American History 1988
Chapter 416 - 405: A Carrot and Stick Approach

Chapter 416: Chapter 405: A Carrot and Stick Approach

The antitrust lawsuit that had lasted for more than half a year not only damaged Microsoft’s reputation but also tore apart the public image that Gates had carefully crafted.

Due to these consecutive events, the growth rate of Microsoft’s stock price had slowed down recently.

In 1997, the internet wave continued to climb to higher peaks, and the whole of Silicon Valley was advancing rapidly.

Almost all computer-related stocks, whether software or hardware companies, were surging.

For instance, Yahoo’s market value had tripled in less than a year since it went public.

From an initial 1.5 billion US Dollars to today’s 5 billion US Dollars, it took only 10 months.

The stock prices of Intel and Cisco were stepping up every day.

"In the past few decades, I have never seen the electronic boards in the trading hall completely green, without even a speck of red,"

stated a Nasdaq trader during an interview with a journalist.

Of course, this enthusiasm was not only reflected in Wall Street’s stock prices but was also evident in frequent actions among major tech companies.

In March, as Microsoft and the Justice Department were trying to negotiate a settlement, Sun Microsystems, Netscape, and AOL announced the formation of a strategic alliance.

This partnership was aimed at creating a network software "chariot" based on Java to counter Microsoft’s dominance in the commercial and consumer markets.

Microsoft’s lawyers immediately cried "foul," arguing that Microsoft’s competitors were forming alliances against Microsoft; how could the Justice Department still claim that Microsoft was monopolizing?

However, Netscape’s CEO Barksdale immediately retorted that it was precisely because of Microsoft’s dominance in commercial software that everyone was forced to fight back.

"If this continues, Microsoft will devour the entire world!"

The conflict between Silicon Valley and Seattle did not affect the reputation of the tech industry’s "golden boys."

Compared to them, Washington and Wall Street were filled with various scandals and partisan conspiracies.

"They are stars," said Billy Taosan of the Elephant Party Subcommittee, "It’s hard to categorize high-tech issues into Elephant Party or Donkey Party, or liberal or conservative."

The only consensus between the two parties was that Silicon Valley was a high-tech paradise, a miracle of economic growth, and an excellent spot for campaign fundraising.

The TechNet lobbying organization, founded by Durell, had directly established political action committees for both the Elephant and Donkey Parties.

They had started to collect a large amount of campaign funds in the back alleys of Atherton and the country lanes of Woodside for the East.

Their fundraising capability made Silicon Valley, and its leaders’ image shine brighter in both parties.

Therefore, no one criticized the actions of Netscape and the other companies involved, including those Elephant Party members who had previously cheered for Microsoft.

After all, although Microsoft was enormous, it could not compare to the entirety of Silicon Valley, especially in terms of lobbying funds.

Impacted by this, Seattle also began to increase its investments in the political field; previously, Microsoft’s governmental affairs department in Washington had only one employee.

He had to squeeze into the corner of a sales office in the suburbs of Chevy Chase, even using a borrowed desk.

Following his experiences during the antitrust case, this tech giant’s political lobbyist had to frequently travel between different cities.

So much so that he kept most of his files in the back of his Jeep for long periods.

Seattle began to understand that lobbying Congress couldn’t be an afterthought stored in the trunk of a Jeep anymore.

Compared to Dean and Netscape, who invested tens of millions annually in public relations, Seattle’s six-figure spending was really negligible.

Only now had Microsoft started to put effort into political lobbying, which was likely to turn around its declining trend in the antitrust case.

The coverage by public media, as well as the Justice Department’s refusal to budge, had once caused the negotiations to stall.

While Gates was deeply troubled by this, Dean was further organizing his businesses.

First, the consumers’ division of the Bit company was officially renamed the Entertainment Media Division.

This name change revealed the company’s future business direction planning.

Entertainment generally refers to the development in social software, gaming, and email services.

Media, then, involves electronic publishing businesses like news media, online video, film, and music, summarizing it as pan-entertainment and digital media.

Based on the instant messaging software Toktok, it nearly monopolized the global chat software market.

According to Bit’s backend statistics, over fifty million people had registered Toktok accounts.

Apart from Microsoft’s Windows system, no other software had such a huge user base worldwide,

and Toktok played in social networking, unlike the isolating Windows system.

The energy released by tens of millions of active users each day was tremendous and unimaginable.

What does this concept look like? Essentially, if Toktok launched a domino game, it could make headlines on major news platforms.

Therefore, the value-added services based on the Toktok platform hardly had to worry about failure.

Because its user base is so immense, acquiring millions of paying users was a piece of cake for it.

