American History 1988
Chapter 405 - 394: One Million US Dollars a Day

Chapter 405: Chapter 394: One Million US Dollars a Day

Although antitrust law has many obscure details, its overall purpose is very clear.

That is to prohibit industry giants from using their bargaining chips to gain competitive advantages when competing for new markets.

There are mainly two purposes for the implementation of antitrust law; first, it encourages industry giants to rely solely on introducing and improving products to compete.

Second, it restrains industry giants from blocking their competitors’ sales channels, or using other chips to pressure existing business partners to jointly suppress competitors.

Comparing this with Microsoft’s approach, there is no doubt that some of its methods violated these provisions.

For example, using its advantages in operating systems to force computer manufacturers to choose only Microsoft’s Navigator browser.

All of this was documented in a white paper by Lübeck, which was eventually submitted to the Trade Commission and then transferred to the Department of Justice.

After more than a month of evidence-gathering and investigation, the slow-moving Department of Justice finally responded.

In a flurry of camera flashes, Attorney General Janet Reno and antitrust chief Joel Klein announced that Microsoft had violated the previously reached settlement agreement.

Therefore, the US Department of Justice would fine it one million US Dollars per day until Microsoft stopped its bundling sales of browsers.

The mass media was in uproar over this, and Gates himself was greatly shocked.

The public was shocked because they did not expect the Department of Justice’s decision to come so swiftly, while Gates did not expect the federal government to be serious.

Not just the public, but even Netscape was surprised by the speed of the Department of Justice’s decision.

According to normal litigation experience, shouldn’t there be a lengthy court proceeding?

But this has to do with Microsoft’s special past, as it is not the first time it has been suspected of violating antitrust legislation; it is a repeat offender.

As early as 1990, the Federal Commission began investigating whether Microsoft was abusing its monopoly position in the PC operating system market to engage in unfair competition.

The commission ultimately deadlocked with a 2-2 vote in 1993 and ended the investigation.

But Attorney General Janet Reno did not let Microsoft off easily; her investigation never stopped.

Later, Microsoft, not wanting to cause trouble, reluctantly reached a settlement with the Department of Justice and signed an agreement in 1994.

Under the terms of the agreement, Microsoft agreed not to link the sales of other products with Windows but was still free to integrate other functions into the operating system.

The Department of Justice preliminarily concluded that Microsoft’s bundling sales of browsers violated the settlement agreement it signed in 1994.

Therefore, as a punishment, the decision for the fine of one million US Dollars per day was made.

At the same time, Microsoft’s coercive terms to computer manufacturers had already been reported by the media.

Many people knew that Microsoft had put pressure on computer manufacturers and ISP operators and had talked to each one.

The previous conflict with Compaq and the public statements from HP prove this point.

At the same time, this is exactly contrary to the provisions of the antitrust law; Microsoft is using its advantages to suppress competitors instead of competing through its product innovation.

So, for all these reasons, the Department of Justice issued such a judgment.

They believed that the investigation against Microsoft had already begun long ago, so the lengthy process of evidence collection and trial could be directly skipped.

Is this reasonable? Of course, procedurally, there is nothing wrong with it.

As for why the Department of Justice was so efficient? Someone suggested that this might be related to Netscape’s recent stock price drop.

Wall Street is not blind; if Microsoft uses its operating system trump card, it’s highly likely that Netscape could not mount an effective counterattack.

So in the past few months, Netscape’s stock has been falling.

To say it has plummeted might be an exaggeration, but a one-third evaporation of market value is already crippling.

Then whose most anxious when Netscape’s stock falls?

Of course, it’s the shareholders who have staked their fortunes on Netscape.

They desperately need to turn the situation around and then restore confidence to the market.

Hence, the Department of Justice announced punitive measures against Microsoft with extreme efficiency.

Sure enough, after Attorney General Janet Reno announced the news in front of the cameras, Wall Street immediately reacted.

In just half a day, Netscape’s stock rose by 20%, and the effect of this good news was very strong.

At the same time, not only Netscape’s investors were cheering, but the business partners pressured by Microsoft also sighed with relief.

With this judgment from the Department of Justice, Microsoft surely won’t continue with its previous strategy, right?

Like with Compaq, Microsoft gave other computer manufacturers two months to consider.

As the days went by, if there was still no progress on Netscape’s part, then they would have no choice but to select Microsoft.

Frankly, these computer manufacturers have a preference for Netscape at heart.

The latter’s browser is more popular and often specifically requested by customers.

If the two-month deadline arrives and Netscape is still helpless against Microsoft, then they truly do not know how to meet their customers’ demands.

