If you've paid attention to anything technology-related
recently, you've probably seen headlines like these.
Antitrust regulation is gaining a lot of traction in the
media as well as in the Department of Justice.
But in general, we've started to see what has been broadly
termed a 'techlash'.
A lot of concern about the role of technology as well as
the size of these companies and the impact that they may be
having on individuals in society.
Since May 2019, the DOJ has opened antitrust probes into
the likes of Apple, Google and Facebook.
The last major antitrust action against a major company
occurred more than two decades ago.
Remember Internet Explorer?
Microsoft's browser has since been eclipsed by the likes of
Google's Chrome and Apple Safari.
But it was once so powerful the federal government had to
step in. Here's what happened.
In 1994, Microsoft was on top of the blossoming tech
industry. Its operating system was fast becoming the go-to
software for professionals and casual computer users alike.
But if you wanted to get on the Internet in the early 90s,
you were using this.
Netscape Navigator.
Software which makes it easy for people to connect the
global computer network called the Internet.
Netscape Navigator was the king of Web browsers at the
time, but there was a downside.
You had to pay $49 to install Netscape on your computer,
the equivalent to about $85 dollars today.
You could also choose from AOL or Prodigy, but those cost
$9.95 a month.
But these options were still light years ahead of Microsoft
at the time.
Microsoft didn't even have internet connectivity built into
its software until the mid 90s.
But the new wave of popularity surrounding Navigator was
reason enough for Microsoft CEO Bill Gates to pen a letter
to the company in 1995 titled The Internet Tidal Wave.
With this document, Gates laid out his vision of the
Internet. He wanted Microsoft's development teams to,
quote, go overboard on Internet features.
Gates also laid out seven broad examples of the ways the
company could conquer the Internet.
One specific example, Microsoft needed a Web browser.
Fast forward to the second half of 1995, and Microsoft
released its brand new Windows 95 operating system, as well
as Internet Explorer 1.0.
But they were separate.
They weren't bundled until 1996 as part of Windows's first
major update and this changed the game for Microsoft.
It was a new way to get online without any extra
installation. It came with the operating system.
And best of all, Microsoft had the advantage of being a
massive company that could offer its software for free.
And it was a massive success.
In just over a year, Microsoft gained 10 percent market
share. This, of course, sent other companies revenues
plummeting. But I eat success might not have been purely
from the popularity of Windows.
Allegations that Microsoft began making it incredibly
difficult to install other Web browsers began to surface.
The allegations were enough to spark a DOJ antitrust probe
into Microsoft in 1998.
The antitrust case against Microsoft was a bit different to
how the law was used in the past.
Before cases were based on one central issue: Was a
dominant company charging super high prices without anyone
to compete with. But this case changed that.
The DOJ argued that Microsoft stifled competition by using
its sheer size to barge into the browser wars.
It could offer Internet Explorer for free, included in the
OS and Netscape would be cut out of the business from the
very first time the computer was turned on.
If you suppress your competitors' innovation and you're the
only game in town, and you keep suppressing innovation,
surely that's the harm to competition.
In fact, it's one of the biggest harms to competition and
it's been known in economic field for all these years that
suppressing innovation is even worse than raising prices
because you're preventing the progressive movement of the
markets.
On top of that, if a person wanted to install Netscape on
the computer. Microsoft allegedly made it incredibly
difficult to do so.
Microsoft, on the other hand, argued that people chose to
use its operating system because it was simply better than
the competition. But Microsoft lost.
The court ruled that the company had to split its software
and operating system divisions in order to abide by
antitrust regulation, at least at first.
That decision was later thrown out in appeals court, right
as the Bush administration settled into the White House.
By the time a settlement had been reached in 2001,
Microsoft's position in the browser wars was already being
eaten away by competition from the likes of Mozilla
Firefox, an offshoot of Netscape.
Internet Explorer wasn't the only antitrust battle that
Microsoft faced, Novell was a company specializing in
network computing and software in the early 80s and 90s.
The company was also known for its word processing
software, WordPerfect.
The company complained in 2004 that Microsoft intentionally
made it difficult to install its software, just like it did
with IE. But Novell's case spent a decade bouncing around
the courts.
Unlike the United States v.
Microsoft case that came before it, Novell lost.
An appeals court said that Microsoft's actions didn't
constitute antitrust behavior.
And the Supreme Court declined to take up the case in 2014.
Those two cases are really in great tension with each other
because the U.S. against Microsoft, as I would say, the
opposite point of view, that a firm with market power does
have a duty to deal fairly and not anti-competitively with
those who want to use its platform.
Novell was acquired in 2014 and by then had left the word
processing business.
It's unclear whether an antitrust case brought against tech
giants today would rule in the same vein as United States
v. Microsoft or more like Novell v.
Microsoft.
If U.S. against Microsoft is giving credence above Novell
against Microsoft, it has a lot to say on controlling the
almost unaccountable power of the Big Tech firms.
Accusations that Apple's App Store stifle competition
resemble arguments that Microsoft prevented downloads of
other applications. And Google Chrome is now the king of
Internet browsers. Big Tech companies are also swallowing
up startups and smaller firms left and right.
The tech world has become a winner-take -all affair.
Tech mergers have faced particular scrutiny, especially in
congressional hearings.
When a company owns four of the largest six entities
measured by active users.
We have a word for it. And that's monopoly, or at least
Monopoly power.
The Big Tech executives might beg to differ.
We face intense competition for all of the products and
services that we provide to name a few examples.
Twitter, Snapchat, iMessage, Skype, Telegram,
Google, YouTube and Amazon are for photo and video sharing,
messaging, advertising and other services that compete with
Facebook.
There's also concern that antitrust regulation remains too
broad to tackle tech's problems.
Antitrust is a sledgehammer where even if you have some
concerns about specific policy issues such as privacy, what
you really need is more of a scalpel.
So it is this very powerful tool.
And breaking up could result in things like breaking up
teams that make innovation more difficult.
So as Congress, the public and Big /tech itself start
calling for more regulation, Microsoft's past antitrust
troubles could hint at what's ahead.