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Bill Gates's Secret to Success: Cheating (gototheboard.com)

25 points by jcarlson23 ↗ HN
This will be controversial but there's a good point that Gates benefited tremendously from no one enforcing anti-trust laws. No company should ever get to a 90% market share - that's not good for the public.

37 comments

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Tichy
Opinions differ on the anti-trust thing... Personally, I don't understand it. I don't think anybody was forced to sign the contract.
gaius
Well, quite. It's worth noting that the anti-monopoly laws are retrospective, which means you can be found guilty of things that were not illegal at the time you did them.

If the democratic will of the People is that the government regulates business that's one thing, but retrospective laws are just insidious. A level playing field up front is the only fair way.

corentin
Just because "The People" democratically wants something doesn't mean it's right.
gaius
You're right, but that's not the point I was making.
gojomo
Yes, and in the context of the article: the 'pay for every computer' pricing contracts Microsoft pursued to its advantage were not by themselves illegal. They became illegal when used by a firm with monopoly power to stifle competition.

Unfortunately there's no bright-line rule that lets you know that today, you're a monopoly. You might write such a sales contract legally on Monday, and on Wednesday cross the invisible antitrust line which (after years of later largely subjective legal argument) obligated you to stop doing the same things that led to your success. So signing the exact same contract Friday would be illegal.

goodkarma
I'm sure no one was "forced" to sign the contract, but by not signing it and agreeing to Microsoft's terms, you could not distribute Windows and other Microsoft products with your computer..
corentin
Just like by not paying for a car you can't go home from the store driving it.
goodkarma
"Just like by not paying for a car you can't go home from the store driving it."

Not quite the same thing IMHO. By not signing the contract and doing what Microsoft wanted, since it was the de-facto standard at the time, you were pretty much kissing your PC sales business goodbye..

projectileboy
Well, hold on... If we're talking about the late 1980s (which the author is), then I'm not sure we could call Windows a de facto standard. I agree with the other poster that Gates simply studied history to determine which sorts of contracts would provide Microsoft with the maximum leverage over time. Other OS vendors could have done the same thing; they simply lacked Gates' intelligence and foresight.
byrneseyeview
So because they charged what people were willing to pay for a popular product, they were cheating?

Look, anyone can make the offer MS made. If they price it low enough, they could get some takers. It was a smart move, because it meant that a dominant player would have growing market share among manufacturers who worked with them, but it would only work out if the product had traction -- otherwise, dealing with MS would just be paying Bill Gates to watch you fail.

xiaoma
A better comparison might be no longer getting water after not agreeing with the utility company's revised contract that insists you pay them anytime you drink anything, even if it is milk. soda or some other beverage.
rbanffy
To put it simply:

"Hey... Your competitor just signed this deal that allows them to include our OS for pennies. I see you will have a tough time competing with them unless you sign it too".

goodkarma
Antitrust or not, most Gates biographies I've read touch on aspects of cheating or questionable ethics. Microsoft has a history of using predatory pricing through OEM distribution and/or giving products away to establish its monopolies.
corentin
Three businessmen are sitting in the hallway of a court, waiting for their trial. After some time, one of them starts lamenting: "because my prices are way higher than my competitors, those bastards want to convict me for profiting from a monopoly!"

"Well, that's interesting" replies the second one, "because I'm also here for an antitrust case: I charge way less than my competitors and they say that I'm doing predatory pricing to kill the competition."

The third one starts laughing hysterically: "Believe it or not, guys, I'm here for the same reason as well! But my prices are exactly the same as my competitors, so they want to convict me of price collusion and profiting from a cartel!"

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Goladus
Funny, but the purpose of an investigation is to determine the truth. It probably sucks to get dragged into an investigation when you've done nothing wrong, unfortunately history is not on their side.

If they're looking for someone to blame, blame the monopolies, cartels, and predators that abused public trust so badly that laws had to get made.

corentin
Well, as far as I'm concerned the real, evil bastards are the ones attacking their competitors through the government using lawsuits instead of working to improve their products and services.
Goladus
I agree that sucks, but the laws wouldn't likely be there if people hadn't pushed those boundaries to begin with. I'm sure people were quite happy in the pre- Sarbanes-Oxley US but Enron went ahead and screwed that up for everyone.
kingkongrevenge
The laws were put there by politically connected businessmen who didn't like dealing with more efficient competition. Read about the original trust busting movement. Market losers resorted to using their friends in power against the winners.
corentin
Your logic is broken; it's a little bit like saying that the Third Reich or the Apartheid wouldn't have existed if the jews and blacks behaved nicely.
[dead] lolb
GASP

You mean there are multiple ways for a company to abuse its position as a monopoly or part of an oligopoly?!?

Get out, lolbertarian shithorn, government intervention to break up anti-competitive collusions and companies is a necessary response to market failure.

dreish
And what about Bill, down the hall from those three, who only offers his best price when he charges his customers for every computer they sell whether it comes with Bill's product or his competitor's? (I.e., RTFA.)

You do understand how this abuses a monopoly position, don't you? I have a feeling this subject hits a libertarian-crank nerve, though.

augustus
Reminds me of John D. Rockefeller's agreement with shippers.Gates must have studied history.

