The Monopoly Formerly Known as Microsoft

Question: How many times must one of the most notorious technology companies of the information age to be sanctioned and fined billions of dollars for anti-competitive practices by governments around the world before it is commonly considered to be a monopoly? Moreover, how many times must a company be sanctioned and fined before it is concluded that further regulation is needed or that sanctions just don’t fix monopolies?

Without diving into all of the obvious reasons that monopolies are bad and when they aren’t, is it at all rational to entrust such a monopoly with an established anti-competitive track record to acquire any company, let alone the coveted code repository and collaboration hub of one of its principal competitors (open source)? While this sounds like a no-brainer, it appears that this is exactly what happened when Microsoft acquired GitHub. Though some may be approaching Microsoft’s most recent with acquisition an open mind and celebrating the GitHub acquisition, it is pipe dream to expect any monopoly, Microsoft or otherwise, to have good intentions with an acquisition such as this; or any acquisition.

Sure, Microsoft could have the best intentions for GitHub and their user base, but they simply cannot be trusted as one of the most notorious monopolies of our age and further examination is required as some of this predates developers entering into the workforce today. This includes many in their 30’s such as myself as many of us were still in high school when Microsoft was going through litigation in the late 90’s. While the government almost succeeded at breaking them up, it appears that we need to be reminded that they ultimately failed and that Microsoft remains a monopoly today just as it was decades ago; especially their own employees. Further, it also appears as if we need to be reminded as to who open source has been fighting against for decades.

Although some might view such inquiries as cursory, as allegations, or that Microsoft is an exception to the rule, Microsoft being a monopoly is not a matter of opinion, but a matter of fact and little has changed since these facts of emerged. It’s completely logical when considering that they have been accused of anti-competitive and monopolistic practices by virtually every modern nation, fined 10’s of billions of dollars for this to date, being saved from being split up by the court of appeals by a technicality, and that they have been fighting multiple governing bodies around the world on the grounds of anti-trust for the past 30 or so years.

In 1999, the United States government finally had enough with Microsoft, its business practices, the courtroom antics of their executives, repeated lying, and even falsifying video of evidence. Resultantly, it was ruled by Judge Thomas Penfield Jackson that Microsoft maintains a monopolistic control over PC operating systems and that they leveraged their power in a manner that would not only crush Netscape, Linux, RealNetworks, Apple, and others but also in a manner that harmed consumers and businesses on a global scale. As a bonafide monopoly, if not the greatest of the 20th century, Microsoft was ordered to split into smaller entities by Judge Jackson later in 2000, as was the case for Standard Oil and Bell earlier that century; but this did not happen.

“Microsoft executives proved, time and time again, to be inaccurate, misleading, evasive, and transparently false. … Microsoft is a company with an institutional disdain for both the truth and for rules of law that lesser entities must respect. It is also a company whose senior management is not averse to offering specious testimony to support spurious defenses to claims of its wrongdoing.” -Judge Thomas Penfield Jackson

While Judge Jackson’s findings were accurate in the US, none of which has been refuted to this day, it was revealed later in the court of appeals that he had spoken with reporters during the trial. Microsoft was able to leverage this to their advantage and ultimately avoid the split that was initially ordered by Jackson. On the grounds that Jackson should have recused himself, a mere technicality in comparison to the charges against them, Microsoft was able to settle with the Department of Justice for a lesser penalty instead and agreed to open up Windows to become much more accommodating to 3rd party developers. However, Bill Gates also conveniently stepped down that same year and it is highly unlikely that this is coincidental. But this was not enough to disrupt their monopolistic practices or offset the damage done to other firms and the monopoly of Redmond not only prevailed, but thrived.

So this is how you get an honorary degree from Harvard?

In 2004, it was ruled again that Microsoft operated in an anticompetitive and monopolistic manner for virtually the same reasons as before in the US, but this time by the EU (29 countries excluding the US), and was consequently slapped with massive fine of $794 million. They were also fined $497 in 2007 and and $1.5 billion in 2008 for failing to comply with the sanctions handed down by the EU Commission. Even countries such as China have followed suit, and in all they have fined Microsoft a combined total of around $9 billion dollars in lawsuits and fines as of 2005; it’s probably gone up since then. Needless to say, the notion of them being a monopoly is not an isolated incident and being fined billions of dollars globally for such practices is quite evident of this.

Besides an opportunity cost though, what’s an occasional billion dollar fine to one of the most profitable companies on the planet? Especially when they’re a monopoly making $100 billion dollars a year that towers over the DOJs own $25 billion dollar budget? It should come as no surprise that fining monopolies and forcing them to make rather arbitrary changes does little more to companies such as Microsoft besides set them back momentarily at best.

