Microsoft 1998 vs Google 2020: Antitrust and Big Tech

Episode Summary

Executive Summary: The episode compares the Microsoft antitrust case with current scrutiny of Google, debating whether antitrust should focus narrowly on consumer welfare or more broadly on preserving economic power and democracy. Bob Topel defends a stricter, evidence-based antitrust approach, while David Boyes argues strong enforcement is needed to stop exclusionary conduct and sustain free markets. The hosts emphasize the tension between private power, government power, and market openness.

Main Topics: Microsoft as the antitrust benchmark for modern tech (Priority: 5/5): The conversation frames the 1998 Microsoft case as the last major antitrust case to shape thinking about technology monopolies, and uses it as the lens through which to evaluate Google. Netscape, middleware, and the threat to Windows (Priority: 5/5): Bob Topel explains the government's theory that Netscape could become middleware, exposing APIs across platforms and reducing Windows to a commoditized layer, which motivated Microsoft’s exclusionary behavior. Google’s conduct and whether it resembles Microsoft (Priority: 5/5): The hosts and guests compare Google’s search dominance, default deals with Apple, and ranking power to Microsoft’s browser tactics, while disagreeing over whether these are true antitrust violations. Consumer welfare vs. broader antitrust goals (Priority: 5/5): The discussion centers on whether antitrust should be limited to consumer prices and output or also protect entry, economic dispersion, and democratic values. Antitrust as an alternative to regulation (Priority: 4/5): Both guests favor antitrust over sector-specific regulation, arguing that antitrust is more general, less capture-prone, and better suited to preserving market competition. Power, information control, and democracy (Priority: 4/5): A major theme is whether a private company like Google having influence over information and voting is more dangerous than government control, and how much monitoring is needed to detect abuse. Future of enforcement and risk of weak precedents (Priority: 4/5): The conversation warns that if the government loses against Google, it may legitimize platform power, whereas a win could restrain conduct even if the specific remedy is imperfect.

Key Arguments: Microsoft was targeted because its conduct toward Netscape suggested a willingness to use monopoly power to block an emerging platform threat. Giving away a product for free is not automatically predatory; in Microsoft’s case the key issue was not price alone but exclusionary conduct bundled with Windows. Antitrust should intervene when monopoly conduct has clear exclusionary effects and insufficient pro-competitive justification under Section 2. Google’s default-search payments to Apple are not, by themselves, necessarily exclusionary because consumers can switch defaults quickly on devices. If Google can influence rankings to harm competitors, that would be a stronger antitrust theory than focusing only on Apple default deals. The Microsoft case mattered because it established that antitrust applies to big tech and changed Microsoft’s behavior even beyond the formal remedy. Consumer welfare is important, but antitrust also exists to preserve freedom of entry and prevent excessive concentration of economic power. Antitrust can be a substitute for regulation because it is broader, less industry-specific, and less likely to be captured by the firms it oversees. A broader antitrust philosophy would consider democracy, independent livelihoods, and the dispersion of economic power—not only short-term price effects. The real question is how to balance efficiency with freedom: society may accept some loss of efficiency to preserve pluralism and market entry. Google’s power over information raises concerns, but the larger fear is a government that might regulate speech and viewpoint. The government needs strong evidence and monitoring to win modern tech cases because algorithmic conduct is harder to observe than Microsoft’s browser tactics. A lost Google case could set the wrong precedent and leave platform power unchecked; a strong case against Facebook may not be enough if Google remains untouched.

Data Points: Microsoft Windows market share: 80% to 95% - David Boyes described Microsoft’s share of the PC operating systems market at the time of the case. Google search market share: nearly 90% - The hosts described Google’s dominance in internet search as the basis for antitrust scrutiny. Microsoft operating systems comparison: about 90% - The hosts noted the superficial similarity between Google’s search dominance and Microsoft’s operating system dominance in 1998. Windows APIs: about 30,000 APIs - Bob Topel used this figure to explain why Windows created an applications barrier to entry. Default search engine switching time: about 4 seconds - Topel argued that switching a default search engine on an Apple device is nearly instantaneous. Default search engines named: 4 competitors - Topel mentioned switching from Google to Bing, Yahoo, or DuckDuckGo.

Pivotal Quotes: "I don't think consumer welfare is the only rationale for antitrust enforcement." — Bethany McLean: Opening framing of the episode’s broader antitrust theme. "The thing I like a lot about David Boyes is the fact that he says that he likes free markets, he wants free markets, and between regulation and antitrust, he prefers antitrust." — Luiza Zingales: Commentary on why antitrust may be preferable to sector regulation. "We have socialism for the very rich, rugged individualism for the poor." — Luiza Zingales: An introductory line used to frame inequality and power in capitalism.

Implications: The episode suggests future tech antitrust will hinge on proving exclusionary conduct in algorithmic and platform settings, not just market share. It also argues that antitrust may be vital to democracy by limiting concentrated private power before it shapes information, entry, and public life.