Why Microsoft, not PwC, is worth fighting for in US vote

Article published in Accountancy Age the week before the Presidential elections

Why Microsoft, not PwC, is worth fighting for in US vote

By Quentin Langley in California

Dateline 03 November 2000

“Bush woos MS to win Washington” reported Reuters on October 19th. It goes on to say that Texas Governor and Republican Party candidate for President, George W Bush, has said he favours “innovation not litigation” his strongest hint for months that he does not support the Clinton-Gore administration’s plans to break up the software giant.

We are still waiting for a corresponding report about one of the candidates wooing PwC or Deloitte Touche Tohmatsu. Why? Microsoft employs 39,000 people world wide, PwC more than four times as many. Bill Gates is playing in a bigger league when purely US employees are considered: 27,000 in Microsoft’s case: still lower than DTT’s 30,000 and PwC’s 45,000.

With the notable exception of Senate Banking Committee Chair, Phil Gramm, very few US politicians have taken a stand on the Levitt plans.

So why are Microsoft employees a key electoral target when the big five accounting firms, which together employ many times as many people, are not? The clue is in the Reuters headline. Over 21,000 of Microsoft’s employees are in just one state: Washington state in the far North West of continental USA.

The American President is not necessarily the person who wins the largest number of votes in the November 7th election. In reality there are 51 elections for an Electoral College, which chooses the President a few weeks later. The delegates to the College vote for whichever candidate tops the poll in their state. The District of Columbia votes as though it were a state.

Although larger states have more votes in the College, the winner take all system means that candidates focus on the marginal or “swing” states. Two of the largest states – New York and Texas – have seen almost no campaigning as they are securely in the Democrat and Republican camps respectively.

Washington State may be best known in the UK for the Seattle-based comedy series Frasier. Microsoft is not even the biggest employer in the state, Boeing is, but much of the state’s economic growth has come from the booming IT sector: mainly Microsoft and its suppliers. But, politically, Washington and neighbouring Oregon are key targets for both Presidential contenders.

Both states have been fairly loyal to the Democrats: the last Republican they voted for was Ronald Reagan in 1984. They were among only ten states to vote Democrat in 1988. But Washington and Oregon seem more favourably disposed to this George Bush than they were to his father. Added to this the consumer activist Ralph Nader, running for President as the Green Party’s candidate, has far more support on the West Coast than elsewhere. He is likely to garner around 5% of the vote nationwide, but it could be twice as much in the West, and this is likely to hurt Democrat, Al Gore. Washington State is therefore very much in play, and Microsoft’s 21,000 employees could deliver the state to Bush.

The big five, with employees evenly spread across all 50 states, cannot tip the balance in any one of them, and that is the only thing that delivers votes in the Electoral College.

Of course, Microsoft also has a higher public profile than the accounting firms. It supplies consumer products, and few people directly employ the services of a global accounting firm. Microsoft is also a publicly floated company with shareholders as well as employees to consider. This reinforces the electoral impact of the firm: the shareholders are also concentrated disproportionately in Washington state.

But if politicians are not bothering to court the accounting firms is there still a chance that the elections will produce a change of policy? It seems as though there is. Although the Democrats hope to keep the White House and have high hopes of gaining the House of Representatives even Democrat strategists will privately acknowledge that the Republicans are very likely to keep control of the Senate. Phil Gramm will still be chairing the Banking Committee.

If the Republicans take the Presidency then there may be a change of policy by the administration. Gramm is known to be close to his Texan colleague, George W Bush, who instinctively favours lighter touch regulation. By contrast, Al Gore is part of the administration which has urged the Congress not to block the SEC’s proposals.

One possible outcome is for Republicans to capture the Presidency and both houses of Congress for the first time since the 1920s. If so, the big five will probably have an improved chance of blocking the SEC’s plans.

Quentin Langley is a freelance writer currently covering the US elections from California.

Copyright (C) Quentin Langley 03 November 2000

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