Peeping Larry

Larry Ellison's enemies were gleefully talking trash last week. Reports were rampant that Ellison, the flamboyant CEO of softwaremaker Oracle, had hired private investigators to peruse the garbage of groups defending his archrival Microsoft in its antitrust case. Reporters descended on Larryland, as the company's Redwood Shores, Calif., campus is called, anticipating Larrygate.

But Ellison resolutely refused to see the revelations as scandalous. He readily admitted that Dumpster diving had its disadvantages. "Some of the things our investigator did may have been unsavory," he said. "Certainly from a personal-hygiene point they were. I mean, garbage--yuck."

But unethical? Ellison begged to differ. His investigators had uncovered evidence that Microsoft was secretly funding "front groups" in order to manipulate public opinion in its favor, he contended. Probing those activities was, Ellison insisted, a "civic duty." He has taken to calling Gates a "convicted monopolist."

Oracle's cloak-and-dagger tactics against its despised enemy Microsoft and its allies--not to mention Ellison's brazen defense of them--left the targets fuming. "They've set new standards for hypocrisy and disingenuousness, even for Oracle," says Microsoft spokesman Mark Murray. The Association for Competitive Technology, one of the organizations Oracle snooped, alleged that spies tried to buy its garbage. Other groups are saying that laptops with information relating to Microsoft were swiped from their offices.

Silicon Valley, meanwhile, was loving it all. Larry watching is a big-time sport in Northern California. And Ellison's latest escapade incorporated all the traits that make him so compulsively watchable: ruthless competitiveness ("It's not enough that we win; all others must lose," he has said, paraphrasing Genghis Khan); love of the spotlight (a biography of him by Mike Wilson is titled The Difference Between God and Larry Ellison: God Doesn't Think He's Larry Ellison); a preternatural obsession with Microsoft and Gates; and a management style that sometimes has an inmates-running-the-asylum feel. "This was precisely the kind of goofy thing Larry might dream up," says biographer Wilson. "It struck me as rather out of character for the company. [Oracle president] Ray Lane must have been on vacation." If he wasn't, he is now. Lane resigned late Friday, though the company says his resignation had nothing to do with the intrigues.

Dumpstergate has its roots in the rivalry--by all accounts, one-sided--between Ellison and Gates. The world's two richest men have a lot in common. They're both college dropouts who started software companies in 1977. And they both became multibillionaires. But the rakish Ellison cuts a far different figure from the wonky Gates. Thrice divorced, Ellison has a taste for Armani, fast cars and faster planes--he once tried to buy a $20 million Russian MiG.

Ellison and Gates dominate different ends of the software industry. Microsoft's core business is operating systems like Windows, and desktop applications. Oracle focuses on powerful database software that manages large amounts of information for corporate and government clients. Oracle software is perfectly positioned for the information age: it allows large organizations to keep track of personnel, clients and inventory. Oracle has also bet heavily on the Internet, arguably putting the company in a better position than Microsoft for an era in which more computing will be done on the Internet and less on Windows-style operating systems. Wall Street clearly likes what Ellison is selling: while Microsoft stock has nosedived, Oracle stock has increased sixfold in the past year.

That wasn't enough for Ellison. Oracle retained Washington-based Investigative Group International to probe the pro-Microsoft spinners in the antitrust battle. I.G.I. hit pay dirt. Oracle says that in the trash of the Independent Institute--which took out pro-Microsoft ads signed by leading academics--investigators found evidence that Microsoft had given the group more than $200,000. (The Independent Institute insists its positions have been unaffected by any support from Microsoft.)

But when I.G.I. went after another group, the Association for Competitive Technology, it got caught. I.G.I. investigators rented space in ACT's Washington building under a false name and had an intermediary offer the building's cleaning crew $1,200 for ACT's garbage. The janitors refused the offer and reported the attempted bribe.

Ellison insists that Oracle told I.G.I. not to break any laws. And he says he did not know in advance that investigators would pick through garbage. Apologize? Forget it. "What exactly did we do?" he asked at his news conference. "What is our corporate espionage? Our corporate espionage is to find out that Microsoft has hired all these companies, these front organizations, and while they pretend to be independent, publishing all sorts of things that are anti-Oracle and pro-Microsoft."