How American Business Learned Who’s The Boss, Or Why Tuckers Firing Should Be No Surprise
Our story begins in the early 1970s. Down in Northern California, Steve Jobs and his buddy Steve Wozniak were busy working on the earlier versions of the Apple Computer. It was a heady time for boot-strap entrepreneurs who were experimenting with computers.
While up in Seattle, Bill Gates and Paul Allen worked on the software to run these new-fangled personal computers. They would call their company Microsoft.
Just five years after their founding, Gates and Allen persuaded IBM, the dominant global technology company at the time, to use the Microsoft Operating System, MS-DOS, for all of IBM’s newly produced personal computers. This was undoubtedly the most important strategic partnership of the era. IBM would provide Microsoft with substantial early sales and the credibility to continue to build their business. With one pen stroke, Microsoft became the number one player in the P/C Software Market.
Flash forward ten more years to the 1990s, and that startup company down south, Apple Computer, is one of the few to challenge Microsoft for dominance in the Personal Computer World. Apple developed its proprietary operating system that runs all its products. But it is Microsoft that is the dominant player in the PC Software. Combine their DOS operating system with their web browser, Internet Explorer, and it’s the most prevalent combination in technology.
It must have been idyllic, living in the beautiful Pacific Northwest, feeling a million miles from the hectic world in New York or Washington, DC. Gates thought he had all the bases covered. He even had Washington covered. Years before, Gates Hired 30-year-old Jack Krumholtz, whose job was to keep track of any pending legislation that would come Microsoft’s way. Jack, who owned a Jeep Grand Cherokee at the time, became known as “Jack and his Jeep,” the person who kept Microsoft up to date on the whims of the Nation’s Power Elite.
Simple, neat, and oh, so very West Coast. Unfortunately, while Gates and Microsoft were not paying attention to Washington, those in Washington were carefully monitoring Gates and his software company. The powers that be under then-President Clinton had singled out the tech giant as target number one.
Late in 1998 came word that the Department of Justice was suing Microsoft for Antitrust Violations in what was one of the most significant such legal moves since the DOJ had broken apart AT&T. Years before, the Department had taken the same sort of action against the country’s number one telephone company, “American Telephone, and Telegraph,” AT&T. When the legal dust settled, that company was split apart into the long-distance arm and all of the regional “baby” bells.
The message for Microsoft was loud and clear, ignore Washington at your peril. The mere idea that the nation’s largest software provider thought they could have a “guy in a jeep” as their only contact with national power structure, simply would not be allowed to stand. Washington is a jealous ruler, and like the potentates of old, all must pay their obeisance. In the immortal words of President Clinton, you must “Pay to Play.”
Unless Microsoft wanted the wrath of all of Washington, they would have to change how they did business. After all, the Department of Justice had the power to do to Microsoft what they had done to AT&T. This was a genuine threat to Microsoft’s very existence.
Ultimately, three things came out of Microsoft’s Antitrust Trial. First, Microsoft was found guilty of violating the Sherman Antitrust Act and several other monopoly provisions. The company was ordered to split into two divisions. This part of the ruling was later overturned on appeal, allowing Microsoft to remain one company.
Second, specific changes had to be made to how Microsoft marketed its productions. Their browser, Internet Explorer, could no longer be bundled with their DOS operation system; each product would need to stand independently.
Finally, although this was not part of the court case, Microsoft completely changed its relationship with Washington. The company, which once wanted to ignore Washington, now became one of Washington’s most significant lobbyists. If a piece of legislation came before Congress, Microsoft was there, front and center. If the President wanted to create some new Executive initiative, Microsoft was there to offer a recommendation.
The company that initially stayed as far away from Washington as possible today has become one of the Capital’s most important contractors.
Anytime Washington needed data processing or IT work, Microsoft was always a bidder. Today, Microsoft holds 5,000 separate contracts with the Department of Defense alone. It is likely the number one technology provider for the Federal Government.
It’s been a lesson that all of the nation’s businesses understand. Fight with Washington, and you’re liable to end up with your business smashed to pieces, like AT&T. Learn to cooperate with Washington, and you may become rich like Microsoft.
Simply put, Microsoft taught the nation’s business leaders who the boss is.
PS. Of course, many people see Microsoft’s transition from a company that ignored Washington to now one of Washington’s chief acolytes as just a coincidence.
Some may also see the firing of one of President Biden’s most significant critics as also just a coincidence. But the timing suggests that there was more to this move. Tucker Carlson, after all, was fired the day before President Biden began his campaign for a new term. No doubt Carlson would have had much to say about Biden’s candidacy, but his voice is now silenced.
Some may see a coincidence. I see the hand of power.
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