Thread by @stevesi

062. Antitrust: Split up Microsoft and Managing the Verdict—2 for 1 today. What was it like to go through more than a decade of regulation, litigation, capitulation…? Rather than recounT legal Sstuff, I wanted to discuss what it felt like at the time. 1/ …rdcoresoftware.learningbyshipping.com/p/062-063-anti…

2/ Pressure on Microsoft started early 90s. Perhaps owing to Bill Gates’ upbringing, he was both comfortable with litigation and also good at compartmentalizing it to the main actors. Legal stuff goes far back. Apple suing MS was first I recall. Lotus sued over “look and feel”.

3/ But June 7, 2000 was a “big day” as it was when after more than two years in proceedings, the judge delivered the “Final Judgement”. I was on a plane from a Windows conference and read the whole thing downloading it 2kb at a time on my blackberry.

4/ An ordered breakup is the most drastic “structural reform” in Antitrust. Most of the people in “power” of that era lived through the AT&T case (breaking up to baby bills, I mean baby bells). No surprise that breakup was top of mind.

Media portrayed this as MS v. The World.

5/ Two notes:
A) MS’s biggest customers were in Texas, not SV (Dell and Compaq)
B) Intellectually we were in the midst of being “disrupted” by the internet, for real we were “scared”.

6/ Significant mismatch existed between our self-view as scrappy fighter trying to “survive” the internet and the world view of MS as the largest, most profitable, well-capitalized company on earth. More than anything this mismatch emotionally and intellectually was challenging.

7/ Legal proceedings in the big case began May 1998 when the Dept of Justice and States sued Microsoft for a whole host of fed/state violations of antitrust laws. A tough thing for non-lawyers is the pace of the process. So much “hurry and wait” and nothing w/ moments of terror.

8/ Big milestones of the case:
Filing of Complaint - May 1998
Findings of Fact - Nov 1999
Conclusions of Law - April 2000
Final Judgement - June 2000
Consent Decree - Nov 2001 —> 2011!!

So many documents justice.gov/atr/case/us-v-…

9/ The complaint was filled with all the comments that are in all the books and news stories of the era, like “cut off Netscape’s air supply”, “embrace and extinguish [extend]” and so on.

The tone towards the company really changed when the case was filed. From the complaint.

10/ The Findings of Fact was still early by and large most were not glued to the case as it progressed. It wasn’t what people talked about in cafeteria or other places…yet. In Findings of Fact we find that Microsoft has a monopoly of Windows PCs. We were a monopoly.

11/ The Conclusions of Law were when things started to look and feel grim, even though the company was hitting it out of the park in terms of sales/revenue (something that was not lost on Wall St or the press one month post dot com bubble burst).

One part really bummed me out…

12/ Legal conclusions repeated “quashing” competition. What really bummed me out was implication we made features to be anti-competitive not for customers.

I was in Office & naive (can’t speak to these) I can say now features happen for many reasons not just direct benefits.

13/ This theme of “for the business” versus “for customers” is one not often explored and what it means in practice. It is something that would become a significant issue for me when I found myself in Windows.

It is easy to make obvious arguments here. Difficult to live them.

14/ When the Final Judgement came down it was fascinating because now it mattered to my real job, Office. All of a sudden Office looked like it could become its own company.

YAY! I mean it sounded too good to be true. Of course we didn’t say that though we did joke internally.

15/ I didn’t really have talking points for the team but held an impromptu team meeting in the “atrium” of MS-17 to try to offer something for people to use at home.

By now the case was on every magazine cover and present at family gatherings, college recruiting, customers, etc.

16/ Case was appealed and the judge encouraged a behavioral consent decree rather than structural. With that by and large the case was not part of building products, except part of Windows (which I had to later manage). Then EU started. Repeat.

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PS/ This post shareable—many of our friends are going through their own antitrust or regulatory journey right now. Maybe this will provide some help or context. The words change but the process is quite similar, and so are the emotions.