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How Microsoft KILLS its Competition Silently?: Business Strategy Case Study - YouTube
Channel: Think School
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On 18th of May in 1998, the US Department
of Justice and the Attorney General's of 20
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US states sued Microsoft for being a monopoly
and illegally killing its competition in the
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computer market.
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And what followed next was one of the most
historic cases in tech history, which lasted
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for two decades.
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And fast forward to 23 years later, even today,
Microsoft is still killing its competition
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right in front of our eyes, and this could
result into yet another historic lawsuit.
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The question is, how did Microsoft kill its
competition?
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What exactly was their business strategy that
turned Microsoft into such a powerful company?
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And most importantly, what are the lessons
that we need to learn from this iconic case
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study.
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This video is brought to you by Scalar Academy.
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But more on this at the end of the
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video.
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The Justice Department has charged Microsoft
with engaging in anti-competitive and exclusionary
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practices designed to maintain its monopoly.
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Microsoft in secret basically finished up
'95 and released it; and then provided no
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documentation.
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Forcing Microsoft to include Netscape's competing
software and our operating system is like
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requiring Coca Cola to include three cans
of Pepsi in every six pack it sells.
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Do you agree that Internet Explorer is defined
here correctly as Microsoft's web browser?
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This is a story that dates back to 1994 America,
when the computer revolution was just catching
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fire.
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This was a time when multinational corporates
had accepted that computer was a powerful
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tool.
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And they already started having hundreds of
computers in the offices, which was being
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used by the employees.
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And these computers had already skyrocketed
the productivity of these companies.
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So practically, computer has already become
an integral part of the American business
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ecosystem.
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And long story short, here are the most important
events that happened in the computer revolution
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of America.
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On 12th of August 1981, IBM introduced its
personal computer with Microsoft's 16 bit
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operating system, which was MS DOS 1.0, and
this made Microsoft a tonne of revenue through
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licencing.
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By 1985, Microsoft was already clocking in
a revenue of 140 million dollars.
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Then on 13th Of March 1986, Microsoft Stock
goes public breaking all records and turn
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Bill Gates into the youngest billionaire ever,
by 1987.
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Then in August 1989, Microsoft introduces
the earliest version of Office suit applications,
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which then became the industry standard for
businesses all across America.
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Followed by that, in May 1990, Microsoft launched
windows 3.0, which was a big leap into graphical
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user interface.
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And this is what made computers accessible
to the common man, which was back then used
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only by the techies through code.
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And as soon as this happened, the usage of
computers exploded in the United States of
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America.
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And this is what made Microsoft the most powerful
and the most dominating force in the computer
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world, with Windows 3.0, selling at the rate
of 1 million copies per month in 1993.
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And nearly 90% of all PCs in the world ran
on Microsoft operating system.
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And this is when another dimension of the
computer industry opened up and that was the
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internet.
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Therefore, in the early 1990s, we saw the
rise of internet browser market.
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And one of the most revolutionary browsers
at that time was a browser called Netscape
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Navigator, which was launched in 1994.
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Netscape at that time was loaded with features
which were far ahead of its competition, they
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had the future of documents streaming, which
allowed users to view the documents while
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it was being downloaded.
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They have the feature of multiple downloads
simultaneously.
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And they also supported JPEG image format.
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And this product was so revolutionary that
even with a $49 subscription cost, they were
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able to capture up to 80% of the browser market
share.
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Now the point to be noted over here is that,
just like today, without the internet, your
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computer is mostly useless.
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Back then in 1995, people started using computer
just to use web browsers to connect to the
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internet.
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And the operating system was just a bridge
that connected the users to the web browsers.
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So practically, browsers were becoming more
important than the operating system itself.
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And building upon this phenomenal success.
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Netscape went public on December 5th, 1995.
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And within a day, the company had hit a market
cap of $2.2 billion.
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And just when they thought of becoming another
legendary internet company, something happened
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in the exact same year that marked the beginning
of Netscape's wall and within the next six
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years, the same billion dollar company was
almost reduced to nothing.
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The question is, how is it even possible that
such a big and innovative company went down
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so quickly?
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Well, the answer to this question lies in
an accurate phrase coming from the Department
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of Justice itself, which summarises how Microsoft
kills its competition.
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And it says, embrace, extend and exterminate.
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To tell you about it.
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In 1994, Microsoft realised that they were
too late to the internet boom, and the browsers
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are becoming more important than the operating
system.
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So in August 1995, when Microsoft launched
windows 95, they also included their own web
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browser called the Internet Explorer, and
they made it the default browser for every
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PC sold.
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So when you start your computer, you could
see the Internet Explorer right on your home
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screen.
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On top of that, Microsoft directly attack
the most important features of Netscape by
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launching something called ActiveX controls.
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And this update made it impossible to easily
download files on the internet, especially
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the Microsoft Office files.
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And this was a direct attack on Netscape prime
features.
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And because 90% of the computers used MS Office,
it became more and more difficult for them
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to use Netscape and other browsers.
