Microsoft's Dominance and the Intel Investigation

Strategic Insights -

As the leading provider of operating systems, Microsoft and its arch-rival Intel are often considered a single entity, "Wintel," due to their symbiotic relationship. However, federal and state investigators are scrutinizing whether Microsoft has leveraged its power to stifle Intel's innovations and new technology efforts that conflict with its own ambitions. The investigation centers on an August 1995 meeting between Intel executives, including Andrew S. Grove, and Microsoft's chairman, William H. Gates, where Gates reportedly made "vague threats" about supporting Intel competitors.

Key Takeaways:

  • The investigation revolves around Microsoft's alleged use of its market muscle to suppress Intel's new technology efforts and innovations that conflicted with its own ambitions.
  • A meeting between Microsoft and Intel executives in August 1995, led by William H. Gates and Andrew S. Grove, raised concerns about Microsoft's tactics, including "vague threats" made by Gates about supporting Intel competitors.
  • The Justice Department and 20 states filed an antitrust suit against Microsoft in May, alleging it used unfair business practices to protect its operating system monopoly and extend it into the internet software and commerce markets.
  • Intel documents reveal that Gates expressed concern about Intel's software work in certain areas, including native signal processing (N.S.P.) and potential conflicts with Microsoft's strategy on the Internet.
  • Intel ultimately followed Microsoft's lead on Internet and multimedia software after the August 1995 meeting.
  • The case against Microsoft focuses on the company's tactics in the market for Internet browsing software and its potential to control the pace of innovation in computing.

Statistics:

  • 85% of computers are powered by Intel microprocessors.
  • Microsoft's operating system is used in 90% of personal computers.
  • The Justice Department and 20 states filed an antitrust suit against Microsoft in May.
  • $100 million was the amount Microsoft planned to spend to train engineers to develop and service products on a version of Windows written for a competitor's microprocessor.
  • 20 states joined the Justice Department in filing the antitrust suit against Microsoft.

Sources:

  • The New York Times: "Investigation Aids Suit Against Microsoft"
  • Fortune magazine: "A Conversation With the Lords of Wintel"