Why the Antitrust Case: United States v. Microsoft Is Still Relevant to Today’s Facebook Monopoly

Microsoft kill pun

During reading Holt’s Empires of Entertainment, I was fascinated by the idea that the push towards more government regulation and antitrust policy came at the heals of the Clinton administration and the Bush administration, when the formation of antitrust agencies, such as the the Antitrust division of the Department of Justice (the DOJ) and the Federal Trade Commission (FTC) came into judicial play. Under the Clinton administration’s team activism, enforced prosecution of antitrust violations became a focus for the DOJ, especially during Clinton’s second term. The reading states,

“During Clinton’s second term– a position most evident in the DOJ’s pursuit of the Microsoft case. Even though the court’s order to break up Microsoft was eventually overturned and a settlement was reached in 2002, the antitrust enforcement under President Clinton certainly employed a more aggressive approach by the DOJ and the FTC than the previous administration. The Clinton Administration also increased regulatory budgets and has more participation from state agencies in the pursuit of antitrust violations.”

After reading this, I wanted to do more research into how Clinton’s administration and the formation of the DOJ and FTC pushed for more prosecution and correction of market failures by banning business practices and blocking monopolizing mergers that made fair competition for smaller tech companies nearly impossible. How did Clinton’s fight for antitrust policy and antitrust enforcement truly impact and change the long term effects of mergers and commercial practices of large tech firms? Did this enforcement stifle the concentration of tech innovation? How did the ‘Microsoft Antitrust Case’ represent a key shift during the Clinton Administration, and American history, whereas the government declared the right to intervene in tech and media companies business affairs, through an aggressive approach of the judicial system?  And finally, how are we still seeing the affects of antitrust policies play out in today’s era of advanced internet resource and tech economics, where active federal investigations are constantly combating market monopolization by dominant corporations, like Facebook?

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Bill Gates and Mark Zuckerberg testify before Senate committees, in 1998 and 2018

Is Mark Zuckerberg the new Bill Gates of our generation? Does his manipulation of the tech industry and total domination of any competitor that opposes as a threat to his platform,  similar to that of Bill Gates in the 1990s? It clearly has given him an unfair, and even unjust edge on market competition. His attempt to put monetary needs over the desires and privacy of users finally caught up with him like it did Bill Gates. Today, Facebook has become the next company to be prosecuted in court by antitrust laws. But will it eventually be sold into separate shares because of its greed? Only the future can tell, but based on its current trajectory and run-in with the federal law it is safe to say Facebook has been on the antitrust radar as of late.

To understand this you must understand a few key facts of the 1990s. It was during this era, that new technologies had marked an important new range of markets with internet and information technology at the epicenter of future economic growth and prosperity. This created new and improved products. On the flip side, it also meant new laws for intellectual property rights, patents, copyrights and trade secrets would become a competitive edge for major companies controlling and buying those rights. Clinton’s administration pushed for the need for greater suspicion regarding the fast growing strategies employed by market monopolizing companies, like Microsoft. Fast growing technological change of major computer industry giants like Microsoft, brought with it the expansion of “intellectual property” and network effects. These were high tech markets that took over market power by taking advantage of network externalities that would be impossible to capture by new competitors because corporate giants already had a large number of existing customers, that were locked into the use of their product and services. High-tech markets of companies like Microsoft used the technology boom to create barriers for new competitors to enter their market, and in the Clinton administration only antitrust policies made sure that dominant positions, like that of Microsoft, weren’t being abused to the point that new competitors could never enter a fast growing market.

This is exactly what Microsoft ended up doing, and in 2001, a federal appeals court ruled that Microsoft had engaged in a series of anticompetitive acts in the 1990s that helped cement its dominance over its market. Twenty years ago, Bill Gates, the chairmen and CEO of Microsoft had to testify before congress, defending the punishable accusation that his company was one giant monopoly over the tech and computer industry. Microsoft had used its Windows and Internet Explorer monopoly to force computer makers to exclude a browser made by Netscape on their PCs. In 2000, a federal judge  ruled that Microsoft had unlawfully maintained its monopoly with Windows and had unlawfully tied its Internet Explorer browser to Windows. A few months later, he ruled that the company needed to be split up.  (Seattle Times Article)

Here is a video of Bill Gates dodging questions and talking in circles about his business deals and licensing handlings in his deposition  (it’s cringeworthy how he dodges all responsibility!): 

Most call this the most important antitrust case of its time, stating that it marks not only an important turning point for Microsoft’s history as a tech giant, but it also shaped both the way the government, tech companies, and the public view a collective responsibility to monitor and hold the tech industry accountable. It dictated that both government and public opinion have an interest in the tech industry’s competitive landscape, with a common goal to allow the tech industry to operate in a fair and open manner, that increases new innovation from small companies alike, and provides more diverse choices for consumers in a thriving market.

Currently we are seeing a replay of the government’s right to get involved in the tech industry with Mark Zuckerberg’s recent troubles of user privacy.  As if Gates didn’t serve as a warning to the young CEO of Facebook, Zuckerberg hasn’t learned the lesson that every monopolization has a price, and to share user data and gain money off it without the permission of the people can only lead to bad things. Whether it is 20 years ago, or now, companies and firms like Microsoft have come to exert too much control over our shared technological future, and make decisions about it without our input. Yet Facebook and Zuckerberg didn’t listen, and now history has repeated itself as Facebook takes a historic stock plunge, and the public calls for the company to be regulated, and even broken into smaller pieces, just like Microsoft, 20 years ago. However, both walk away very rich people, and the government is left reeling and trying to figure out how to regulate giant tech companies like Facebook. Will we see the rise of newer improved antitrust cases and stricter regulation laws on the internet? Or years from now we will be seeing the new emergence of a tech mogul that still believes monopoly over an entire market is the only business plan to make?Top Art - Playing Monopoly What Zuck Can Learn From Bill Gates.jpg

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