
What Happened to the Microsoft Monopoly? - fwdbureau
http://economix.blogs.nytimes.com/2012/06/20/what-happened-to-the-microsoft-monopoly/?ref=business
======
NelsonMinar
This article skips over the direct role that United States v. Microsoft had in
creating space for innovative companies like Apple to succeed. Without the US
anti-trust intervention it's quite possible Microsoft would have totally
embraced, extended, and extinguished open Web technologies and subsumed the
Web into a Microsoft proprietary platform. Macs would not be nearly as viable
a product if Internet Explorer were the only browser that worked with most web
sites.

Another important part of the history is Microsoft's June 1997 $150m
investment lifeline to Apple when Apple was worth less than $4B. That
investment predates US v Microsoft but at the time it was widely believed that
part of Microsoft's motivation was ensuring Apple didn't go completely broke
and thus invite even more monopoly scrutiny to the PC business.

~~~
soupboy
In what way did the anti-trust case help other companies? Or how did the
bundling of IE hinder other companies like Apple? I was too young and in a
country without internet access at the time to remember what the deal exactly
was. But it seems to me that having IE or not on my PC would in no way have
affected other companies. I mean, with Firefox and later with Chrome, people
switched to it mainly because they were better browsers, not because IE wasn't
on their PCs already.

~~~
illumin8
The problem was that Microsoft introduced proprietary extensions to standard
HTML that would only work properly in IE. They first tried to create a
monopoly on browser market share. By bundling IE with Windows 98 as the
default browser, they succeeded in gaining 90%+ of marketshare just by
default, which pretty much destroyed Netscape overnight. Then, they started to
release proprietary extensions to HTML like ActiveX that conveniently would
only run on a Windows computer running IE.

If they would have succeeded in this strategy, we would have a rich web
experience with "web 2.0" applications, however, the protocols would all be
proprietary and you would only be able to access them on an x86 computer
running Windows and IE. Their strategy of embrace and extend was hugely
successful, and you can see the aftermath all around you. Look at the
extraordinary lengths developers have to take to support older versions of IE.
Up until the justice department rulings in the early part of the 2000s
Microsoft was still making subtle tweaks to try and break standard IETF
protocols. They had a willful disregard for RFCs and always tried to add
Microsoft only extensions on top.

The article is interesting in that he highlights the end result is that
innovation trumps monopoly, however, he ignores the damage this caused to both
users and entire companies that were literally wiped out by these anti-
competitive practices. WordPerfect, Novell, Netscape, and countless other
innovative companies were extinguished by this.

~~~
tzs
> The problem was that Microsoft introduced proprietary extensions to standard
> HTML that would only work properly in IE.

Microsoft wasn't doing anything that Netscape wasn't doing. Both of them were
introducing their own HTML extensions left and right. Each was free to
implement the extensions the other introduced.

> They first tried to create a monopoly on browser market share. By bundling
> IE with Windows 98 as the default browser, they succeeded in gaining 90%+ of
> marketshare just by default, which pretty much destroyed Netscape overnight.

That's not correct. What destroyed Netscape was the fact that IE was a better
browser. IE did a better job of implementing standard HTML, and it did a good
job of implementing Netscape's non-standard HTML extensions, and it performed
better.

It's easy to say Microsoft won by bundling, but if you look at sales numbers
from before bundling, when the competition between IE and Netscape boxes on
the shelves at Egghead and CompUSA and the like, you'll find that IE
dominated. I don't remember the exact numbers, but I remember them being
massively in IE's favor. (My employer had retail software for sale, so we
subscribed to a report from a company that had an arrangement with all the
major software retailers to get sales numbers, and they produced a nifty
monthly report showing pretty much ever item available at those stores and how
many units were sold every month. Browsers were one of the items I watched
monthly on those reports).

~~~
illumin8
Sales numbers for boxed copies of Netscape/IE are irrelevant because in 1998
everyone just used the browser that came with Windows. You had to
intentionally try to download Netscape. In fact, you couldn't even download
Netscape without using IE to do so.

I will admit that when IE 4 finally came out it was better than Netscape 4
(minus the active desktop crap that bogged down the 64MB RAM systems of the
era), however, previous versions of IE were far inferior to Netscape.

