By Frts. Gautam Mohanty in Bhubaneswar, September 8, 2021: A second scenario likely to give rise to arrogance is when the new kid in school beats up the playground bully- or when the new entrant in an industry knocks the mighty incumbent of the throne. The tech sector is full of these “David and Goliath” stories and one of the best of course is…

In its response to an unending stream of antitrust litigation – both in the U.S. and abroad – Microsoft has displayed the arrogance of a monopolist. The company is now the Goliath of the technology world, but let’s recalls when Microsoft was the puny David.

It’s interesting to listen to college dropouts Bill Gates and Paul Allen talk about their early days together. How their friendship began when the ‘mother’s club raised the money to put a computer in their high school in 1968. How they then began hanging out at the commercial computer centre in town, where they didn’t have to pay for computer time as long as they found bugs in the system and reported them.

How they designed their first computer to do traffic-volume-count analysis and called their first company Traf-O-Data. How they tweaked the BASIC language they had used for Traf-O-Data and licensed it to MIT for the Altair minicomputer. How the credit line on that first product read “Micro-Soft Basic: Bill Gates wrote a lot of stuff; Paul Allen wrote some other stuff.”

They were David. IBM was Goliath. But instead of killing off the young upstart, Goliath came calling. It was 1980, and IBM was looking for programming languages for its secret PC project. Gates and Allen were willing to sell, but as negotiations continued, IBM expressed an interest in acquiring an operating system as well.

Microsoft hadn’t developed one, but as it happened, Allen was at that same time in the process of buying a system called Q-DOS (“Quick and dirty operating system”) from a little local company called Seattle Computer. Allen did the deal (for 50,000), and then he and Gates renamed the product MS-DOS and licensed it to IBM.

Even then, David was loading his slingshot. Gates remembers that IBM didn’t really pay them that much. “ But we knew there were going to be clones of the IBM PC. We structured that original contract to allow them. It was a key point in our negotiations.” What’s more IBM was covering all the bases by also offering a version of its PC with the rival CP/M operating system, which had the advantage of being established on other PC brands.

Here’s where Gates and Allen whetted their appetite for battle. To make MS-DOS the operating system of choice, they prompted their product vigorously and urged other software companies to write applications for DOS first. Within a year, DOS ruled – just as the first of what would become a tidal wave of PC clones began to flood the marketplace.

It didn’t take long for Microsoft to begin to wield its monopoly power. I often like to say that Bill Gates is the reincarnation of Tom Watson Sr., a similarly ruthless entrepreneur. (I should note here that throughout this article I want to show how the self-destructive habits afflict institutions and institutional cultures, rather than individuals or individual founders or leaders. But in the case of Microsoft, a still relatively young company with its original founder still in control, it is impossible to separate the company culture from the individual.)

Apple hauled Microsoft into in 1988 in what was then the most complicated software copyright lawsuit to date, but which was just the beginning of Microsoft’s legal entanglements. Had Microsoft’s windows 2.0 stolen the “look and feel” of Apple’s Macintosh operating system, as Apple claimed? Was the “look and feel” taken as a whole, protected by copyright? After four years of deliberation, the court answered “no” to both questions.

The decision was upheld on appeal in 1994, and a further appeal by Apple to the Supreme Court was denied. Did Microsoft get away with murder? It’s not for me to dispute the court’s ruling. But it’s interesting to note that Apple, once the world’s top PC maker, has been relegated to niche status, selling its machines to a devoted cult of desktop publishers and graphic designers. (But stay tuned: the success of Apple’s iPod music player has Microsoft mulling an alliance with Sony.)

With the arrival of the Internet, Microsoft’s tactics became more brazen. Initially, Gates failed to see the internet’s full potential. He believed that closed dial-up services like CompuServe and Microsoft’s MSN would prevail. As journalist Joe Breen puts it, “ He was wrong, and, in 1994, an upstart Silicon Valley company called Netscape, with its Navigator browser software, rubbed his nose in it.” In response, Microsoft developed its Explorer browser. It was by no means a superior product, but the price was right. It was bundled free with Windows, and thus it appeared on the desktop of every new PC. Netscape, which charged for its software, obviously couldn’t compete.

The Department of Justice challenged the move, arguing that Microsoft was using the market dominance of one of its products, its operating system, to muscle in on the market for another, Internet browsers. Microsoft argued that it was simply giving added value to the consumer. Thus the stage was set for the litigation we described in this, which Joe Breen calls “the mother of all antitrust suits.”

We know how that case turned out, how Judge Jackson ruled that Microsoft should be broken up, and how his ruling was overturned on appeal. But Microsoft wasn’t winning any friends. We noted Paul Krugman’s in Times, comments that even as the settlement was being worked out, Gates and Ballmer were still up to their old tricks, displaying the same arrogance that got them into trouble in the first place.

Even harsher was the judgment of another Times columnist, Pulitzer Prize winner (and globalism advocate) Thomas Friedman. Viewing Jackson’s ruling as an indictment of the high-tech’s general arrogance and contempt for government, Friedman wrote that “no one optimizes this attitude more than Bill Gates.” As far as Friedman was concerned, Microsoft’s hiring of an “army of Washington lobbyists” to try to persuade Congress to slash the budget of the Justice Department’s Antitrust Division while its case was before the department was more than enough reason for the government to break up the company.

“Think about the arrogance behind that strategy.” As a comparison, he asked readers to imagine how they would feel if the biggest company in town tried to use its influence to slash the budget of the police department at a time when the police were investigating the company.
Looking back on the case in July 2000, Judge Jackson told Ken Auletta, who was writing a book about the case, that he might now propose a new remedy for Gates. He would require the Microsoft leader to write a review of a recent biography of Napoleon. Why? “Because I think he has a Napoleonic concept of himself and his company. An arrogance which derives from power and unalloyed success, with no leavering hard experience, no reverses.”

Another battle looms. At the World Economic Forum in Davos, Switzerland, in January 2004, Gates made a surprising confession: “Google whipped our butts.” The last entity to whip Microsoft’s butt was Netscape. Now Mucrosoft is touting Vista (formerly code-named Project Longhorn), the long-awaited replacement for Windows XP that is loaded with new programs and features. It includes integrated search technology for finding and organizing information, whether it is on the Internet or in the user’s own e-mails and files.

Can Microsoft make its own search technology the default? Will Google be “Netscaped”? Anticipating the battle, Google has launched “Gmail”, its own e-mail service that will allow users to store the equipment of 500,000 pages of e-mail for free.

Google is already huge. This may be a fight between Goliath and Godzilla.

Thanking You!

www.bschoolforum.org

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