One might think that Microsoft would be brilliant for coming out ahead like this, but you would be wise to remember that they are fighting tooth and nail against these allegations and the changes that they brought for decades. Ironically though, by forcing Microsoft, a company built on logic, to make common-sense changes while allowing their monopoly to remain intact, one could only rationally expect this to benefit them substantially in the long run, especially without solving the underlying philosophical problems that got them there in the first place; and this is exactly what happened. Sure, their stock may have faltered for a bit, but their revenue was steadily increasing year by year despite this which should not be the case after being regulated on the grounds of being a monopoly.

Doesn’t regulation suck? Look at all of that lost revenue.

Because of the unique treatment that Microsoft received as a monopoly, they actually recovered masterfully on the back of innovations like Windows XP, Windows 7, Office, its Services and Cloud divisions, consequently growing and diversifying their revenue under Steve Ballmer, not Bill Gates. In fact, Microsoft did the exact opposite of what the chosen one himself predicted would not happen after almost destroying his own company, seemingly downplaying the fact that the company was structured in his image and proving that his exit was the best thing for the company by virtually every objective measure; including but not limited to more than doubling their annual profit and revenue. Needless to say, he didn’t see this company tripling its revenue in the shadow of one of the largest antitrust suits in US history.

“Although I’ve been able to spend more time on our technical strategy since naming Steve as president in July 1998, I felt that the opportunities for Microsoft were incredible, yet our structure wasn’t optimal to really take advantage of them to the degree that we should,” -Bill Gates

But this progress came at the expense of creating new competition. Although Microsoft gained significant ground after their cream puff sanctions, especially with regard to staying intact when it is painfully obvious that they needed and still need to be broken it up to this very day, Microsoft and companies seeking to succeed in the same fashion also created a new wave of developers, but not in the way they would have liked. On top of companies being started to compete with Microsoft in new ways while they were weakened from sanctions and bad press, multitudes of engineers also began contributing to socially beneficial passion projects with others in their spare time and sharing their findings/code for strangers to build on, free of charge. Although this was happening prior to software monopolization, how well organized these open-source movements became after monopolistic hydras such as Microsoft revealed themselves was stunning and their implementations quickly became threats to the business of software, especially Microsoft’s monopoly; but don’t take my word for it.

“open source is an intellectual property destroyer. I can’t imagine something that could be worse than this for the software business and the intellectual-property business.” -Jim Allchin, Former Co-President Platforms & Services at Microsoft

Although the focus seems to be on the notion of whether Microsoft will naturally squander GitHub or if it might somehow be good for the open source movement and for GitHub, few seem to be acknowledging the obvious ways that Microsoft stands to advance substantially in its longstanding battle with open source with this acquisition that was not possible while competing with open source in an open market. We all know that if they succeed at integrating GitHub, it will most likely serve as a golden shovel for Azure, help them compete with Amazon, and open source becomes a tool of the entity it was called to arms against; huge Microsoft win. If they fail to integrate GitHub though, squandering it will serve a heavy blow to the open source community that they have been battling for decades and ultimately be of benefit to them just the same; another huge Microsoft win. The acquisition is win/win for them, a bargain at $7.5 billion dollars, and it’s highly unlikely that their crack risk analysis team has not also considered this given their track record with acquisitions. It almost goes without saying, but open source is humanity’s response to software monopolies such as Microsoft and is a hedge against them; Microsoft Encarta vs Wikipedia was just a battle within the war.

I digress, but monopolies are bad mmmkay’ and it’s important to remember that they are incapable of changing their own course, especially when said practices net them $100 billion dollars for every billion dollar fine they receive for anticompetitive business practices. This is why governing bodies tend to break them up or tool them out as utilities before this happens so as to prevent them from becoming too big and too entrenched to be regulated adequately; too big to regulate if you will. However, when governments stand to make billions off of you in such a way, fines can function no differently than bribery and it appears that Microsoft is the rule in this regard, not the exception.

Because Microsoft was never regulated adequately, it seems to be an even larger monopoly today than it was in the 90’s and has evolved much like an unregulated utility throughout industry. But besides monopolistic growth, what else would you expect from a monopoly after escaping the penalties and necessary measures made to ensure that they could no longer function as a monopoly while seemingly only gaining the federal government as a client? It seems as if they didn’t get regulated, but got made instead of sorts. You are welcome to believe that Microsoft hit refresh and has changed philosophically because three people there read a Carol Dweck book though.

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