American History 1988
Chapter 392 - 381: Surging In

Chapter 392: Chapter 381: Surging In

"Actually, it’s very simple to get all of AOL’s shareholders to unequivocally support Netscape and ignore all the benefits that Microsoft’s preinstalled system icons could bring,"

Steve Case’s fingers lightly tapped on the tabletop, "As long as the interests of the two are tied together, no one would consider Gates’s proposal."

Dean’s gaze flickered, and under Steve’s slightly tense but impassive eyes, he simply responded.

"Go on~"

"Alright, Dean, I think I’ve guessed it," Steve spread his hands, deciding to tell the truth.

"As an ally, there is no doubt that we stand with you, but AOL is a public company.

In order to be accountable to shareholders and the public, the prerequisite for AOL’s assistance to Netscape is that it must be in its own interest.

So I thought of a compromise, which is ’you are in me, and I am in you.’"

Seeing that Dean was still noncommittal, Steve simply shrugged.

"To put it more bluntly, it’s cross-shareholding between AOL and Netscape.

Only in this way, the board of directors and all investors will support our decision!"

Dean looked at Steve Case with an enigmatic gaze and, just when the latter thought he would outright refuse, Dean laughed.

"Steve, you are a qualified CEO."

"What?" A puzzled Steve Case didn’t understand.

"Tell me, how many chips do you want to get?" Dean leaned back on the sofa with a detached look in his eyes, his tone betraying no emotion.

For some reason, Steve Case suddenly felt a twinge in his heart, but he still believed this was the best solution at the moment.

"Dean, according to the current market value ratio of AOL and Netscape.

My expectation is that AOL provides 10% of its shares in exchange for 15% from Netscape.

This deal is very reasonable, and it’s even a friendly price considering our alliance."

The reason Steve Case said this was because AOL’s market value was actually higher than Netscape’s.

Thanks to the unlimited monthly service, AOL firmly occupies the top spot among domestic ISP providers.

It also provides content services, and it wouldn’t be an exaggeration to say that AOL can control the content that millions of users browse online.

"We see what AOL gives us," one user described his internet life during an interview with a reporter.

Although this might be somewhat one-sided, it indicates AOL’s ability to control how users access information.

Because of this, Wall Street is very optimistic about AOL’s future development.

Also, with the rise of the internet wave based on content, AOL’s current market value has reached 12 billion US dollars.

Although Netscape has started an era and owns an application store model based on its browser platform, it is, after all, too young.

As of today, it’s been just over half a year since it went public.

But with the symbolic flag of the "Internet" and a multitude of developers on board, Netscape’s market value is also very close to 8 billion US dollars.

No other company has been able to quadruple its market value in such a short time.

Keep in mind that at the initial IPO, Netscape’s valuation was only 1.8 billion US dollars.

But from the perspective of the "veteran" AOL, Netscape is an immature newcomer, and its market value is much lower than its own.

Steve Case wants to use a 1:1.5 ratio to allow both parties to cross-hold shares, which he deems very reasonable.

Even because of the uncertainty of competition with Microsoft, they are not taking advantage of their downfall—that’s the proof of an alliance.

It’s not unreasonable for AOL to think this, and Steve Case also fixed his gaze firmly on Dean.

"Steve," Dean lifted his eyes, "1:1, AOL and Netscape each cross-hold 10% of the shares!"

"Dean..." Steve Case was somewhat helpless.

"Stop," Dean interrupted him, "Don’t haggle anymore, this is for the sake of our alliance."

Steve Case was stunned.

Dean didn’t explain much more, "Pay attention to Netscape’s financial report for this quarter, it’s more than you think."

"What? Dean, I need to have reasons to convince the board.

In their eyes, AOL is worth 12 billion, and Netscape 8 billion—that’s a fact."

Steve Case hadn’t expected Dean to become so assertive all of a sudden.

"Alright, I can only tell you. Netscape’s application store revenue has increased significantly, and its gaming business has also improved.

And one last thing, who is behind the scenes strategizing for AOL to become the biggest beneficiary in the ISP market?"

Under Dean’s intense gaze, Steve Case backed down.

Dean was right, AOL indeed owed him a lot of favors.

If it were anyone else, for the sake of business, Steve Case would choose to ignore those favors selectively.

But this was Dean Price, who wielded substantial influence in the internet industry, and no one wanted to offend him.

Of course, what really made Steve Case concede was the previous statement about Netscape’s application store and gaming business.

These were gold mines that many coveted, especially the application store. They didn’t even have to do much and could just sit back and collect the profits.

My God! For the first time, the industry finally witnessed the power of controlling a platform, meaning countless developers were working for them voluntarily.

