E-Business Goes to Court

Tech business is getting interesting again.

Now, though, the most fascinating developments do not happen in Silicon Valley R&D shops. Neither do they take place in the high-rise offices of venture capitalists. And they certainly are not confined to the deal-making rooms where IPOs are conceived and underwritten.

Instead, the most interesting, attention-grabbing tech business news of 2002 is unfolding in courtrooms scattered around the United States.

Crimes and Punishments?

Think about it: Carly Fiorina snaps at a lawyer amid questioning about the merger of Hewlett-Packard and Compaq in a Delaware courthouse, trying to explain her comments to bankers before the vote. Bill Gates goes to Washington to sweat it out while a featureless version of Windows is test-driven right in front of him.

If lawyers have their way, legendary analyst Henry Blodget, the brains at Idealab and many more characters in the e-business world will be lining up to take the stand in various lawsuits, spilling the insider secrets of some of the world’s most successful or most dubious companies for public consumption.

It’s sordid, but it’s riveting, full of personality, conflict, backroom intrigue and big, big, big money — all right there in public view.

A Few Good Lawyers

That bird’s-eye view of companies’ inner workings is the most fascinating aspect of the recent rash of investigations and lawsuits. Although we all have different levels of understanding of how business gets done — I mean really gets done — we crave the type of insider details that only a sworn oath, a raised hand and a Bible can provide.

We’re getting a chance to peek into the lives of the most powerful people in the technology business. And we’re eating it up.

Act One, Scene Two

Already, we have seen Bill Gates transformed into a calm, commanding presence onstage. His current poise contrasts sharply with his videotaped deposition in the initial phase of the Microsoft antitrust trial, where he was described by reporters as shifty and uncomfortable.

The logical conclusion is that Gates worked on his courtroom demeanor in the interim. And why not? He knows that is the thing that now matters most, not his company’s latest software release. He conquered the tech world once; he probably figures he can do it again, even if he has to wear a suit and tie and remain under oath the entire time.

The opposing counsel did score some points against Gates, but for the most part, his presence helped Microsoft’s case. In the end, the company’s punishment will be less than originally proposed, though slightly more than a slap on the wrist. Microsoft will be just fine, and it will have Gates to thank for that.

Fiery Fiorina

Meanwhile, those on hand for the HP-Compaq courtroom brouhaha described HP CEO Fiorina as “exasperated” and “vehement” when she responded to accusations that she misled investors about the numbers behind the controversial merger.

But all of this may be a tempest in a teapot. The type of proof the Hewlett family needs to stop the merger does not seem to be there, so Fiorina can get as snappy as she wants on the stand. The merger will go forward; it just might take a little longer than expected.

Fiorina’s real problem lies beyond the courtroom, although she laid the groundwork in her testimony by arguing that even if the merger fails, it will have done so despite the best efforts of all involved and a clear and honest understanding of its prospects.

In fact, Fiorina has the upper hand: She can argue that attempts to block the merger and question the post-merger company’s chances weakened morale and confidence enough that the doubters, not the merger, are to blame for any failures.

What’s Next?

However, all of these spats will pale in comparison to the case against the big New York banking and brokerage houses — if it ever gets to open court.

Already, New York’s attorney general has released e-mails that paint an ugly picture of the process by which stock recommendations were made during the Internet boom years.

The prospect of Henry Blodget taking the stand to explain why he and his fellow analysts privately called dot-com stocks “dogs” while publicly telling people to buy them sendschills up the spine of tech business insiders.

And the chance to hear what Idealab incubator executives were thinking should prove invaluable to those interested in deconstructing the dot-com bubble.

It is a new world order. The big boardrooms on the 75th floor, where the decisions are made, are no longer off-limits to the general public. For the first time, we have a chance to find out what really goes on behind the scenes. A lot of what we hear may make us a bit uneasy. But we’ll definitely tune in to see what comes next.

What do you think? Let’s talk about it.

Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.

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