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And then, Microsoft also removed the Internet
Explorer from the add and remove tab, because
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of which neither the consumers nor the manufacturers
could delete the Internet Explorer from the
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computers, and cherry on the cake, they made
it available for free of cost.
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So this is how they first embraced the concept
of internet browsers.
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Then they extended their products with features
that do not support the competing products.
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And lastly, Microsoft used their dominance
over the platform to promote their own product
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over its competition, eventually, to exterminate
the need to use rival products.
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And not so surprisingly, this led to the downfall
of Netscape Navigator.
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And by 2000, Internet Explorer had 95% market
share, making it the most dominating web browser
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in the market.
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And this is how Microsoft established an industry
standard, which meant that if you wanted to
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make a living from software development, you
had to make sure that your product worked
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in Internet Explorer.
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But if Microsoft things were making a lot
of money, maybe the story could be over for
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you.
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Similarly, Microsoft's instant messaging platform,
MSN Messenger, also tried to kill one of the
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most popular instant messaging platforms during
that time, that was AIM, which was made by
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a company called America Online.
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And the way they did that was that the first
embrace the concept of instant messaging by
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launching MSN Messenger.
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And this was obviously installed in your PC
by default.
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And then they extended the standard with proprietary
Microsoft add ons, which added new features,
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but broke the compatibility with AOL software.
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And then they gained dominance by providing
MSN Messenger for free.
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And now the same thing is happening with zoom.
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And this is the reason why I asked you yesterday,
how many of you installed Microsoft Teams
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deliberately?
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Or did it just get installed in your PC with
the updates, and as usual, most of you said
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that it automatically got installed with the
updates, and the rest of you either did not
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use teams, or you're using a Mac.
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Now, here's the catch, guys.
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Microsoft Teams has seen an exponential growth
since 2020 by 456%, and I couldn't find zooms
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monthly active users since the last April
2020.
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But when they release the numbers, you know
exactly what to compare it to.
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On top of that, you might also see that Microsoft
will build an insanely user friendly file
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sharing system for Microsoft Office files
in Microsoft Teams.
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And soon enough, you could also see some hurdles,
which might make zoom difficult to work with.
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Now, the point to be observed over here is
that, in April 2020, while zoom had 300 million
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daily active users, one year later, Microsoft
Teams already had 145 million active users.
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And these users, obviously the ones who could
have used zoom or have shifted from zoom to
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Microsoft Teams.
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So effectively, Microsoft has already started
eating into zoom's customer base.
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This is how Microsoft kills its competition.
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And this is what brings me to the most important
part of the episode and that are the lessons
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of the case study and the study materials
to help you dive deeper into these tech wars.
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Before we move on, let me introduce you to
our partners of this episode.
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And that is scalar.
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Now we will amidst all of this tech war that
is happening between these companies, the
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one thing for sure is that this competition
is going to create some extraordinary opportunities
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for highly skilled computer engineers.
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And that's where Scaler comes in.
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Scaler is a world class tech upscaling platform
and their mission is to make you skilled enough
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They cover data structures, algorithms, system
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The best part is that Scalar has been made
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the link in the description.
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Moving on to the lesson on the case study.
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There are three very important lessons to
learn from Microsoft's iconic case.
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The first thing I want you to do is take a
step back and look at the story very, very
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carefully.
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Did you see that in spite of Microsoft sabotaging
Netscape, Chrome was very easily able to beat
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the Internet Explorer to become the most used
browser in the world.
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In spite of Microsoft killing AOL, using the
MSN Messenger, Facebook and WhatsApp have
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turned out to be the winner of the social
media revolution.
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And it almost looks like Microsoft was so
obsessed with killing its competition, that
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it completely lost sight of the evolving trends
in the internet services like search engine,
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social media, and even mobile revolution.
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And this tells us two very, very important
lessons that while good companies focus on
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their competition, great companies focus on
their customers and the needs of the market.
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Number two, regardless of how powerful you
are, if you don't build great products, the
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success you're going to achieve is always
going to be short lived.
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And lastly, while Microsoft always wanted
to be the richest kid in the block, and tried
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to keep all the wealth to itself, Apple and
Google built a platform for developers to
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empower them and build wealth for a large
number of people.
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And in this process, they ended up making
more money than Microsoft.
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Hang on, but Google and Apple also got dragged
to the court because they will also acting
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as a monopoly right?
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Hmm, interesting.
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We'll talk about that in the upcoming episode.
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That's from my side for today, guys.
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If you learned something valuable please make
sure to hit the like button in order to make
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YouTube Baba happy and you will also find
the links to the study material in the description.
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I have barely covered 1% of the topic.
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So please have a look at those links.
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Because it will help you a lot in case if
you're writing a research paper or it just
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curious to learn about Microsoft's monopoly.
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And for more such insightful business and
political case studies, please subscribe to
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our channel.
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Thank you so much for watching.
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I will see you in the next one.
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