ones that the Gates Foundation does not openly discuss.

She continues: “Sometimes I wonder if anyone at the Gates Foundation has any vision of what good education is, or whether they think that getting higher test scores is the same as getting a good education. I wonder if they ever think about their role in demoralising and destabilising the education profession.”

Further bolstering concerns around the Gates Foundation’s corporate relationships, the US education reform work heavily promotes one partner, the British firm Pearson Education.

Legacy problems

When asked about his legacy by the Daily Mail in an interview last year, Gates was quick to deny that it concerns him: “That’s the stupidest idea I’ve ever heard! Legacy is a stupid thing! I don’t want a legacy. If people look and see that childhood deaths dropped from nine million a year to four million because of our investment, then wow! I liken what I’m doing now to my old job. I worked with a lot of smart people; some things went well, some didn’t go so well. But when you see how what we did ended up empowering people, it’s a very cool thing.

“I want a malaria vaccine. If we get one then we’ll have to find the money to give it to everyone but the impact would be so huge we would find a way. Understanding science and pushing the boundaries of science is what makes me immensely satisfied…the first half of my life was good preparation for the second half.”

Reading Gates coming out swinging to deny that he is concerned with his legacy recalls scenes in The Usual Suspects in which Kevin Spacey as Verbal Kint is talking about the mysterious Keyser Söze and denying he knows very much about him.

Some of the Bill & Melinda Gates Foundation’s partners and the places it invests its money are as questionable as Bill’s claim that he doesn’t care about his legacy. But what really has tongues wagging at other major American foundations is the oddly impenetrable culture and occasional hypocrisy of an organisation that ought to be geared up to do good. And Microsoft’s top-down dictatorship style of management is grating some employees, too.

A storm is brewing. Is it time for Bill to retreat to an honorary position at his Foundation as well?