Regardless, ultimately Microsoft lost the US antitrust lawsuit and is no longer dominant in the era of the Internet.

Much of the money he earned would end up funding good causes so I feel there is some justice in all of this.

henning
They still have two strong monopolies: Windows and Office. Neither are going anywhere anytime soon.
patrickg-zill
They are still illegally "tying" by their use of the WHQL certification process.
steveplace
This is one of those where I try and put myself in his shoes.

If your business had the opportunity to take the contracts he mentioned, would you? Of course there are those silly things called laws that might get in the way of this business deal, but they may not have been clear at the time (I don't know).

All I know is that Gates leveraged his product against an unknown market and then created barriers of entry for other competitors. Machiavellian, perhaps, but brilliant.

brentr
I read things everyday about what's better: Windows or something else. The truth is each OS has its own plusses and minuses. Linux/Unix allows a sophisticated user much more power than Windows. Windows has a whole network of developers that create the mainstream games and other entertainment software I enjoy. I use both a Unix and a Windows system, but I use both in a very different manner.

Regardless of one's opinion on what OS is better, you cannot deny that Gates is one of the most brilliant people of our time. His business practices are what brought him wealth. He may or may not have done a few questionable things, but what business hasn't? This is why we have a justice system. Laws are not always written to be black and white. The justice systme is there to help us define all the gray in between.

If I had the ability to create a monopoly because the laws don't explicitly define a certain prohibition, you can bet your ass that I would. I'd deal with antitrust issues as they came up and leverage what I have already done to move into a new area of exploitation. Whether or not you want to believe it, that is how capitalism is practiced.

brentr
Would the person who downmodded me for my comment post a response. I would like to know your opinions of what I wrote. I was only trying to stimulate discussion.

If you downmodded me because you don't like Windows, Gates, or my statement on the practices of capitalism, that's fine. I just want to know what you think. There must be some disagreement that you have. I would like to respond to that.

jamesbritt
I didn't mod you either way, but a statement such as this

"He may or may not have done a few questionable things, but what business hasn't? "

is stunningly vapid in equating all things "questionable".

Some things really are better or worse than other things, and some companies really do behave better or worse than others.

silverlake
I think nearly all companies pursue the same tactics, but we only notice the winners. When I was at Motorola long ago, I stumbled across an outline of how to compete against other cell phone companies. Technological innovation was a minor point. Most of it was using legal tactics to tie up competitors, confounding standards bodies, securing exclusive deals with some countries, etc. It also talked about how competitors were doing the same thing.

I think if you ran a business and didn't do these things, you'd be roadkill on the information highway.

rbanffy
I don't agree Billg as one of the most brilliant people of our time. He is certainly a clever strategist, but not much more than that. He got incredibly lucky a couple times: The non-exclusivity IBM deal, the PC clone market (that could have not existed if the BIOS were harder to reverse engineer - say, like a Mac). MS has also at least one failed attempts to create a PC-like environment: MSX. They saw that a commodity computer running an OS they controlled was a way to get big money.

I would also like to know if they somehow covertly helped the BIOS reverse engineering process.

Everything they did up to Windows 3 derived from that - do whatever it takes to secure a market for their OS. They did not leave OS/2 to IBM because the codebase was bad. They needed control of the OS in order to keep it a commodity and having a competitor developing the OS that runs on commodity PCs was out of the question. Up to the launch of Windows 3, the public discourse was that OS/2 was the future. It changed dramatically at that minute.

They played dirty tricks all the time. Threatening Apple not to renew the Applesoft BASIC license was a way to secure Apple would endorse Microsoft BASIC on the Mac and ditch a competing product. I don't know what else they got from Apple while their cash cow had a piece of MS software within. It certainly made Apple's contracts better the next time.

They got lucky a couple times and IBM got fooled twice. Their dominance is the consequence of luck and borderline criminal tactics. I see no huge genius here beyond one that was willing to bend the law (and morality) as much as he could.

It's also unclear how much of this came from Ballmer.

As far as I know, the big genius among the Microsoft founders is Paul Allen.

furiouslol
I think you need to give credit where credit is due. Bill Gates is one of the geniuses of our time.

You don't create a powerful company like Microsoft just by being lucky. This is the guy who brought personal computing to the masses. This is the guy who managed to grow his company into the behemoth that it is today. This is the guy who responded to the Internet threat brilliantly (well initially that is.).

Dirty tricks are PARTS AND PARCEL of the world, especially in businesses. The techies are insulated from such behavior, which is why they are usually shocked at such behavior. People on the business side are used to such behavior. They deal with it. They counter back. Wall St revel in it. Govts use them all the time. This is society at its normal equilibrium. Google, being a techie wonderland, is trying to avoid this for as long as possible but trust me, WallSt will push their hands sooner or later.

Paul Allen wouldn't have build Microsoft into the success that it is today. He just isn't as sly as Bill is.

mattmaroon
This is simply redefining cheating such that Microsoft is guilty of it because he doesn't like them. That sort of contract seems like a brilliant maneuver to me. The fact that they were merely forced to stop it, rather than pay for having done it shows the DoJ probably didn't feel it was illegal.

And if it ain't illegal, it ain't cheating in business.