American History 1988
Chapter 417 - 406: At the Crest of the Waves

Chapter 417: Chapter 406: At the Crest of the Waves

May saw Microsoft rejecting the Department of Justice’s proposal to split the company, and thus the antitrust case entered its second phase.

In court, Microsoft presented a videotape to prove that uninstalling the Navigator browser caused the Windows system to become sluggish.

It essentially argued that the browser was a feature of the system, so Microsoft bundling it was not due to business competition.

However, the Prosecuting Attorney was well-prepared for this; they brought in a computer and managed to uninstall Navigator right there in the courtroom.

It turned out to be unrelated to the system, and Windows was still able to run smoothly.

Moreover, technicians discovered signs of editing on the videotape provided by Microsoft.

Only after Judge Jackson issued a warning did Microsoft admit that the videotape they provided might not be entirely accurate.

It was not until the court staff prepared to personally verify this result that Brad Chase, Microsoft’s vice president, stepped up to admit that the videotape was fabricated.

This further worsened Judge Jackson’s impression of Microsoft, and he even openly denounced the company as untrustworthy in court and questioned its willingness to abide by the law.

"Allowing a monopoly corporation such freedom that they can suppress emerging competitors at will is damaging to the original intent of the Sherman Antitrust Act.

Especially for companies in industries where technology is rapidly advancing and paradigms are frequently shifting," said the Washington District Court’s notice, clearly indicating its stance.

Therefore, on June 18, the preliminary judgment of the antitrust case was officially handed down.

According to Sections 1 and 2 of the Sherman Antitrust Act, Microsoft’s behavior constituted an illegal monopoly.

It established a position of absolute advantage in the market for x86 personal computer operating systems.

And Microsoft had taken action to crush threats to this monopoly, including applications from companies such as Apple, Sun, Netscape, Lotus Software, Real Networks, Novell, etc.

Based on these facts, the district ordered the split of Microsoft as a remedy.

According to the judgment, Microsoft would be divided in two.

One company would inherit the Windows operating system, along with all the assets and technology of its subsequent versions.

The other company would receive the Office suite of business applications, along with other Internet-related software, including the browser.

As a preventive measure, Microsoft must also share its application programming interfaces (APIs) with third-party companies.

And appoint a panel of three, who will have unfettered access to Microsoft’s system records and source code repositories for five years to ensure compliance.

Even Microsoft is required to promptly disclose technical details of Windows software to downstream companies like Netscape.

Uniform standards must also be established in the pricing of the operating system.

Furthermore, any improper competitive practices must stop within 30 days.

The District Court’s ruling was like a bomb exploding over the skies of Seattle.

And at the very moment the judgment was released, Wall Street had already begun to respond.

Microsoft’s market capitalization, which had reached 140 billion US dollars, was cut by a third on that day.

Then, Bit, which had just reached the 100 billion US dollar milestone, coincidentally became the largest software company in the world.

Surprisingly, the antitrust case’s outcome seemed to further stimulate Bit’s share price rise.

Many speculators held the notion: if Microsoft were really broken up, Bit, the company ranked second, would naturally become the next industry leader.

Well, that wasn’t entirely without reason.

This judgment, however, provoked strong resistance from the Republican Party, politicians led by Newt Gingrich crying out against the conspiracy.

The average consumer had not called for these antitrust actions; they were the business demands of competitor companies.

The development of high-tech allowed consumers to enjoy low prices, high output, and a series of stunningly innovative new products.

Yet, more and more companies are trying to impede competitors by seeking protection from the government.

Many such cases are based on speculations of some undefined, future vague harm to consumers.

These interventions will weaken the competitiveness abroad of successful American companies like Microsoft.

Even the Republicans bluntly stated that the federal government had become a tool for some private interests to suppress their rivals.

Who these private interests were, everyone understood without saying.

At the same time, right-leaning newspapers began subtly criticizing Dean’s lifestyle.

How could someone who has children but unwilling to start a family represent the American dream?

Microsoft was about to be split, and some people were genuinely panicked.

Gates was a supporter of the Republican Party, a fact almost universally known in the industry.

People like Newt Gingrich fought tooth and nail for Microsoft; it was not about party strife but purely about interests.

After all, having a third of Microsoft’s market value slashed was a deep cut for many.

So, the reputation of being the world’s richest man no longer carried weight, and the lure of Silicon Valley’s campaign funds dimmed substantially.

Politicians no longer cared about his status and began to criticize Dean in various ways.

Nevertheless, this still did not change the district court’s ruling, with Microsoft given four months to submit a detailed proposal on how to split the company.

At this moment, in the tidy office of Building 8 at the Redmond Microsoft Campus in Washington State, a difficult moment was taking place.

The curtains were drawn, casting the room in semi-darkness.

On a nearby desk lay a collection of framed photographs, the ones in front featuring Gates’s wife, Melinda, their 4-year-old daughter, and their son who was still in swaddling clothes.

