December 14, 2017

The Microsoft Case: A Window Into the Software Industry

This week I’m publishing reflections on the Microsoft antitrust case, which was filed ten years ago. Today I want to consider how the case change the public view of the software industry.

Microsoft’s internal emails were a key part of the government’s evidence. The emails painted a vivid picture of how the company made its strategy decisions. Executives discussed frankly how “it will be very hard to increase browser market share on the merits of [Internet Explorer] alone. It will be very important to leverage the OS asset to make people use IE”. Often the tone was one of controlling customers and sabotaging competitors, rather than technical innovation.

Probably the most cringe-inducing metaphor in the whole case was “knifing the baby”. Here’s a trial dispatch from Business Week:

In particularly colorful testimony on Nov. 5 [1998], [Apple VP Avie] Tevanian described an April, 1997, meeting between two Apple and two Microsoft officials. Tevanian, who was not at the meeting, said Microsoft officials suggested that Apple abandon its business of providing “playback” software that enables users to view multimedia content on the computers. Instead, they offered Apple the much smaller portion of the market for the tools that developers use to create the content. In Apple’s mind, though, the playback software was its baby.

According to Tevanian, Apple executive Peter Hoddie asked Microsoft officials, “‘Are you asking us to kill playback? Are you asking us to knife the baby?'” He said Microsoft official Christopher Phillips responded, “‘Yes, we want you to knife the baby.’ It was very clear.”

Stories like this shredded the public perception of software companies as idealistic lab-coated technical innovators. It wasn’t just Microsoft whose reputation took a beating – it was Apple who gave us the baby-knifing metaphor. One shrewd observer told me at the time that the difference between Microsoft and its competitors was not motive but opportunity – the other companies would have done what Microsoft did, if they had the chance.

None of these companies were as crude and brutal as they looked in court – litigation has a way of highlighting the extremes – but there was more than a grain of truth to the idea that software markets are driven by power and dealmaking, along with engineering. Another classic moment in the trial came when a Microsoft lawyer was cross-examining Netscape CEO Jim Barksdale about emails written by Netscape founder and Silicon Valley superhero Jim Clark. The lawyer asked Barksdale whether he regarded Clark as “a truthful man”. Barksdale paused before answering, “I regard him as a salesman.”

Comments

  1. Not that I trust wikipedia as an authoritative source or anything, but Dilbert appears to have first been published in 1989, not 1998…

    [Oops. My bad. I’ve removed that reference from the main post. — Ed]

  2. “None of these companies were as crude and brutal as they looked in court”

    You mean because they didn’t literally kill any babies? But they did manage
    to cut off Netscape’s “air supply” and use their monopoly power to kill them as
    a company… and the evidence you cite indicates that this behavior was
    widespread. The Findings of Fact in the case shows all kinds of anticompetitive
    and anti-innovation behavior that harmed consumers. Pretty crude and
    brutal in my opinion.

  3. Off the topic, but I notice the site being more responsive lately, and a quick check shows it’s now being hosted by slicehost.net. Good for you. 🙂

  4. I worked for an ISP when all of this was unfolding. I remember that many of us in the tech support field at the time were puzzled by Netscape’s behavior.

    To be usre, it must have been a heady experience to have the most popular web application at the time. But Netscape became more and more difficult to work with in ISP-branded browsers, and their costs also went up.

    Netscape was even being reported in the news as considering buying Novell (for their networking apps) and becoming the new OS, a web-based one.

    But there were really two things that contributed to their downfall in my view, and they were much more anti-competetive (albeit self-inflicted wounds) than Microsoft’s activity.

    The first was that they started to charge $30 for their browser. This was about the time of Internet Explorer 4.0, and IE was better than Netscape’s Navigator or Communicator. What was netscape thinking?

    The second was that Netscape’s browser became bloated, eating up lots of system resources.

    I am not trying to excuse Microsoft’s behavior. But I don’t think we very often reflect on the other things that were going on at the same time, and I think that Netscape simply forgot who they were, and more importantly, what they were in business for. Since they weren’t poised to be the new OS yet (if they ever would have been), I think we also tend to forget that their own actions contributed to their downfall.

  5. Bryan Feir says:

    Woadan:

    I agree; Netscape 3.x was really the high point of their browser. Netscape 4.x not only became bloated and less stable, they actually re-introduced previously fixed bugs from Netscape 2. (The one I’m personally aware of being an image colour inversion that affected monochrome NCD X-terminals, which we were using in our lab at the time. Worked in 3, failed in 4.)

    Netscape did inflict a fair amount of damage to themselves, and one can also say that them being the center of the anti-trust case against Microsoft actually damaged the case. A number of people at the time thought that focusing on the OEM agreements would have been a better choice; Jean-Louis Gassée was quite willing to tell the story about how Microsoft locked out any OEM from including anything other than Windows in the bootloader, with examples of his attempt to sell BeOS preinstalled.

  6. Please try to be more grammatical. I can’t quite determine what exactly you’re trying to say.