Menu
For Bill Gates, antitrust fight a personal crucible

For Bill Gates, antitrust fight a personal crucible

With the US antitrust case against Microsoft, Gates faced company's gravest threat

Ten years ago, Bill Gates was the new John D. Rockefeller. And from the US government's perspective at the start of its antitrust trial against Microsoft in 1998, Gates was every bit as powerful as the legendary oil baron was -- if not more so. The desktop operating system was seen as important to the new, tech-focused economy as oil had been to the industrial economy of the early 20th century.

With gas now averaging well above US$4 a gallon and oil profits through the roof, it is difficult to believe that in 1998 the US government and more than 20 states were focused on Microsoft's desktop operating system dominance. The case threatened Microsoft with a breakup and would ultimately bring Gates, then serving as Microsoft's chairman and CEO, to the witness stand in defense of the company he is now about to leave. It was a brutal case with enormous stakes. It was a crucible, and it was personal.

The antitrust fight turned on many legal issues concerning Microsoft's anticompetitive practices. Part of Microsoft's defense was based on the idea that its behavior was constrained by emerging technologies. The company argued that it faced "unknown knowns," as former Secretary of Defense Donald Rumsfeld might have put it. Microsoft 10 years ago knew that game-changing threats were certain to arrive -- it just didn't know their exact shape. Linux, Java and browsers were often cited as threats at the trial, but those were known threats; what Microsoft argued was that the unknown threats to come were just as real.

It was not an argument that Rockefeller's Standard Oil could have raised. It was not an argument the judge bought at the time. But history may still have more to say on whether the argument had merit.

In 1998, Google was just getting started, its seeming omnipresence still years away. Smart phones, which today are developing into their own competitive platform, weren't in use. Wireless networks were in their infancy. That left Microsoft as the proverbial 900-pound gorilla ostensibly in need of restraint.

Unlike the strain Windows faces today, Microsoft's OS was on top of the desktop world. That fact led to the antitrust fight that would roil Microsoft for years, a fight that was personified on the company's side by its leader.

In preparing for the case, the government had asked Gates to testify. He opted not to. So on Oct. 19, 1998, in US District Court in Washington, Gates was accused by the government of lacking "intestinal fortitude" because of his decision. In lieu of an appearance, the government instead used videotaped deposition excerpts that showed Gates being evasive and argumentative, leading to courtroom chuckles over sometimes embarrassing comments.

Gates had not believed the tapes would be shown in court, and at a news conference soon after they were made public, Gates went after David Boies, the government's lead trial attorney. "You have to understand that Mr. Boies made it clear...in the negotiations leading up to the case that he is really out to destroy Microsoft," Gates said.

The belief that the government was out to "destroy" Microsoft was certainly the company's perspective. Microsoft officials thought the government was seeking a corporate breakup. Gates' feistiness also underscored a different worldview: that the company saw itself competing in a market that could change overnight. Gates' now famous 1995 Internet Tidal Wave memo (download PDF) illustrated his view: "Browsing the Web, you find almost no Microsoft file formats. After 10 hours of browsing, I had not seen a single Word DOC, AVI file...."


Follow Us

Join the newsletter!

Error: Please check your email address.
Show Comments