Bill Gates, Microsoft, and Monopolization

Over the course of its dramatic antitrust trial in 2001, Microsoft found many of its corporate emails and memos entered into the public domain. The charges were brought by the Justice Department and Federal Trade Commission after numerous complaints alleging the company used its monopoly on desktop operating systems to take over new industries, especially web browsing. Only vaguely remembered today, the trial was big news at the time, offering a window into the strategizing of the first great software monopolist.

The words of cofounder and then-CEO Bill Gates were especially revealing. In addition to coming off as an evasive, condescending asshole, Gates made a long list of claims in his video deposition that would soon be directly refuted in court by his own emails. In one incriminating message, Gates suggested using Microsoft’s Office application monopolies to undercut its rival browser, Netscape:

One thing we have got to change in our strategy — allowing Office documents to be rendered very well by other peoples browsers is one of the most destructive things we could do to the company. We have to stop putting any effort into this and make sure that Office documents very well depends on PROPRIETARY IE capabilities. Anything else is suicide for our platform.

Several additional measures followed, in which Microsoft used their OS monopoly to block Netscape from other platforms. They pressured Intuit, the home accounting software marker, to change its default web browser from Netscape to Internet Explorer for “something like $1M . . . in return for switching browsers,” according to another email from Gates. And they did the same to Apple and AOL, with an email describing the CEO’s offer to the online firm: “Gates delivered a characteristically blunt query: how much do we need to pay you to screw Netscape? (‘This is your lucky day’).”

The company’s glaring lies led to a guilty verdict and an order by the Department of Justice (DoJ) to break up its OS and applications arms. But the criminal episode ended in a reprieve: the Bush administration dropped the DoJ demand that the firm be split up, and today, Microsoft is again the world’s biggest corporation by market value.

The Power of Google

While Google enjoys a much sunnier reputation than Microsoft did in the 1990s, it has its own sordid email record that casts a sharp light on the company’s incredible power. When the Trump administration first issued its immigration bans, Google engineers debated in an internal email thread whether to add more search results outlining the benefits of migration. They didn’t follow through, but it was a candid suggestion that showed the firm’s tremendous influence over the information its users encounter.

That extends to information unfavorable to Google itself. After the European Union levied a multibillion-euro fine against Google for favoring its own comparison-shopping results over others, Barry C. Lynn, the US competition scholar and monopoly critic, posted a statement praising the penalty on the website of the New America Foundation (NAF), where his think tank was housed. Google’s then-CEO, Eric Schmidt, called the institution’s head angrily, and soon Lynn received emails from his boss accusing him of “imperiling the institution as a whole” — Google wasn’t just a major funder of the NAF, its main conference room was named the “Eric Schmidt Ideas Lab.” Apparently some ideas weren’t welcome in this lab: Lynn’s research group was purged from the NAF.

In a more recent episode, Google’s management went to great lengths to conceal from its own workforce the nature of its contracts developing drone AI (artificial intelligence) for the Pentagon, with one internal email from a head AI researcher advising that company PR and public statements “Avoid at ALL COSTS any mention or implication of AI . . . Weaponized AI is probably one of the most sensitized topics of AI — if not THE most. This is red meat to the media to find all ways to damage Google.” The author of the email noted she was speaking publicly about “Humanistic A.I.” at the time to burnish the idea. But the company’s workers reacted volcanically, and Google ended up bashfully hosting a debate on the issue, with so much interest among employees that the subject was debated three times in one day, for workers around the world to view.

No Raise for You

The high-water mark for disastrous Big Tech internal emails is probably the correspondence detailing Apple’s leadership of an extensive wage-fixing conspiracy. From 2005 to 2010, the labor market for software engineers grew rather tight, as Google and then Facebook aggressively hired to build out their platforms. You’d expect this increased demand to result in higher pay for these scarce workers — and it probably would have, except that a legally adjudicated corporate conspiracy in Silicon Valley acted to keep salaries in line. And Steve Jobs’s Apple was at the center of it.

The plan was based on no-poaching agreements, in which big tech companies secretly agreed not to cold-call experienced engineers at other companies. (Experienced software designers are rare, and unlikely to respond to simpler hiring techniques like job listings or employment fairs, while direct cold-calling yields somewhat better results.) Thanks to subsequent court cases, we have the internal documents and emails from the great tech powers — and they’re even juicier than the Microsoft memos.

Among the evidence: Jobs’s email to Google CEO Eric Schmidt, responding to its efforts to recruit Apple engineers. “If you hire a single one of these people,” Jobs wrote, “that means war.” Apple was by far the bigger firm, so the threat was not empty. Google’s human resources hiring documents from this period indicate that Google had “special agreements” with certain companies including “Restricted Hiring” lists, as well as a “Do Not Cold Call” list that included Apple, Microsoft, Intel, and other tech firms like IBM and Comcast.

Apple reciprocated, with yet another incriminating internal email reading “Please add Google to your ‘hands-off’ list. We recently agreed not to recruit from one another so if you hear of any recruiting they are doing against us, please be sure to let me know.” Emails from Schmidt on the subject start innocently enough with “DO NOT FORWARD,” and he wrote in later emails that he would “prefer” that the communication be done “verbally since I don’t want to create a paper trail over which we can be sued later?” His HR head replied, “makes sense to do orally. i agree.”

At one point, while these illegal agreements were in effect, an errant Google recruiter still called and tried to hire an Apple employee working on web browsers. Jobs complained peevishly to Schmidt, who quickly wrote to Jobs saying the offending recruiter would be “fired within the hour.” Jobs responded with a smiley face.

Later, word of the wage-fixing deals got out, and the companies faced a Justice Department lawsuit and a large civil suit by sixty-four thousand employees. The actions were settled in 2015 with a hearty $435 million from the various corporations involved, coming to several grand per class member.

Steamy Reading

Big Tech’s history of incriminating emails suggests that the House Judiciary Committee probably has some juicy reading in front of them. If released, the most incriminating passages will surely end up in news reports and social media, where sound-bite-ready confessions have had legs in the past. With the tech firms already reeling from multiple investigations and penalties around the world, Big Tech will undoubtedly go all out to prevent further damage to their already-battered reputations.

But for everyone else, especially people like me who write about Big Tech, it’s another story: there’s really nothing like an overheard whispered confession from the rich and powerful. Information wants to be free.