Now, it looks like they won’t have to deal with angry customer complaint calls anymore.

Actually, several days before, many in the industry had already sensed something unusual.

That period coincided with frequent issues with Microsoft’s Navigator browser.

The browser wars attracted the attention of many in the industry, and of course, everyone was regularly following these two products.

When Navigator first encountered problems, many assumed it was just a temporary bug that would soon be fixed.

However, when the issue kept reoccurring sporadically and Microsoft was slow to address it, industry insiders began to sense something unusual.

This did not seem like an issue caused by a bug—the headless, flailing directives from Seattle further proved this point.

Indeed, rumors quickly began to circulate that the issues with Microsoft’s browser did not stem from inside the company.

The underlying meaning of this news was extraordinary. What external factor could affect the performance of Navigator to the extent that Microsoft was unable to address it?

Shrewd industry peers turned their attention toward that low-profile billionaire in Silicon Valley—no one else in the world had such capability.

As a result, computer manufacturers like Compaq and HP, who had close ties with Dean, completely ignored Microsoft’s ban.

They continued to pre-install Netscape’s browser on every computer they manufactured.

Even Compaq was ready to remove the obnoxious Navigator icon again just as soon as the winds were clear.

The reactions of computer manufacturers couldn’t be understood by the general public; they only knew that the Department of Justice had penalized Microsoft.

Did this mean that Microsoft indeed engaged in monopolistic practices in its competition with Netscape?

Additionally, Microsoft’s deliberate hiding of the Navigator’s uninstall button disgusted many users.

Yes, the current Navigator browser was like rogue software—ordinary users had no idea how to uninstall it.

Now with antitrust penalties, the public grew even more suspicious of Microsoft’s practices.

Without a doubt, this was a public relations crisis for Seattle.

It was not just about Microsoft’s corporate image but also threatened to tarnish Gates’s personal idol status among the public.

As a household name and a tech magnate, stories about Gates had been written countless times.

Ignoring his family background, Gates always was a hero in many people’s eyes, a symbol of the American dream.

Though Dean’s rise later diverted much of his limelight, Gates’s positive image never changed.

Only this time, the antitrust maelstrom cast a shadow over everything.

"Brad, it’s been two weeks. Can you give me a definite answer today?"

Gates paced restlessly in his office, his thick glasses blurry due to lack of attention.

The bulging eyes behind the lenses also showed fine red blood vessels growing, revealing his recent mood hadn’t been great.

"Preliminary investigation indicates the problem is not with us," Silverge said under immense pressure as he delivered his verdict straightaway.

"What do you mean?" Gates spun around swiftly.

"We’ve never encountered the issues reported by users here in Redmond, including various models tested at different times.

But strangely enough, when we switch locations, Navigator does indeed experience unresponsiveness.

After comparison and a series of elimination methods, we suspect the issue lies with the network environment."

Silverge’s explanation left both Gates and Ballmer frowning in confusion.

"Network environment? Is there a problem with the user’s communication protocol, or is it the network’s transmission speed?"

"Neither," Silverge shook his head. "Navigator has been blacklisted."

Gates and the others were taken aback, then incredulously lifted their eyes.

"Brad, are you saying someone is targeting us, that all of this is deliberate?"

"This is our suspicion, and it’s also the only reason that can explain this phenomenon."

"Who? Who has such means?" Gates asked, bristling with killing intent.

To block Navigator across the entire network would require massive influence—the federal government couldn’t possibly manage it. Suddenly, Gates’s gaze froze.

Damn! He seemed to have forgotten a key figure.

"Brad, perhaps we’ve both guessed who that person is."

With a serious expression, Silverge nodded. Yes, he had already identified the target.

Gates stopped pacing and took a deep breath, "Is there a way to find evidence?"

"It’s difficult because it involves the functioning of America’s entire network; we can’t even find the entry point."

An investigation? How to investigate? Do you think the CIX Alliance’s security measures are a joke?

Even though Microsoft is aware of organizations like the CIX Alliance, they have no right to step onto their domain.

Apply for an official investigation by the federal government? Don’t make them laugh—they don’t even have solid evidence.

Should they sue for using illegal competitive tactics just because of the browser war with Netscape?

Setting aside whether or not it would be illegal, Netscape isn’t an ISP and doesn’t have such resources.

As for Dean? Again, they had no evidence.

"Steve, Microsoft is in trouble. Maybe it’s time for our political friends to take action."

For the first time, Gates felt the situation was tricky. Coupled with the recent verdict from the Department of Justice, he decided to use his political resources to resolve it.