Saturday, May 26, 2018

"‘Crush Them’: An Oral History of the Lawsuit That Upended Silicon Valley"

From The Ringer, May 18:

Twenty years ago, Microsoft tried to eliminate its competition in the race for the future of the internet. The government had other ideas.
Nineteen-ninety-eight changed the course of technology, which is to say that it changed the course of history. A nearly bankrupt relic of ’80s tech nostalgia released a gumdrop-shaped PC called the iMac. An innovative search engine originally known as BackRub became a company with an even stranger name. A fast-growing online bookstore hatched a plan to start selling, well, everything.
In hindsight, these were tectonic shifts, but they hardly registered as tremors compared to the earthquake emanating from Washington, D.C. On May 18, 1998, the U.S. Justice Department and 20 state attorneys general filed an antitrust suit against the most powerful tech company in America: Microsoft.

The then-23-year-old giant, which ruled the personal computer market with a despotic zeal, stood accused of using monopoly power to bully collaborators and squelch competitors. Its most famous victim was Netscape, the pioneering web browser, but everyone from Apple to American Airlines felt threatened by late-’90s Microsoft. The company was big enough to be crowned America’s most valuable firm, bold enough to compare attacks on its domain to Pearl Harbor, and, eventually, bad enough to be portrayed as a (semifictionalized) cadre of hypercapitalist murderers in a major motion picture. The “don’t be evil” optics that colored the rise of today’s tech giants (and have recently lost their efficacy) were a direct response to Microsoft’s tyrannical rule.

To say history is repeating itself isn’t quite accurate, but in recent times we’ve seen a former tech wunderkind dragged in front of Congress, a raft of Hollywood productions casting our handheld gadgets as a bridge to dystopia, and a chorus of calls for the tech giants to be dismantled by the government. This is not the kind of ’90s nostalgia the titans of the internet had in mind.
Giants always fall, eventually. Microsoft may have simply been too bloated by the turn of the century to outflank more nimble competitors like Google and Apple. But there’s still considerable debate about whether it was the government lawsuit that nudged the company into an abyss of late-to-the-party products such as the Zune MP3 player and the Bing search engine. Microsoft never would have thought of these ideas first, but absent government intervention, it might have devised ways to eliminate the companies that did. “Because of antitrust enforcement, that’s why we have Google,” says Gary Reback, a well-connected antitrust lawyer who represented Netscape in the ’90s. “There is no other reason.”

And yet it’s only because Google has become so Microsoft-like in its dominance that the 20-year-old case still resonates. (Amazon and Facebook have also been accused of monopolistic tendencies.) In a world where a handful of companies control much more of our data than Windows 95 ever did, it’s an open question how much this famous case really accomplished. Our current tech overlords may be doomed to repeat the transgressions of the Microsoft era — some antitrust watchers believe they already have. “One of my theories about antitrust is it goes in cycles,” says Stephen Houck, one of the government lawyers who took the deposition of Microsoft founder Bill Gates. “Microsoft or some other tech company gets very successful, they make a lot of money, and they tend to get arrogant and think they know more than the government.”

Just how similar were Microsoft’s actions two decades ago to what’s going on today? And how critical was the government’s lawsuit to unseating Microsoft from its perch of power to make room for a new crop of innovators? On the 20th anniversary of the filing of the Justice Department’s suit, we asked the lawyers who tried the case, the competitors who found themselves under Microsoft’s heel, and the journalists tasked with making sense of it all to recount tech’s most important legal battle, in their own words. (A representative from Microsoft did not respond to requests to participate in this project. All titles refer to roles interviewees held at the time during which the story takes place.)

I. The 800-Pound Gorilla
By the mid-’90s, Microsoft had become the dominant player in tech, with its Windows operating system powering 90 percent of personal computers and its Office suite the standard in workplace software. The Redmond, Washington–based company cast a pall over innovation in Silicon Valley, until a well-funded startup called Netscape invented a way to bring the internet to the masses.

Gary Reback (antitrust lawyer representing Netscape): The tech industry in the United States had always been monopolized by a company. First it was AT&T, then it was IBM, then it was Microsoft. … Their basic dominance was almost a suffocating dominance. There wasn’t a feeling that there was anybody that would or could compete with them from Silicon Valley.
Steven Levy (senior editor, Newsweek): It was widely known that venture capital funds wouldn’t fund you if you were going to go into an area where Microsoft was involved.
Jon Mittelhauser (founding engineer, Netscape): Software was this large process that big companies did that they sold on the shelves at brick-and-mortar stores. Because of that, there weren’t very many of them and frankly there was really only one, and it was Microsoft. They had pretty much swallowed everybody else. There was this long history of the first word processor that got traction was WordPerfect, and it got killed by Microsoft Word. And the first spreadsheet was Lotus and it pretty much got killed by Microsoft Excel. Any company that was successful that was doing software basically had two options — one was Microsoft copied what you did and did it better and got a business, [or] two was you got bought by Microsoft. They were the 800-pound gorilla.

Mittelhauser was one of several University of Illinois students who helped code Mosaic, the first popular web browser, while working at the National Center for Supercomputing Applications. The project was led by Marc Andreessen, who would go on to become the cofounder of Netscape and the prominent venture capital firm Andreessen Horowitz. Andreessen and the Mosaic team recognized early on that what they were building could one day usurp Windows.

Mittelhauser: When the first version of Mosaic came out, it was one of those things that, for lack of a better term, kinda went viral. Mosaic exploded across all of what the internet was at that point, [at] universities and research institutes. And because we were just stupid kids who didn’t really know what we were doing, it was buggy as hell. But we didn’t really care because we just put up new versions every other day.

Levy: Andreessen, his confidence was unparalleled. He teamed up with Jim Clark, who was an experienced entrepreneur from Silicon Graphics. The first time I talked to him, he was talking about how the web would be the next operating system. It was a template for the future of unlimited ambition by internet entrepreneurs, like [Jeff] Bezos and the Google people and even [Mark] Zuckerberg later on. He was young, but no one was gonna tell him that he couldn’t rule the world.

Mittelhauser: Marc and Jim flew out, met the rest of the team, and hired us on the spot. … This was in April of ’94. My plan at that point had been to spend the summer working on a master’s thesis, but instead I basically wrote a master’s thesis in two weeks in May. May 2nd of ’94 we opened the door to the first office. At some point later in May I graduated, as far as I know. I wasn’t there. I was heads-down building Netscape.

Steve Lohr (technology and economics reporter, The New York Times): It was the pioneering commercial browser. Marc Andreessen famously said what they wanted to do was reduce Windows to a buggy set of device drivers underneath the browser, which would be the new top player that people would see and interact with. Microsoft wasn’t thrilled about that.

Levy: Out of nowhere, it was the hot company. Andreessen posed barefoot on the cover of Time. This was something that was alien to people back then. Even Bill Gates wore shoes....
...MUCH MORE, including that picture of Andreessen with hair.