Microsoft co-founder and long-serving ex-CEO Bill Gates has admitted naivety in his dealings with Washington around the software giant’s fabled antitrust case with the US Department of Justice (DoJ).
But, as Google set out to defend itself against DoJ claims levelled against it this week, the latter-day philanthropist of Redmond fame told CNBC the tech giants are unlikely to make similar errors to him.
In a not-so-veiled reference to Twitter, Facebook, and Amazon, Gates said: “Whenever you get to be [a] super valuable company [having] political discourse mediated through your system and a higher percentage of commerce go through your system, you’re going to expect a lot of government attention. I was naive at Microsoft and didn’t realise that our success would lead to government attention and so I made some mistakes in saying, ‘Hey, I never go to Washington DC’.”
But times have changed, he said.
“Now, I don’t think that naivety is there. These companies have lots of sophisticated advisors and they’ve tried to engage [with lawmakers] in various ways but the rules will change,” he said.
The suffering heaped on hundreds of millions of Americans struggling through the COVID-19 pandemic and its related restrictions could be reflected in the political optics of the case, at a time when tech industry figureheads have seen astronomical increases in their wealth.
“It is kind of poignant that the tech companies have done so well at a time when things are very tough and so that’s an element of the increased attention,” Gates claimed.
On Tuesday, US Department of Justice launched its antitrust case against Google, saying the dominant search company was unlawfully protecting its search monopoly through “anti-competitive and exclusionary practices”.
With echoes of Microsoft’s DoJ case, which began in 1998 and hinged on whether the Redmond giant was using its dominance in desktop operating systems to gain unfair advantage in the browser market, the federal legal team said Google was the “monopoly gatekeeper to the internet for billions of users and countless advertisers worldwide.”
“For years, Google has accounted for almost 90 per cent of all search queries in the United States and has used anti-competitive tactics to maintain and extend its monopolies in search and search advertising,” the DoJ said.
Although it does not explicitly say it is seeking to break up Google, the DoJ did ask for “structural relief as needed to cure any anticompetitive harm.”
The DoJ is also pursuing the line that saw Microsoft lose in its initial DoJ ruling. The department is arguing that Google makes its search engine the default on billions of devices, preventing the pre-installation of services from competitors.
Gates backed some government success in clipping the wings of the tech giants, although the details would have to wait, he said.
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“We’re in unchartered territory here. For a lot of industries like the railroad industry or the movie industry, [the government] created special policies that they thought were effective for competition. This is a new industry with different issues and so to get it right, will take a lot of a lot of good thinking. But, I’d say the chances of them doing something is pretty high,” he said.
Not everyone is convinced the chips are currently stacked in the DoJ’s favour, however, due to the speed at which the case was strung together.
How Gates can see the tech industry’s monopoly problems as somehow new is anyone’s guess.
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After initially ruling for the breakup of Microsoft, the DoJ later reached a settlement that saw Microsoft share APIs with third parties – this was little more than a slap on the wrist.
Whether the DoJ can meet out sterner punishment to Google could depend on political unity.
In partisan times, the signs are not good. The Justice Dept’s lawsuit against Google is joined by 11 state attorneys general – all Republican. Last month, only Democrats supported a Congressional report that accused tech giants of abuse of their market power, even though both sides were largely in agreement. Meanwhile, a second group of state attorneys general, a mix of Dems and Republicans, are preparing a separate antitrust case against Google. ®