Then there was a group photo of the first 11 employees at Microsoft’s founding, as well as a black and white photograph of Einstein, and three well-positioned covers of "The Economist."

Gates sat in a chair in the middle of the office, rocking back and forth incessantly, a characteristic gesture of his.

He rested his elbows on his knees, his chin almost touching his kneecaps.

Whenever he seriously thought about something, he would shake even faster.

But now, judging from the rhythm of the rocking chair, all of it seemed particularly feeble.

As for Gates’ right-hand man Ballmer, at that moment he was sitting on the sofa with his hands covering his head.

They had just finished a meeting, the day after the court had announced its verdict.

"Hey," finally, Gates broke the silence in the office, "if they really mess up the company, split it in an irrational way..."

Ballmer stared at his feet, saying nothing.

"Then does our effort still have meaning?" Gates continued, regardless, "You know, this time the result is very unfavorable for us."

"Perhaps we still have a chance to appeal," the low tone of Ballmer’s voice made the office feel even quieter.

"Appeal?" Gates twitched the corners of his mouth, "We are indeed doing that, just..."

The office fell silent again; Microsoft’s legal team was indeed trying to reverse the judgment in the appellate court.

But the Department of Justice and the state governments were also asking to bypass the intermediate circuit courts and send the case straight to the Supreme Court of the United States.

A section of the "United States Code" allows this kind of action; the provision grants the Supreme Court direct appellate jurisdiction over certain antitrust cases brought by the federal government, at the level of the district courts.

Plainly put, in such rules, antitrust cases don’t need to go through the normal appeals process and can be directly adjudicated by the Supreme Court.

And why would the Prosecuting Attorney make such an application request? That’s a question for one of Dean’s friends on the Supreme Court.

Once the case reaches the Supreme Court, one hardly needs to doubt the outcome.

In recent years, nearly every investment Dean made in Silicon Valley brought along those Supreme Court justices.

So, do you guess whether the Supreme Court will agree to the district court’s request for expedited review?

As the antitrust case had progressed to this point, Gates could conclude that the political forces behind Dean were much stronger than his own.

"Steve, I’m planning to step down as CEO, no matter what the outcome of the appeal turns out to be."

Ballmer wasn’t surprised by this; it was the worst-case scenario they had discussed earlier.

"If Microsoft is truly split in two, how should the two companies be arranged?"

"You’ll be in charge of the Windows system." Without much thought, Gates gave his response.

Ballmer was his staunch ally, the two had been close friends since their Harvard days.

And the Windows system was the core of Microsoft; Gates did not trust anyone else with it.

Additionally, although he was stepping down as CEO, his status on the board would not change.

"Don’t we really have any other option?" Ballmer asked, unwilling to accept this fate.

"Wait!" Gates exhaled the word softly.

Ballmer looked puzzled.

"The next resident of the White House is from the Elephant Party."

With Gates’ hint, Ballmer’s previously dimmed eyes suddenly sparked with light.

He got up and moved his body around, "I wonder what the scene is like in Silicon Valley right now?"

"Probably throwing a party," Gates stood in front of the window, gazing southward, long and silent.

...

Indeed, a party with thousands of attendees was taking place in Silicon Valley, where everyone except those from Microsoft was excited about the court’s ruling.

Apple’s Jobs, HP’s John Yang, Sun’s Scott, Novell’s Robert... with glasses in hand, they were enthusiastically talking with everyone present.

Microsoft’s dismemberment would open up a brand-new market, and the ambitious guys were already discussing how to carve it up among themselves.

"Dean, we are ready to announce the Ark project tomorrow," Robert Frankenberger, with a glass in hand, found Dean on the balcony.

"Good, I think Seattle will be terrified," Dean said, clinking glasses with him with a smile.

The Ark project spearheaded by Novell aimed to rival Windows with another consumer-grade operating system.

Companies involved in it, apart from computer manufacturers like HP, included software companies such as Netscape and Bit.

The entire ecosystem was almost ready, and even if it couldn’t threaten the position of the Windows system outright, taking a piece from its mouth shouldn’t be too difficult.

Especially during Microsoft’s turbulent times, an announcement of such a plan by multiple companies together might stir up another commotion.

It might even scatter Microsoft to pieces, and that would indeed be interesting.

Just then, Anna approached and whispered a few words to Dean’s ear.

"I got it," Dean nodded.

Seattle was betting on the upcoming election, choosing the Bush Family.

If nothing unexpected happened, the splitting of Microsoft was already a given, but there might be a timeframe involved.

Three years, perhaps? Dean swirled his glass as he looked towards the distant coastline, silent.

At the crest of the wave, it might turn out to be even more exciting than imagined.

----

PS: The book is nearing its end. The author has a day job and has been too busy with work this year, having to stay up until one or two in the morning to write over the past two months.

Today it’s become unbearable, and most of my energy has drained away.

If this continues, my health might fail before the story does, so it’s drawing to a close.

My apologies to everyone!