Proprietary tags in Netscape? Yeah, I guess if you consider the <blink> tag
proprietary, sure. They can be counted on both hands. IE had entire
proprietary APIs, not just a few tags. There's a huge difference.

~~~
tzs
Netscape, in addition to <blink>, added <font>, <basefont>, changing the text
color via an attribute of the <body> tag, attributes to change numbering style
for <ol>, the height and width attributes of <img>, the background attribute
of <body>, <center>, a bunch of attributes to <hr>, <ilayer>, <keygen>,
<layer>, <multicol>, <nolayer>, <server>, <spacer>, <nobr>, <noembed>, <wbr>.
<big>, <small>, <sub>, <sup>. I'm not sure if this is an exhaustive list.

------
rdw
It's impossible to conclude from the evidence presented that the antitrust
action had no effect on the breaking down of Microsoft's monopoly. It's
entirely plausible that the enforcement left them unable to respond as quickly
to new markets as their competitors, leading to them beginning to get
undermined a few years later. Abusing their monopoly in the PC OS market to
get advantages in unrelated markets was in many complaints against Microsoft
at the time.

It's entirely within reason to believe that had the Justice Department not
been breathing down their necks that Microsoft would have used its monopolies
to illegally squash the original iPod. There are plenty of examples of
products that were well-made, innovative, and desired but didn't make a major
market impact for poorly-understood reasons (WebOS comes to mind). It's not at
all obvious that the iPod was bound to succeed; if all those amorphous outside
factors hadn't gone its way, we could be sitting around discussing how the
iPod was a repeat of the Newton, and how inevitable it was that Microsoft
finally cracked the the MP3 market with Plays4Sure.

~~~
azakai
> It's impossible to conclude from the evidence presented that the antitrust
> action had no effect on the breaking down of Microsoft's monopoly. It's
> entirely plausible that the enforcement left them unable to respond as
> quickly to new markets as their competitors, leading to them beginning to
> get undermined a few years later.

In fact, companies targeted by antitrust (I think it was IBM) have stated that
antitrust regulation, by itself, shifted their focus. You are no longer
rushing ahead, instead you must be cautious about everything. So it is indeed
quite plausible that antitrust actions against Microsoft made possible the
current non-Microsoft-dominated era.

------
cap10morgan
This article misses the forest for the trees. During the height of Microsoft's
monopoly, consumers were very much limited in their choices. MS did everything
they could to keep the likes of OS/2 and BeOS off of new PCs, and that means
no one ran other OS's, so no one wrote apps for them. Had that not been the
case, the PCs, phones, and tablets we use today would be very different. I
daresay they'd be better, for having arrived at many current innovations
sooner due to the more robust level of competition and potentially having more
viable options in the market today.

Just because MS lost its monopoly on its own does not mean that we, as
consumers, would not have benefitted--and would still be benefitting--from
breaking up that monopoly when it was more dominant.

~~~
jonhendry
Except Microsoft's leverage in operating systems never really carried over to
other hardware platforms, like phones and PDAs.

~~~
cap10morgan
I'm not claiming it did. I'm saying that a very different PC desktop / laptop
OS and software ecosystem back in the mid-nineties would have ripple effects
on PCs, phones, and tablets today.

------
ZeroGravitas
University of Chicago economics professor says government regulation not
needed? Why am I not surprised?

~~~
noarchy
I know what you're getting at, but one could argue that the market indeed took
care of the problem (if you consider it to be a problem) of Microsoft having
such a large market share. Apple innovated, and Linux found a place in
Android. Suddenly Microsoft is playing catchup.

~~~
rprasad
The market took care of the problem only because the antitrust injunction
prevented Microsoft from dominating the market in its customary manner.
Without that injunction, Apple would be _dead_ today. (Microsoft's investment
in Apple during the antitrust proceedings is the only reason Apple survived
long enough to push out the iPod.)

Indeed, a lot of what Apple is lauded for today (i.e., integration) is stuff
that Microsoft was explicity prevented from doing under the terms of the
antitrust injunction.

~~~
noarchy
Microsoft's investment in Apple wasn't mere charity, if we're to believe this
anecdote: [http://www.forbes.com/sites/ericjackson/2012/03/01/steve-
job...](http://www.forbes.com/sites/ericjackson/2012/03/01/steve-jobs-used-
patents-to-get-bill-gates-to-make-1997-investment-in-apple/)

Things like the iPhone weren't going to come from Microsoft. Rather than
beating them in the desktop market, which Apple still hasn't done, it won on a
different battlefield.

