What the case against Apple has to do with Microsoft in the 1990s

The U.S. Department of Justice’s 88-page antitrust complaint against Apple contains a nice reminder for the company: You’re here because we paved the way.

According to the DOJ, the antitrust case against Microsoft paved the way for Apple — then teetering on bankruptcy — to launch its breakthrough success: the iPod. Decades and trillions of dollars later, Apple sits in the top spot. And because time is a flat circle, it faces an antitrust case that builds directly on the 1999 case against Microsoft.

To better understand the DOJ’s case against Apple, it helps to understand this United States v. Microsoft. If you were a teenager in the 1990s (or maybe not yet born – in which case good for you), then be able to missed this important antitrust case, but here’s the short version: Microsoft got nervous about the rise of the Internet and used its position as a monopoly to crush potential competitors, especially Netscape.

The court’s factual findings describe how Microsoft first tried to convince Netscape not to build a Web browser for Windows 95, and then tried to control the company by offering it a “special relationship.” When that didn’t work, Microsoft turned to the “cut off the air supply” page of the playbook, giving away Internet Explorer for free with Windows and making deals/threats to exclude Netscape from major distribution channels through other manufacturers. If you’re keeping score at home, this is basically illegal, courtesy of the Sherman Antitrust Act.

The DOJ initially tried to split Microsoft into two companies. That ultimately didn’t happen, but Microsoft left the trial weakened and with a long list of “prohibited behaviors” that ordered the company to refrain from anticompetitive tricks when dealing with OEMs and developers. Wired‘S The story of the 2000 case makes for fascinating reading on the whole.

In the current case, the Justice Department is not only implying that Apple benefited from the results of United States vs. Microsoft; it comes right out and says it. Take section 26 of the complaint:

For example, the iPod did not gain widespread acceptance until Apple developed a cross-platform version of the iPod and iTunes for Microsoft’s Windows operating system, the dominant operating system for PCs at the time. Without the consent decree in United States v. Microsoft, it would have been more difficult for Apple to achieve this success and ultimately launch the iPhone.

It then details how iTunes initially only worked on Mac computers; after the consent decree, Apple developed a version for Windows, and the iPod started going gangbusters. The rest is history? I’m not really sure that Apple owes the DOJ a thank you note for making the iPhone possible, but it didn’t hurt that I didn’t have to deal with Microsoft’s harassment along the way.

The case versus Microsoft also resonates everywhere DOJ v. Apple with one adorably strange word: middleware. Microsoft’s control over middleware: software that makes this possible other software to run on the operating system, such as web browsers or media players, formed the core of US v Microsoft. The DOJ concluded that Microsoft used various bullying techniques to deter other companies from developing middleware that would compete with or divert developer attention from its own platforms — and threatened to end its partnership with Intel when it attempted to develop platform-level software and undermining Java development while preventing its allies from working with Sun Microsystems. Real villain stuff!

The DOJ uses the M-word when describing “super apps,” calling it “a type of middleware that can host apps, services, and experiences without developers having to use the iPhone’s APIs or code.” They haven’t really taken off in the US yet; the closest might be the Uber app, which lets you request a ride, order dinner and reserve an e-bike all in one place. But true super apps as they exist in other markets simply don’t exist here, no doubt in part because Apple doesn’t allow them on iOS. The DOJ says this is because Apple sees them as a threat to its platform – and that Apple blocking them is a major barrier to innovation.

As a whole, the complaint paints a picture of Apple at a similar time to Microsoft at the height of its power. Microsoft saw the rise of the Internet coming and realized that its dominance was threatened. The DOJ portrays that Apple faced a similar problem when the iPhone achieved success: “Apple’s internal documents show that, shortly after the introduction of the iPhone and despite its success, the company began to fear that the disintermediation of its platform and the commoditization of the iPhone would threaten Apple’s competitive position. substantial profits from iPhone sales and related revenue streams.”

“Disintermediation” of PCs is what Microsoft feared, and the DOJ claims this is what Apple fears for the iPhone. Microsoft was absolutely right to be scared – and it looks like Apple is too.

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