For longtime tech industry watchers, the US Department of Justice’s antitrust suit against Google feels like déjà vu all over again. Many of the charges in the suit have almost eerie echoes to those levied against Microsoft in 1998.
Both claim the targets used their monopoly power illegally — in Google’s case, to maintain its market dominance in search; in Microsoft’s case, to use Windows to squash competitors. In both cases, the very core of both companies was being attacked.
Despite those similarities, the current lawsuit against Google won’t be nearly as consequential as was the fight against Microsoft. While it certainly means a great deal for Google’s future, it likely won’t change the world and tech business the way the one against Microsoft did.
Google’s stranglehold on search
Because of where Google and Microsoft stood in the tech world at the time each was sued, and because of the nature of the charges, the effect of current action against Google will be different. Today, it is just one tech giant among many — Meta, Microsoft, Apple, Amazon, X (the company once known as Twitter), and many others.
The DOJ contends that Google has illegally used its power to maintain a monopoly in internet search, and to kill off any potential competitors before they can even get a start. Its case against Google is relatively straightforward. It claims Google has a monopoly on the search market — more than a 90% market share — and that it maintains that monopoly by paying smartphone manufacturers and wireless carriers, including Apple, Samsung, Verizon and others, a combined $10 billion a year to make Google their default search engine.
The government contends those payments are a “powerful strategic weapon” to kill off and scare away rivals and make sure Google continues to keep its internet search monopoly. In opening arguments, the Justice Department’s lead courtroom lawyer, Kenneth Dintzer, said, “This feedback loop, this wheel, has been turning for more than 12 years. And it always turns to Google’s advantage.”
If the government wins, Google will likely no longer be allowed to make those payments. The effects of doing that, though, are unclear. Will people abandon Google in droves for other search engines? Keep in mind that the default search engine for PCs is Microsoft’s Bing, and yet Google dominates desktop and laptop search — it has more than 83% market share. (Note: the default search for Macs is Google, but Windows has a 70% worldwide operating system market share for desktops and laptops.) It may be that many people simply believe Google’s search is better than that of its competitors.
And even if users do choose alternate search engines such as Bing, DuckDuckGo, or others, will that really change the way they use their computers or the internet? Unlikely. They’ll just use a different search engine to find what they’re looking for.
Will it allow a new search engine company to thrive? Also unlikely. And given that artificial intelligence AI) and generative AI are increasingly being used to improve internet search, it’s likely that if people switch, they’ll move to Bing because of Microsoft’s AI prowess. And Microsoft, with its market cap at more than $2.3 trillion isn’t exactly a small tech upstart.
More likely, the effect will be that the government will feel emboldened to launch even more antitrust suits against Big Tech. That’s potentially a big deal, but not at all a game-changer in the way the 1998 suit against Microsoft was.
The 1998 Microsoft antitrust suit was more consequential
Compare all that to the 1998 lawsuit against Microsoft. Back then, Microsoft essentially was the tech world, with Windows having up to 90% of market share for desktop and laptop operating systems. The Mac was a niche product.
Microsoft forced PC manufacturers to make its Internet Explorer browser the Windows default — and banned other browsers from coming pre-installed on Windows. If the manufacturers didn’t agree to do that, they couldn’t get the license to include Windows on their machines, which meant they’d be dead in the water.
Microsoft also went out of its way to make it difficult to install other browsers on Windows, and used dirty tactics during the trial to cover up how hard the company made it to do. The company introduced into evidence a videotape showing how easy it was to install the Netscape Navigator browser. However, the government showed that Microsoft cheated when making that videotape by skipping over several long, convoluted steps — which Microsoft then conceded it had done.
Back then, there were no smartphones, no IoT devices, no wireless routers giving you internet access. Essentially, if you wanted to get online, you had to buy a PC with Windows on it. And that meant using Internet Explorer. Microsoft was on the way to, in essence, becoming the internet’s gatekeeper.
There were other issues in the suit, too. Because Windows had a worldwide monopoly on operating systems, companies that made applications like word processors, spreadsheets, and presentation programs had to get technical details from Microsoft to get their software to run properly.
Microsoft made it hard for competitors to get that information in a timely way. But Microsoft’s Windows developers freely shared information with its own Microsoft Office developers. That allowed Office to become dominant and kill off its competitors.
All this meant that in 1998, Microsoft was on its way to having a monopoly both on getting onto the internet and on using desktop software.
In 1999, the courts ruled in favor of the government and said Microsoft had to be split in two — one company to create and sell operating systems, the other to sell application software like Office.
Microsoft appealed. The case dragged on for several years, until in 2002 the government and the company came to an agreement: Microsoft wouldn’t be broken up, but it would have to share information about Windows with competitors, and PC manufacturers would have the freedom over what software to include with their hardware, including software that competes with Microsoft.
At the time, the agreement seemed like little more than a slap on the wrist. But the suit dramatically changed the tech world. Microsoft had become so embroiled in the fight and focused so much internal resources and attention on it that it took its eye off many other prizes. Its attention was so diverted that it missed out on owning internet search. (Ironically, Google launched in 1998, the year of the Microsoft trial.)
Apple launched the iPhone in 2007, well before Microsoft created a smartphone — even though Microsoft had a mobile operating system, Windows CE, before Apple had one. Microsoft also lost out by not creating a social media platform and not focusing on developing a significant online shopping presence.
There’s a reasonable chance Microsoft would have done at least some of that, and likely most of it, if the feds hadn’t targeted it in a lawsuit. There might have been no Google, no Facebook, no Amazon. Microsoft could have become a dominant smartphone maker. It might have ruled the tech world today with the same iron fist it ruled the 1998 tech world with Windows.
The effects of the Google suit won’t come close to being that consequential.