The rapid growth in market value of Bit Corporation was largely due to its entertainment media division.

Of course, there were other companies launching competitive software, such as Microsoft, which introduced a similar MSN online chat feature.

However, firstly, its ecosystem construction was virtually non-existent, and secondly, the style of MSN was too business-oriented.

Therefore, Microsoft’s business in this area barely made a splash, as ordinary people preferred Toktok’s more humanized and enriched social features.

It was only after several imitating companies failed consecutively that everyone realized that though social software was technologically simple, it had its moat.

Once people got used to Toktok and built their social connections around it, it was almost impossible for other software to break in.

Furthermore, Bit’s ecological development over the past few years was also one of the reasons keeping competitors at bay, with an ecosystem involving social interactions, gaming, media, etc., built around the Toktok platform.

Otherwise, Dean wouldn’t have renamed it the Entertainment Media Division, as according to future strategic plans, Bit will establish its own internet business empire.

This might overlap with some of Yahoo’s businesses, but still, the future internet market is large enough to accommodate multiple giants.

Moreover, Yahoo focuses on news media and its associated advertising business, which does not conflict with Bit’s focus on social domains.

As for Netscape, just like its browser, it positions itself more as a "tool" in the internet domain.

People use browsers to go online and download various practical plugins from its app store.

At the same time, Internet companies worldwide are utilizing various internet protocols certificates developed by Netscape.

Its email service and the games from its app store comprised the second largest part of Netscape’s revenue.

Unlike Bit Corporation’s customers, developers are the core of Netscape’s profitability, representing the upstream in the internet domain.

Bit, Netscape, Yahoo, these are currently Dean’s business arrangements based on software and the Internet domain.

Oh right, there’s also Amazon, which Bezos is planning to take public this year.

In the past year, Amazon’s sales soared from a few million US dollars to over 200 million US dollars.

With the addition of Bald Eagle, Amazon developed at a stunning pace, as the latter truly provided its own storage centers.

Basing on Bald Eagle’s management experience, Bezos is also constructing Amazon’s second logistics center near Seattle.

According to his plan, within the next three years, he will have Amazon’s logistics cover most states in Merrill.

However, this could only be considered Dean’s investment; it could not contribute bricks or mortar to the businesses here in Silicon Valley.

However, there might be opportunities for collaboration with Amazon in hardware in the future, like Palm Company’s PDAs, music players, and smartphones being housed on Amazon’s marketplace isn’t too far-fetched, right?

Speaking of Palm Company, its second version of the handwriting computer, Palm II, was already released, and even Dean personally appeared to support it.

Compared to the first generation, the new model completely updated both the system and hardware, and it avoided many design flaws of the Palm I.

Whether it was Hawkins or Dean himself, they were both highly confident in Palm II, and Dean was now deliberately promoting his hardware investments to diminish his own image as an internet czar.

Old Huang’s NVIDIA Corporation naturally wasn’t left behind either, as Dean not only visited the sites regularly but even headhunted several talents for Old Huang.

Moreover, regarding hardware, Dean recently planned to send Hawkins and his team to East Asia for exploration.

The domestic contract manufacturers in Merrill ultimately still had too high costs; the employees not only refused to work overtime but even went on strike frivolously.

Because of the explosive sales of Palm, orders were repeatedly added in batches, resulting in the factory workers refusing to work overtime.

Gosh, Hawkins nearly panicked at that time.

Since you guys don’t want to work, there are plenty of others who will.

The white bosses were just too comfortable; Dean decided it was time to up their intensity.

That’s when the benefit of the contract manufacturing model came into play; once the negotiations in East Asia were sorted, Palm immediately withdrew the domestic orders.

What did layoffs at the contract factories have to do with them? Palm didn’t keep laborers, only technicians.

Meanwhile, in contrast to Dean, capital was reveling in the internet wave.

A typical example was Sun Zhengyi, whose SoftBank Group invested in over a hundred internet startup companies in the past two years.

That meant he maintained a frenetic pace, placing bets on almost one company every week.

This pace was 10 to 20 times that of the typical Silicon Valley venture capitalist, leaving Durell’s colleagues utterly bewildered by Sun Zhengyi’s reckless investment strategy.

Who invests in venture capital like this? But amidst the tide, few could remain sensible.

Silicon Valley’s venture capitalists were also quietly changing their style, no longer focusing on a company’s profitability and future when investing.

Users and traffic had become the standards for evaluating an internet company’s prospects, leading to increasingly irrational investments and a surging influx of hot money.

Just as Dean was preparing to further adjust his strategies, news came from Washington that the Justice Department’s negotiations with Microsoft had broken down.

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