The people v. the nerds

World War 3.0
May 4, 2001

"This is a very exuberant industry... Companies act toward each other in ways companies do not act in more mature industries." The conception of maturity playing off against immaturity runs through this account of the great antitrust suit of the 1990s, in which the United States government went in to nail Bill Gates and Microsoft. It provides the first real descriptions of many of the personalities behind the corporate manoeuvrings of that era. And the nerds do not come out of the story in an admirable light.

The important thing was not to have companies that made profits or provided real value, but to have rocketing share prices that enabled companies to buy up one another, displace one another and push rivals out of the game. Arguably, this ruthless shakeout was an essential process, preliminary to laying down the stable information systems of the future. Equally arguably, it was a display of rival childish brutalities, characteristic of the small group of people who had created these stock fortunes, but with their profits subject to a process of infinite postponement.

When the courtroom drama of the decade started, the world saw more of the kinds of people who have created and come to dominate the information revolution, and emotional immaturity is the term that constantly reappears as the story is told. Many of the protagonists are overgrown adolescents, people who "scored high on their math SAT" but low on the verbal part of the test, people who have not been used to losing arguments, or compromising with their fellows, or interacting with people rather than with screens. They are bombastic and belligerent, overworked, greedy because they have no experience of other values, outrageous in the demands they make of rival companies (while trying to make deals with them), possessed of much raw intelligence but lacking in judgement. They often make bad witnesses in court. And that is before we confront the character of Gates himself. "With Gates all you hear is a nine-year-old's wail" - here is a man who has never in his life had a boss, or been reprimanded or fired or completed a degree or had to conform in any way. These asserted faults of character are crucial to Ken Auletta's account of what has transpired.

The confrontation between Gates and the government started in 1990 with a Federal Trade Commission investigation that led to a Justice Department probe and a consent decree. Then, in 1997, it erupted into the civil antitrust investigation and lawsuit that forms the subject of this book. Until the debacle of the final judgment, Gates had always treated his commercial enemies (Netscape especially) as more significant foes than the federal authorities in Washington DC. But the Justice Department had decided that his inclusion of Internet Explorer, an internet browser, inside Microsoft's Windows operating system constituted an illegal use of monopoly power. But much more than the browser issue lay behind the challenge and behind Judge Thomas Penfield Jackson's pursuit of this powerful and unchecked company.

To Gates, the charge of monopoly and the department's investigations were unwarranted intrusions into his management of his own company. Giving away the browser free to Windows customers was an important business strategy in Gates's attempt to generate profits in the world of the internet, to which he and Microsoft had been converted during the course of the decade. His decision to fight the Justice Department without compromise was illustrative of Gates's whole approach. At a conference in Davos he had boasted, for quotation, "I'm going to destroy three companies: Sun Microsystems, Oracle and Netscape." Destroy, not compete with.

Auletta explains that antitrust trials are different from the more familiar television courtroom dramas in that there is no climactic moment, just the steady drip of one irrelevant fact piled on another. The same might be said of books that are amplified magazine journalism, like Auletta's own. It is only as the text proceeds through its 400 pages that one begins to see, through the mounds of anecdotage and character description, the vastness of the implications of a monopoly at work in a major zone of economic development.

Despite the looming legal challenge, Microsoft continued expanding aggressively, endeavouring to make Windows link easily to every possible service in continent after continent. Gates bought up or into 40 companies in 2000 alone. He also built up a large lobbying machine in Washington DC, though it has not reversed his misfortunes. The Feds, according to Auletta, are harassing Microsoft at every turn.

In the American system, once a court has issued a ruling upheld on appeal, a lower burden of proof is required to convict in subsequent suits. The company has virtually lost the right to a presumption of innocence, and 129 lawsuits in 26 states are pending. Although a final ruling by the Supreme Court may be years away, Gates's executives live in fear of subpoenas. Three million of its internal documents are still held by the Justice Department. Microsoft has started losing major deals because of the fear on the part of the potential deal-makers of being dogged by controversy.

Since 2000, the world has become less Microsoft-centric. One of Gates's men told Auletta: "Gates no longer looks forward to coming to the office."

Anthony Smith is president, Magdalen College, Oxford.

World War 3.0: Microsoft and its Enemies

Author - Ken Auletta
ISBN - 1 86197 390 X
Publisher - Profile
Price - £17.99
Pages - 437

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