[D66] Bill Gates’s Philanthropic Giving Is a Racket

[Antid Oto]

Bill Gates’s Philanthropic Giving Is a Racket
By
Rob Larson
jacobinmag.com
9 min
View Original

Bill Gates recently resigned from the board of Microsoft to focus full 
time on philanthropy. It’s a perfect time to remember: 
billionaire-funded philanthropy is a public-relations scam.


Bill Gates recently announced he’s stepping down from the board of 
Microsoft, the trillion-dollar software colossus he cofounded, to 
“dedicate more time to philanthropic priorities including global health 
and development, education, and my increasing engagement in tackling 
climate change.” The national papers happily reported the news: “In his 
post-Microsoft career, Mr. Gates has become better known for his work in 
fighting infectious diseases and climate change. [In February], the 
Gates Foundation said it would commit an additional $100 million to 
fight the coronavirus,” the New York Times reported.

This was typical of the affectionate press treatment of Gates, who’s now 
considered one of the better billionaires, relative to Trump or the Koch 
brothers. This is mainly due to the Bill & Melinda Gates Foundation, the 
world’s largest private charitable entity with billions in its endowment 
used for fighting AIDS, accelerating economic development, and many 
other worthy causes.

But Bill Gates and his foundation are the perfect picture of why this 
model of billionaire philanthropy is so flawed. Gates’s foundation was 
originally cooked up as a feel-good gloss to cover up his shredded 
reputation during Microsoft’s antitrust trial, putting him in the long 
tradition of obscenely rich people using the occasional generous gift to 
try justifying their enormous wealth and power.

Broken Windows

It’s worth remembering where Gates’s money came from. In 1981, Microsoft 
bought the rights to a version of an early operating system (“DOS”), the 
basic software running on a computer that makes it operable and can 
support applications. They modified it and sold it to IBM for its 
incredibly successful personal computers, leading to stupendous growth 
at Microsoft as IBM and the many clone PC-makers wanted the same OS in 
order to attract more software developers, whose applications made the 
PC useful.

This created “network effects,” which we economists will tell you is a 
major driver of monopolization. Gates and his tech CEO chums have used 
that monopolization to summon gigantic profits and to tighten their grip 
over still-growing portions of the world economy. Network effects are 
present when a service gains value to you as more people use it, like a 
phone network. Markets delivering this kind of service are especially 
prone to monopoly, both since early leaders in the market tend to build 
up an advantage in their bigger network, and since networks typically 
require a uniform standard in order for users to broadly connect and 
benefit from it.

People want to use or join networks that already have many other users, 
like Facebook, rather than ones with very few. The long-lasting AT&T 
phone monopoly is a major historical example, along with today’s 
regional rail shipping monopolies and Facebook’s social media empire. 
And Gates’s company exploded with a prime slice of the entire early IT 
revolution.

During his company’s manic growth period, Gates emerged as a modern 
Gilded Age tycoon. Even sympathetic biographers refer to Gates’s 
frequent “abrasive, childish rants” and “childlike temper tantrums.” 
Gates’s number two and CEO successor, Steve Ballmer, maintained this 
reputation of management by yelling like an ape at employees and 
sometimes throwing chairs. These are the patterns of human behavior that 
are encouraged by the business world’s strict hierarchy, and tech, 
despite its reputation for in-office yoga training and green tea vending 
machines, is no exception.

The ability of corporate hierarchy to create cultish conformity is 
well-known. But Gates took it to new cultish heights, as shown in 
business reporting on Gates’s rocking habit: “It has become part of the 
corporate culture at Microsoft among programmers trying to re-create 
themselves in the chairman’s image. Gates often rocks himself in a 
chair, elbows on knees, to contain his intensity, especially when the 
talk is about computers; it’s not unusual to walk into a room of 
Microsoft managers and find most of them rocking in sync with him during 
an important meeting.”

Gates’s charm also comes out in episodes in which he frequently slammed 
his hand into his fist while saying, “We’ve got to crush” whatever rival 
dared sell software in the nineties. “We’re going to put Digital 
Research out of business,” James Wallace and Jim Erickson’s standard 
history of the company recounts, “slamming his fist into the palm of his 
other hand. He would issue a similar vow twice more during the next year 
. . . promising to put MicroPro and Lotus out of business, each time 
emphasizing his promise by smashing his fist into his hand.”

In addition to the network effects, it was Gates’s burning desire to 
grind his competitors to sand, along with his desire to set the standard 
that software makers would conform to, that led to Microsoft selling 
over 90 percent of the PC operating systems of the 1990s and 2000s. That 
dominance made Gates the world’s richest man for decades on end.

And when new online technology came along outside of Gates’s control, 
above all the Internet browser sold by Mosaic (later Netscape), Gates 
inaugurated a period described in business and computing history as “the 
browser wars.” Microsoft began by withholding its software details from 
Netscape when the browser company requested a conventional preview of 
them for the next version of DOS-successor Windows. Then it approached 
Netscape’s management and according to later legal claims by its 
management, offered to divide the browser market, with an exec offering 
a “special relationship.” Netscape rejected this due to the gigantic 
advantage that Microsoft’s new browser would have, since it would likely 
come with the ubiquitous Windows OS updates which reached nearly every 
running computer in the world.

