Microsoft came first in the Monopoly game, now Google

Near the end of this month, the Justice Department’s antitrust division will have to make a big decision: Whether to try to break up one of the richest and most powerful corporations on the planet.

By November 20, the Department of Justice will formally propose remedies in federal court in the following situations. USA / Google. This summer, a federal judge ruled that Google It maintained an illegal monopoly on internet search.

DOJ said: previous court records We find what is known in antitrust circles as the structural solution really amusing, but for what? It might be more accurate to call Google the nuclear option: Division of the company into separate entities.

The thing is, the DOJ had previously tried to break up a tech giant it accused of monopolistic behavior, a small company called Microsoft.

And for a moment it looked like it might actually happen. After considering the recommendations of the Ministry of Justice on 7 June 2000, A federal judge ordered Microsoft to be split in two.

Like Google, Microsoft has been found guilty of acting like a monopolist, often using the dominant Windows operating system to pressure personal computer manufacturers into favoring other Microsoft applications, such as the Internet Explorer web browser.

“It was believed that if we split Microsoft into an applications company and an operating system company, those two separate companies would compete very aggressively,” said Daniel Rubinfeld, an economist at the Bill Clinton administration’s DOJ at the time of the Microsoft case.

The Justice Department wanted a clean break, in part because “behavioral solutions” (ongoing monitoring and other conditions to make sure Microsoft was playing by the rules) would be difficult to implement.

But Rubinfeld also hoped that the split would prevent Microsoft from expanding its tentacles into a newfangled technology called the World Wide Web.

“This was a point in time where we didn’t know exactly how the internet was going to evolve, other than that it was going to be very important,” Rubinfeld said. “We wanted to see innovations that would be important as the Internet evolves.”

Ultimately, the separation never happened. Microsoft appealed successfully, some problems in Florida meant George W. Bush became more business-friendly and took over the White House, and a deal was reached in September 2001.

He banned Microsoft from requiring computer manufacturers to use only Microsoft software and appointed an on-site monitoring committee to essentially oversee the company.

There is debate about how successful this agreement was. Antitrust solutions are not just about punishing and preventing anticompetitive behavior. They are also concerned with realigning the playing field to ensure competition and innovation in relevant markets, including markets for technology products that do not yet exist.

Fiona Scott Morton, an economist at the Yale School of Management, argued that aside from the legal and public scrutiny Microsoft endured during protracted and expensive litigation, the deal was successful by at least one measure: It prevented Microsoft from shutting down the nascent network to rivals.

“The Microsoft lawsuit prevented the software maker from controlling the internet,” said Scott Morton. “And now we have the Google case, and we hope it will prevent the party that controls the internet from dominating the next thing. “Maybe this is artificial intelligence, maybe this is something else.”

Some of those who support stricter enforcement of competition rules we discussed He said that if it were not for Microsoft’s antitrust agreement, Google would not be the internet giant it is today.

But Adam Kovacevich, CEO of technology industry association Chamber for Progress, said tying Google’s success to the Microsoft case was a misinterpretation of history.

“The founders of Google were giving absolutely no thought to the Microsoft antitrust case,” said Kovacevich, who previously worked on antitrust issues at Google. “They weren’t trying to compete with Microsoft. They were trying to develop Yahoo.

But beyond the debate about the impact of Microsoft’s antitrust settlement, a counterfactual emerges: What would happen if Microsoft were split?

“I believe we would see more innovation if there was more competition,” Rubinfeld said. “I mean, I’m pretty happy with a lot of the products I use, but I think they can get better.”

Underlying the government’s pro-secession argument is the logic that a large number of smaller companies means more competition to develop the best technology at the cheapest price.

Joseph Coniglio, director of antitrust policy at the tech-backed Information Technology and Innovation Foundation, argued that this may seem like a lesson from the Econ 101 textbook, but in the real world, sometimes real innovation requires massive scale.

“The big companies are the ones that have the resources and incentives to make the big investments to create these new products,” Coniglio said.

If Microsoft had broken up in the early 2000s, perhaps it would not have been a major player and innovator in cloud computing, Coniglio said.

“If you split Google, how does that affect the company’s ability to invest in AI and these new, next-generation technologies?” Coniglio asked.

By cutting off the Android mobile phone operating system and Chrome browser from Google, the Department of Justice claimed that these products strengthened Google’s search monopoly.

Consumers need to know that the pace of technological advancement is not determined solely by Silicon Valley, Rubinfeld said.

“I think it is wrong to think that the path of innovation is predetermined and that it cannot be affected by the actions that antitrust agencies actually take,” he said.

For your information, Rubinfeld still uses Windows as his operating system and Google as his search engine.