Although Netscape’s current market value couldn’t match AOL’s, the future was promising, which was why Steve Case wanted to cross-hold shares.

There’s also the online gaming business, which Bit Company had proven to be lucrative, with countless companies now eager to get involved.

If Netscape could make headway in this field, that would be even better.

"OK, just a 10% cross-holding deal!" Steve Case was determined to push through this transaction at the board meeting.

"I’ll be on the East Coast during this time." Dean stood up to take the coat Anna handed him, ready to leave.

The wind was picking up; it was time to make some preparations.

Beneath the surface, undercurrents were raging, and the fish were scattering in all directions.

He smelled the oncoming storm, and the murmurs of secret conversations and conspiracies seemed to echo in his ears.

...

Rewind to the Seattle meeting at the beginning of the year, everything started here.

After realizing that conventional business competition methods, including copycat tactics, could not win the market for Navigator.

Gates understood that it was almost impossible to directly defeat Netscape.

They had to resort to unconventional means, and they had to be fast.

Because as Netscape recruited more and more developers, the Matthew effect would become increasingly apparent.

Once the trend had been set and the market had accepted Netscape’s model, it would be even harder for Microsoft to change the game.

Therefore, for Netscape’s browser, he adopted a completely new strategy.

"Put pressure on each of our business partners, ask them to help promote Microsoft’s Navigator browser.

At the same time, prevent the further spread of the Netscape browser, by any means necessary."

In the list of business partners Gates wrote, it nearly covered all the important companies within the computer industry.

Starting from that day, every major internet service provider had received calls from Gates and his subordinates.

They made calls to all the major ISPs, personal computer manufacturers, software companies, and consulting firms.

In those calls, Microsoft promised them benefits in exchange for heavily promoting the Navigator browser.

At the same time, as a countermeasure, these partners needed to increase the difficulty of promoting the Netscape browser.

Meanwhile, Gates ordered all software developers within the company to stop all their current tasks.

They were to fully support the iterative updates of the Navigator browser, a command that eventually mobilized as many as four thousand developers.

Yes, four thousand technical staff gathered in Redmond and began an aggressive campaign on the Navigator browser.

If you want the Navigator browser to be truly recognized by the market, it must not fall too far behind Netscape.

Gates had a three-pronged strategy for the Navigator browser, a plan that had already been put into action.

The first step was to release the first-generation browser to understand the market’s needs and expectations for new features in the software.

The second step was to improve the product features based on market feedback and then release the second version of the browser.

The third step was to combine all lessons learned and launch the third version, which often became a flagship product.

Of course, on top of this was a "embrace and extend" strategy, such as first identifying the market leader.

Then imitate them, copy their vision, offer substitutes, and finally integrate products, leverage advantages, and erode the competition.

Clearly Netscape was the market leader, and Microsoft faithfully advanced its own strategy, already moving to the second step.

Now the third step, which is the third version of the browser, would be Microsoft’s flagship product.

Gates expected it to clash with Netscape’s Explorer in both performance and market presence.

So to ensure that Navigator 3.0 was flawless, Microsoft invested thousands of developers to perfect this version’s browser functions.

Meanwhile, externally, he also had to buy time for Navigator.

As mentioned above, putting pressure on Microsoft’s business partners to slow down the spread of the Netscape browser was one of the goals.

Gates was well aware of the maneuvers Microsoft could engage in after monopolizing the desktop system.

In that meeting, he gave a full explanation of the "privileges" in Microsoft’s hands.

"Regarding how to develop and utilize the Windows desktop, we have three options.

First, when we realize our core assets are at risk, we can use it as a bargaining chip to deal with the browser wars.

Second, we can monetize it, selling desktop positioning to the highest bidder.

Third, we can use it to sell and promote our own content.

I admit, through the first option, we can adjust our own turf.

But at the same time, we also cut the competitive edge of MSN."

For the sake of winning the browser market, Gates did not hesitate to use MSN internally as a pawn to win this war.

His three proposals caused a lot of controversy at the internal meeting, first the MSN department did not agree with this approach.

They had worked hard for so long only to be reduced to a sacrificial piece.

Secondly, other executives also had difficulty accepting Gates’s actions.

This was not just a question of morality; it could also potentially get Microsoft into legal trouble.

As early as 1991, Microsoft had already been sued over monopolistic issues with desktop software.

But back then, there was no Windows 95, and Microsoft had not completely monopolized the operating system, so the matter eventually fizzled out.

But now, Gates’s decision was resurrecting memories for many executives.

Nevertheless, ignoring the internal disputes, this resolution was forcibly passed by Gates.

Thus came the scene now facing Dean, when the bottom line was broken, any subsequent "foul" would no longer be a burden.