Internal sources allege Bill Gates pressured Steve Ballmer to accelerate his retirement amid proxy fight and declining performance

While the decision to go seems to have technically been Ballmer’s, interviews with dozens of people inside and outside the company, including many close to the situation, indicate that he had not aimed to leave this soon and especially after the recent restructuring of the company that he had intensely planned. Instead, sources said Ballmer’s timeline had been moved up drastically — first by him and then the nine-member board, including his longtime partner and Microsoft co-founder and chairman Bill Gates — after all agreed that it was best if he left sooner than later. That was due to a number of increasingly problematic issues on the immediate horizon — including a potentially nasty proxy fight, continued business performance declines and, perhaps most of all, that Ballmer’s leadership was becoming a very obvious lightning rod. Interestingly, Ballmer actually indicated that he had planned on staying in his letter about his impending departure, noting: “My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company focused on empowering customers in the activities they value most.” That sentence spurred much chatter inside the company, including the persistent rumor that Gates had dropped the bomb on Ballmer. That sentiment was further underscored when Ballmer’s letter contained no reference or thanks to Gates, with whom he has been tightly tethered over the last several decades. Its absence has been much discussed internally at Microsoft, where ithas been seen as an unusual slight and a sign of a rift. Gates also did not reference his longtime business partner in any celebratory manner in Microsoft's announcement. “Asa member of the succession planning committee, I'll work closely with the other members of the board to identify a great new CEO,” said Gates, in the entirety of the quote about Ballmer’s retirement. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.” Other sources cautioned that it was not indicative of tensions between the pair, but was done to minimize “lame duck concerns’ that might arise if Ballmer was portrayed as already out the door. Those sources also insist that Gates never asked Ballmer to step down sooner, although they acknowledge that he also did not — as Gates had in the past — disagree that it was best that he move on. “Did Gates instigate it? No,” said one source with knowledge of the situation. “But was he as supportive of Ballmer as he had been in the past? Maybe not.” That was still a big change, of course. Gates — who has always been and remains the key decision-maker on Microsoft's board — had always been Ballmer’s major backer, despite increasing pressure both externally and from other directors for him to step down. Gates had rejected such suggestions for years. That included former director and Netflix CEO Reed Hastings, who many sources said had been one of the first to urge that the company replace Ballmer as CEO, as well as from a spate of Wall Street investors complaining about the company’s declining value in the Ballmer years. As AllThingsD’s John Paczkowski wrote on Friday: “Here’s one metric by which Ballmer will be judged harshly. On the last day of 1999, the day before he took over as CEO, Microsoft’s market capitalization was $600 billion. On the day before he announced his intention to retire, it was less than $270 billion.” That’s a damning number, of course, coupled with a widespread sentiment that Ballmer had missed critical trends in tech under his tenure. Despite a strong growth in revenue, investors and others had long concluded that Microsoft had thrived when Gates was CEO and waned under Ballmer’s rule. Still, until recently, there has been no signal from the company indicating any change in top leadership. In fact, the management reorganization backed strongly by the board a month ago had essentially placed Ballmer at the center of the structure under a plan described as “One Microsoft.” And, at the time of the restructuring announcement in July, Ballmer’s definite and clear message was that he was there to stay: “Lots of change. Butin all of this, many key things remains the same. Our incredible people, our spirit, our commitment, our belief in the transformative power of technology — our Microsoft technology — to make the world a better place for billions of people and millions of businesses around the world. It’s why | come to work inspired every day. It’s why we’ve evolved before, and why we're evolving now. Because we’re not done. Let’s go.” Though early in its rollout, the changes have been jarring and created a level of chaos at the company that has led to much grumbling internally. It also did not help that the restructuring was quickly followed by a dismal Q4 performance by Microsoft. HOUSE_OVERSIGHT_019420