Bill Gates in Canada: a checkered legacy
Microsoft chairman Bill Gates has helped the University of Waterloo establish itself as a top technology centre.(CBC)
For Bill Gates in Canada, it was the best of times, it was the worst of times.
The chairman of Microsoft Corp. steps down from his day-to-day activities on Monday, leaving behind — in Canada at least — a checkered legacy.
On the plus side, the software company Gates started in his basement in 1975 with his friend Paul Allen got an easier ride in Canada than in many other countries. After Microsoft's growth into a multinational behemoth, it became the target of — and continues to be the target of — multiple antitrust investigations and lawsuits. The United States, the European Union, Japan and now China have all at one time or another launched antitrust actions against Microsoft. Canada, where Microsoft expanded in 1985, has never really gone after the company.
Of course, many of Canada's antitrust concerns with Microsoft were addressed through proxy, with the WordPerfect battle being the best example.
The word-processing software, a competitor to Microsoft's Word, was created in 1982, then shuttled from owner to owner, eventually ending up in the hands of Ottawa-based Corel Corp. in 1996. Corel's ambitious chief executive officer at the time, Michael Cowpland, thought he could do a better job than WordPerfect's previous owner, Waltham, Mass.-based Novell Inc., in going head-to-head with Microsoft.
Corel, however, didn't have any more luck than Novell. Cowpland, who left Corel in 2000 after weathering an Ontario Securities Commission investigation and who now runs mobile content provider Zim Corp., says WordPerfect's failure to crack the market was the result of predatory practices by Microsoft.
"Corel would have done a lot better if they hadn't been using antitrust techniques," he says. "They'd literally call up manufacturers and say, 'If you're shipping Corel Office then you won't have any Windows to go with it.' That made it pretty difficult to get significant penetration."
'Corel would have done a lot better if they hadn't been using antitrust techniques.'—Michael Cowpland, former CEO of CorelNovell held a long-term grudge and launched an antitrust lawsuit against Microsoft in 2004, eight years after selling WordPerfect to Corel for $115 million US. Novell said that Microsoft, led by Gates, conspired to kill off WordPerfect in 1994 by delaying providing the data that would have allowed the software to run smoothly on Windows 95. Microsoft's obstructive tactics, detailed in e-mails from Bill Gates, led to WordPerfect's market share declining to 10 per cent at the time of its sale to Corel, from 50 per cent in 1990, Novell said in its lawsuit.
Microsoft, which declined to make executives available for this story, has denied the charges and says Novell's own mismanagement led to WordPerfect's downfall. The lawsuit continues, with the U.S. Supreme Court earlier this year denying an appeal by Microsoft to quash the case.
Corel, meanwhile, was kept aloft by a $135-million US investment from Microsoft in 2000, a move analysts saw as an attempt to stave off yet another antitrust suit from the Ottawa company. Microsoft was seen as benefiting from the appearance of having a competitor in the word-processing market.
Cowpland believes Microsoft and Gates have learned from their numerous antitrust battles, and have corrected their behaviour somewhat in recent years. The company is also facing new, stronger competition in the form of Google Inc. and open-source software — both factors it cannot combat with its dominance in operating systems.
Gates, meanwhile, is "a very nice guy" in person, Cowpland says, but otherwise he's a shark.
"When it comes to business, he's renowned for winner-take-all," he says.
Also on the plus side, Gates's lasting legacy in Canada is likely to be tied to his help in establishing the country as a major recruitment centre for multinational technology firms. Thomas Coleman, dean of the school of mathematics at the University of Waterloo, says Gates has been instrumental in attracting students and teachers to the institution, both through his personal visits and Microsoft's hiring practices.
The Redmond, Wash.-based company hired about 60 University of Waterloo graduates last year and often averages at least 30 a year. Gates's visits to Waterloo over the past few years, the latest coming last February, have also attracted a good deal of media attention, which helped the Ontario city and university establish their credibility as a high-tech hub.
"We're one of their biggest, if not the biggest, recruitment centres in the world," Coleman says. "His visits put a real spotlight on what we're doing here in Waterloo."
Gates also seems to enjoy himself in Waterloo, Coleman says, where he is "treated like a rock star." On his last visit, he obliged a group a students looking for his autograph, something he doesn't normally do.
"The Microsoft people told me afterward that he rarely has time to do that, so it was nice to see," Coleman says. "He obviously had a good time here in Waterloo. The last time he was here, he told the students he would come back to visit even after he steps down from Microsoft."
Anti-Microsoft sentiment at universitiesStill, even within universities, the company is dogged by questions surrounding its business practices. It has often tried to combine research grants with requirements to use its software, a fact that has stirred up anti-Microsoft sentiment among some students and faculty.
"That hasn't gone over well," Coleman says.
Many of the Waterloo recruits go down to work in Redmond, but an increasing number may end up staying in Canada as Microsoft has recently run into problems with U.S. immigration. Gates's calls on the U.S. government in recent years to increase the number of skilled foreign worker visas it issues have fallen on deaf ears, forcing Microsoft to expand its presence in Canada. The company last year opened a development centre in Richmond, B.C., a two-hour drive from Redmond, that now employs 230 people, bringing its total Canadian employment to 950.
With the United States continuing to clamp down on immigration, the trend of limiting foreign worker visas and Microsoft's growth in Canada is expected to continue, at least until a change in U.S. government.
"It's much easier for Microsoft to draw upon Canadian talent than try to fight U.S. immigration," says IDC Canada software analyst Kevin Restivo.
When it comes down to the actual products Microsoft makes — software — it's difficult to gauge Canada's importance to the company, however. The Richmond centre does not have responsibility for the development of any specific product and Canadian employees instead work on developing products in global teams.
One notable exception, however, is the Child Exploitation Tracking System, which was developed in 2004 at the request of the Toronto police. The free software is now used by law-enforcement agencies around the world to combat online child exploitation.
Still, the lack of obvious made-in-country products means some consider Gates's ultimate Canadian legacy will be like that of many other technology firms: the simple establishment of a sales and distribution centre here.
"Canada is a branch-plant economy," Restivo says. "The tech companies operating here are inevitably based elsewhere."
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