~~~
rprasad
That was my point -- without the antitrust injunction, Microsoft would not
have invested in Apple. Ergo, Apple owes its existence today to the
injunction.

~~~
noarchy
The article I linked never mentioned the injunction. Apple was suing
Microsoft, and the investment by MS was part of how Steve Jobs offered to
settle the matter.

------
dude_abides
I wonder how many people who argued about Linux vs BSD in early 90s would have
predicted that 20 years later, in the post-PC-era, these would be the two most
popular operating systems by far, backed by the two biggest post-Microsoft
tech companies, Google and Apple.

~~~
heretohelp
What's interesting is they're not really competing.

BSD for desktops, Linux for servers. Not the split _I_ would've guessed 10-13
years ago.

~~~
dude_abides
My point was that Android is based on Linux and iOS on BSD. So the split
really is BSD & Windows for desktops, Linux for servers, and BSD & Linux for
phones. Who would have predicted this?

~~~
heretohelp
I'm pretty sure the only thing Windows can compete on, on the desktop, is
price. That has to really suck.

There are very few niches/users left that actually _want_ Windows > Apple, and
most of them begin with "gam" and end with "ing".

~~~
ghshephard
Windows still owns the enterprise. Active Directory / Group Policies still
beat anything you can do with OS X, and IT groups have 10 years of experience
they don't want to walk away from.

But, users are pulling these organizations, kicking and screaming into a world
in which everyone wants a MacBook Air/Pro.

I really don't envy Microsoft.

~~~
eridius
Could you elaborate? I'm not particularly familiar with Active Directory, so
what makes it so much better than using Open Directory on OS X? Wikipedia says
Open Directory even has "Active Directory domain member support", whatever
that is.

~~~
Spooky23
There's almost no comparison.

Open Directory is basically a ldap with MIT kerberos that can sort of
integrate with AD. Most folks setup a hybrid (referred to as the "magic
triangle") where you use AD for user auth and OD for computer policy stuff.
It's not very robust, and Apple isn't exactly committed to the notion of
server operating systems, so it doesn't get much love.

You really need to buy a client app like ADmit Mac, or a server-side solution
like Centrify to really work with Active Directory.

AD itself is a really brilliant collection of software. Think of it as a fully
integrated, smoothly operation bundle of LDAP, Kerberos and DNS -- it "just
works".

Coming from a Unix background, AD was amazing to me as there isn't any Unix
equivalent at all, except maybe for the ancient NIS and NFS integrations. You
get single sign on. Robust Access Controls. The ability to trust the
identities of external organizations. A policy engine to do all sorts of
management activities at various levels. Oh, and it allows you to easily build
fault-tolerant deployments without much forethought.

------
cturner
I'm surprised by the large Android figures there. For a time OSX became the
most widely distributed unix-like consumer system and that was exciting. But
despite a strong play, it's being overtaken by android. Looking at these
numbers, if I was starting a consulting business at the moment I'd be tempted
to focus at android.

~~~
njharman
Fractured, commodity market, lots of competition, lots of dead ends (failed
devices, companies)

Vs

Unified, Premium market, no hordes of java devs jumping bandwagon, less
porting, less chance of backing loser.

~~~
adventureful
Tell Samsung Android is a dead end. They're generating extraordinary profits
off of Android right now.

------
tomjen3
The rebirth of Netscape navigator, JQuery and XMLHttpRequest happened to the
Microsoft Monopoly.

~~~
rprasad
Microsoft created the XMLHttpRequest standard; it was first featured in
Internet Explorer. Microsoft was also one of the first backers of jQuery.

Mozilla owes much of its market share to the EU, which forced Microsoft to
bundle competing browers with Windows, and to the collapse of Netscape in the
first dotcom bubble.

~~~
asadotzler
Mozilla owes almost none of its market share to the EU. We earned almost all
of our marketshare well before the EU decision requiring microsoft to
advertise (not bundle) alternative choices and since that change in the EU a
couple of years ago, we've seen very little movement in our user numbers. It
may prevent IE from getting as many users, but it splits those users among
Firefox, Chrome, Opera, Maxthon and others.

------
stfu
I have to admit that graphs using logarithmic scaling can come quite handy
when trying to make a certain point.

------
mtgx
We should be happy Microsoft is not a monopoly anymore, and instead of trying
to encourage them to come back to that position, we should encourage the
competition to even things out some more.

------
adventureful
The only way Microsoft, like IBM before it, could have held onto its market
position was if the government stepped in and specifically protected it.

