Investopedia/Matthew Johnston: 4 Mistakes Google, Facebook Must Avoid As Antitrust Cases Loom

Investopedia                                                         News > Company News
4 Mistakes Google, Facebook Must Avoid As Antitrust Cases Loom

    FACEBOOK
    TWITTER
    LINKEDIN

By Matthew Johnston
Updated Jul 1, 2019

Four of the U.S.’s biggest tech firms—Facebook Inc. (FB), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), and Alphabet Inc.’s (GOOGL) Google—are facing looming antitrust cases and should heed the lessons of Microsoft Corp’s (MSFT) not-too-distant past, say a number of major investors and antitrust experts, according to Bloomberg.

Microsoft had to endure its own antitrust lawsuit between 1998 and 2002 over the bundling of its Internet Explorer web browser into Windows, the dominant PC operating system at the time. A settlement agreement was finally reached in 2002, but the subsequent fallout hobbled the company’s stock for the next 15 years.

While no formal lawsuits have yet been launched, America’s other four tech giants are in regulators' crosshairs and will surely want to avoid Microsoft’s fate. To do so, they should avoid four of Microsoft’s big mistakes:
Don’t Deny or Even Put Up a Fight About Having a Monopoly

Microsoft made the mistake of trying to defend their business on the grounds that it was actually competitive. Meanwhile, the company’s Windows software accounted for approximately 90% of the market for PC operating systems at the time, according to Bloomberg.

Denying having a monopoly is an understandable move if U.S. antitrust law explicitly prohibited monopolies. But it doesn’t. It only forbids doing certain things to obtain, maintain or extend a monopoly. It is on that point that legal scholars say Microsoft should have defended itself rather than trying to deny something so self-evident to everyone.
Don’t Resort to Spin

If denying having a monopoly isn’t bad enough for its image and credibility, Microsoft only worsened things by trying to spin bad news into good news. The company was only fooling itself when it started stationing a PR person outside the courthouse to reassure reporters that it had been another good day in court for Microsoft. Blatantly false statements like that will likely backfire.
Assume Everything Will Be Made Public

If there is a record of something, whether written, audio or video, companies should expect it to come under the scrutiny of the investigators and, in the event of a lawsuit, be made available to lawyers, judges, and the rest of the public.

Deposition videos of Microsoft co-founder and CEO Bill Gates drew laughter in court from Judge Thomas Penfield Jackson, as the videos showed an evasive and combative Gates argue over the definition of “market share,” and even over the word “definition” itself.

Internal company e-mails were also read aloud and many contradicted the statements of witnesses. Judge Jackson was no longer laughing at this point.
Don’t Be Condescending About Technology

Whatever the complexities of the technology in question, large corporations should not assume that lawyers and judges just don’t understand it enough. They’re smart enough people that if they don’t already understand the technology enough to judge the legal merits of the case then they’ll find somebody to fill in the gaps. It’s probably unwise to let somebody explain your technology better than you.

Microsoft went as far as trying to demonstrate why removing its own web browser from Windows would hinder computing performance by illustrating such a situation in a doctored video. Microsoft performed the simulation several times, but the government diligently reviewed the videos and uncovered the inconsistencies. In the end, it was Microsoft that looked like it might not have fully understood its own technology.
Looking Ahead

Microsoft has since fought back to become the biggest company in the world with a market capitalization of more than $1 trillion. Amazon, Apple, and Google’s parent Alphabet have held the number one position before, and Facebook is no slouch either. But for them to remain major tech players they would probably do best to work with their investigators and be willing to make compromises. Certainly, if they go to court they will likely want to settle fast, and definitely don’t want to repeat Microsoft’s mistakes.
Compete Risk Free with $100,000 in Virtual Cash
Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of Investopedia traders and trade your way to the top! Submit trades in a virtual environment before you start risking your own money. Practice trading strategies so that when you're ready to enter the real market, you've had the practice you need. Try our Stock Simulator today >>
Related Articles

Tech Stocks
Is Google a Good Investment?

Company Profiles
The Story of Uber

Company Profiles
Who Killed Sears? Fifty Years on the Road to Ruin

Macroeconomics
10 Years Later, Lessons from the Financial Crisis

Rich & Powerful
President Donald Trump: The Road to Victory

Wealth Management
Is It Time for a Universal Basic Income?
Related Terms
Learn About Jay-Z
Jay-Z, born Shawn Corey Carter, is an American entrepreneur, investor, music producer and rapper with a net worth of $1 billion as of 2019.
more
Blockchain Explained
A guide to help you understand what blockchain is and how it can be used by industries. You've probably encountered a definition like this: “blockchain is a distributed, decentralized, public ledger." But blockchain is easier to understand than it sounds.
more

    About Us
    Advertise
    Contact
    Privacy Policy
    Terms of Use
    Careers

Investopedia is part of the Dotdash publishing family.

    The Balance
    Lifewire
    TripSavvy
    The Spruce
    and more