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EU Antitrust Activities Aimed at Microsoft and IBM

03.23.09

Google (Chrome browser) and Mozilla (Firefox browser) joined forces in the EU to complain about Microsoft’s marketing of Internet Explorer (IE) originally brought by Norwegian browser company Opera, and T3 filed an antitrust complaint in the EU against IBM for adversely impacting the mainframe market. Neither Microsoft nor IBM are strangers to antitrust actions in the US and EU, and these complaints are just chapters in very long novels. Both companies have had profound impacts on IT and the Internet, and Microsoft and IBM have an interesting history together which makes these EU complaints all the more interesting.

US v. IBM

From its origins with the 1890 Census Dr. Herman Holerith’s 80 column punch card (what I call the 1st Big Bang of the Internet) led to a company called IBM which had a monopoly on punch cards until its consent decree in the 1930s. Then in January 1969 the US Justice Department brought an antitrust action against IBM for monopolizing the computer market. At the time IBM sold its hardware, software, training, and all services as a bundled product. That is, if someone wanted the mainframe software they also had to purchase hardware, training, and everything else from IBM. So in the July 1969 IBM signed another consent decree to unbundle which led to the development of hundreds of companies for supplying software (like University Computing and Computer Associates), hardware (disk drives, memory, and the like). The antitrust trial was heard by a judge in New York for many years before the claims were dismissed when President Reagan came to office in 1981. Interestingly enough one of the lawyers who represented IBM in the trial was David Boies who represented the US government in the antitrust trial against Microsoft in 1998.

IBM and Microsoft Changed Computing Together

In 1981, the same year that the Antitrust suit was dropped by the US government, IBM launched its Personal Computer (PC) as most folks know (my 3rd Big Bang of the Internet). The IBM PC’s operating systems (OS) was a product call IBM-DOS (Disk OS) from an upstart company in Redmond, Washington called Microsoft (MS). When IBM introduced the PC this was a major departure for IBM in that this was IBM’s first product which used components made by others including the OS. There were a number of other PC’s on the market before 1981, many of which relied on an OS from Digital Research called CP/M (Control Program for Microcomputers) which was very popular. Apparently IBM could not reach an agreement with Digital Research, but did reach an accord with Microsoft. Although IBM wanted to restrict the use of IBM-DOS like Apple had done with it OS, but ultimately the Microsoft OS version (MS-DOS) was widely used on the clones (Compaq, HP, and many others) with the advent of the Phoenix Technologies BIOS (Basic Input Output System) that permitted all Intel based PCs to use MS-DOS.

Impact of IBM and Microsoft

Both companies have had a dramatic impact on IT and the Internet as is quite obvious, and these claims in the EU may chart the future of each company. Holerith’s 80 column punch and its progeny which started around 1890 last until the advent of the Graphic User Interface (GUI) which was popularized by Apple’s Lisa (from a license with Xerox) and Microsoft’s Windows products. Ironically one of the most significant events for the evolution of the Internet (my 4th Big Bang of the Internet) was in about 1995 when Microsoft started distributing IE which without additional charge. Microsoft’s IE became ubiquitous and the notwithstanding Microsoft’s anticompetitive business practices, the use of the Internet exploded. So we all should watch closely to see how the EU deals with the claims against IBM and Microsoft as the EU’s rulings will likely impact the future of IT and the Internet.
 

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