Thanks to the ensuing legal challenges, we know a fair amount of the 
browser war strategy. The discussions were naked plans to use monopoly 
power to crush an upstart. Microsoft got a license from the 
rights-holders to the original version of Mosaic and redeveloped it 
hastily into Internet Explorer, the lame browser your work PC probably 
still defaults to. Gates and his minions feared that Netscape would soon 
reach a tipping point where network effects would embrace it as a 
standard that would be “locked in.” Thus a top Windows executive said, 
“I don’t understand how IE is going to win . . . we must leverage 
Windows more.”

Likewise, Microsoft VP Paul Maritz is said to have stated the company’s 
goal in making their own browser free: to “cut off Netscape’s air 
supply.” By the time of the release of Windows 98, the company had gone 
further and forced PC-makers to include Explorer on their desktops, 
putting it in front of millions of users. Of course, the question of 
which browser is better isn’t the main issue here — the use of naked 
market muscle by a figure who media would have you believe is a sweet 
grandfatherly benefactor.

Microsoft’s hardball tactics in the browser wars, and its endless parade 
of these power plays from chip design to media players, now began to 
catch up with it, as the extremely business-friendly United States 
finally had to take action. In public, he said, “Who decides what’s in 
Windows? The customers who buy it.” But at a dinner party, the talk 
turned to politics, and he bragged, “Of course, I have as much power as 
the president has.”

Indeed, he golfed with President Bill Clinton, dined with House Speaker 
Newt Gingrich, and had Vice President Al Gore visit the Redmond 
Microsoft campus. Like all great capitalists, he enjoyed the company of 
powerful figures with abutting interests. But his company’s aggressive 
steps to take over new markets like web browsing forced the Justice 
Department’s hand.

The ensuing trial itself was fascinating for several reasons, not the 
least of which is Gates’s performance. He gave hours of videotaped 
testimony for the case, viewable today online. Besides being a 
transparently evasive and condescending ruling-class dick, Gates made a 
long list of claims that would soon be directly refuted in court by 
comparison to his own emails. The media was killing him on the nightly 
news, and even bland business journals like BusinessWeek reported, “He 
argues with prosecutors over the definition of commonly used words, 
including ‘we’ and ‘compete.’ Early rounds of his deposition show him 
offering obfuscatory answers and saying ‘I don’t recall’ so many times 
that even the presiding judge had to chuckle. Worse, many of the 
technology chief’s denials and pleas of ignorance have been directly 
refuted by prosecutors with snippets of E-mail Gates both sent and 
received.”

It was during this trying time that Gates discovered the wonders of 
charitable giving.

The business press has observed how “Twenty years ago, people associated 
the name Gates with ‘ruthless, predatory’ monopolistic conduct.” 
However, “after taking a public relations beating during [the Microsoft 
antitrust] trial’s early going in late 1998, the company started what 
was described at the time as a ‘charm offensive’ aimed at improving its 
image . . . Mr. Gates contributed $20.3 billion, or 71 percent of his 
total contributions to the foundation . . . during the 18 months between 
the start of the trial and the verdict.” A wealth manager frankly 
states, “his philanthropy has helped ‘rebrand’ his name.”

Indeed, philanthropy by the very richest men and women globally is one 
of the main arguments their defenders have — sure, Gates and other 
billionaires make a lot of money, but then they use it to help us. So 
generous! And look, he’s smarter than our racist TV president! But often 
it’s a fig leaf for ruling-class dominance.

Further, in this era of tax cuts for wealthy households and resulting 
government budget deficits, many advocates of cutting back the social 
safety net still point to private philanthropy and “faith-based” 
organizations as being able to step into their place. But this is 
ludicrous — private charities, even on the scale reviewed here, are 
nowhere near able to independently pay for a country’s social needs, 
from housing the mentally ill to providing vaccines.

The foundations themselves recognize this, as when Patty Stonesifer, 
then chief of the Gates Foundation, said, “Our giving is a drop in the 
bucket compared to the government’s responsibility.” This was confirmed 
when the foundation committed $50 million to fight the Ebola outbreak in 
West Africa. In contrast, the UN estimated the total cost of containing 
the outbreak at roughly $600 million. Such amounts are within the reach 
of these modern foundations, but far beyond the kind of commitment they 
are known to make. Of course, if the towering fortunes of today’s 
billionaires were socialized and put under some form of popular control, 
we could go much farther and have an actually robust global public 
health system, making testing quickly available on a nonprofit basis, 
and making epidemics less likely to break out in the first place.

Sometimes even conservative supporters of austerity and government 
cutbacks recognize this. Milton Friedman, Reagan’s economic adviser and 
author of Capitalism and Freedom once wrote: “It would be nice if we 
could rely on voluntary activities of individuals to house and care for 
the madmen. But I think we cannot rule out the possibility that such 
charitable activities will be inadequate.”

As for Gates’s original empire, the Bush administration’s Department of 
Justice dropped its demand to break up the company, despite a federal 
court formally ruling that Microsoft had a monopoly on Intel-based PC 
operating systems, and that it had used illegal monopolization tactics 
to crush software threats from Netscape, Sun, Apple, and others. So 
today Gates remains cartoonishly rich, and free to step down from 
Microsoft’s board on his own terms.

Meanwhile, the corporate media happily help to spit-shine his reputation 
as a generous benefactor of humanity instead of a petty, bullying scumbag.