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Ken Auletta - World War 3.0: Microsoft and Its Enemies

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The Internet Revolution, like all great industrial changes, has made the worlds elephantine media companies tremble that their competitors-whether small and nimble mice or fellow elephants-will get to new terrain first and seize its commanding heights. In a climate in which fear and insecurity are considered healthy emotions, corporate violence becomes commonplace. In the blink of an eye-or the time it has taken slogans such as The Internet changes everything to go from hyperbole to banality-creative destruction has wracked the global economy on an epic scale.
No one has been more powerful or felt more fear or reacted more violently than Bill Gates and Microsoft. Afraid that any number of competitors might outflank them-whether Netscape or Sony or AOL Time Warner or Sun or AT&T or Linux-based companies that champion the open-source movement or some college student hacking in his dorm room-Microsoft has waged holy war on all foes, leveraging its imposing strengths.
In World War 3.0, Ken Auletta chronicles this fierce conflict from the vantage of its most important theater of operations: the devastating second front opened up against Bill Gatess empire by the United States government. The books narrative spine is United States v. Microsoft, the governments massive civil suit against Microsoft for allegedly stifling competition and innovation on a broad scale. With his superb writerly gifts and extraordinary access to all the principal parties, Ken Auletta crafts this landmark confrontation into a tight, character- and incident-filled courtroom drama featuring the best legal minds of our time, including David Boies and Judge Richard Posner. And with the wisdom gleaned from covering the converging media, software, and communications industries for The New Yorker for the better part of a decade, Auletta uses this pivotal battle to shape a magisterial reckoning with the larger war and the agendas, personalities, and prospects of its many combatants.

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Contents For Kate and Amanda From here to the moon and Chronology O - photo 1

Contents For Kate and Amanda From here to the moon and Chronology O - photo 2

Contents

For Kate and Amanda

From here to the moon and...

Chronology

O CTOBER 28, 1955William Henry Gates III is born in Seattle.
1975Harvard sophomore Gates and his Seattle school chum Paul Allen write a software language for a personal computer and establish a company, Micro-Soft.
1980By now rechristened Microsoft, the company acquires a small operating system and develops MS-DOS (Microsoft Disk Operating System), licensing it to IBM for the first PC.
1981To produce the PC, IBM brings together Microsoft and Intel, forging what later becomes known as the Wintel axis, with Intel relying on Microsofts operating system and Microsoft relying on Intels chips.
1983Microsoft unveils its first Windows operating system, using the point-and-click commands of a mouse.
1986With 1,400 employees and revenues of nearly two hundred million dollars, Microsofts stock is sold to the public. Bill Gates becomes a billionaire.
1988Microsoft becomes the worlds largest software company.
Apple, for which Microsoft provides software, sues Microsoft, claiming copyright infringement.
1990Windows 3.0 becomes an instant success.
The Federal Trade Commission launches an investigation of Microsofts business practices.
Microsofts revenues climb above one billion dollars.
1993Judge dismisses Apples suit against Microsoft, ruling that it did not infringe Apples copyright.
After the FTC deadlocks over whether to bring an antitrust action, the Justice Departments Antitrust Division initiates probe.
J ULY 1994Justice and Microsoft sign a consent decree that will go into effect in 1995. The government agrees to drop its antitrust action, and Microsoft agrees to cease certain practices. The vaguely worded decree, however, allows Microsoft to develop integrated products.
O CTOBER 1994Microsoft announces a $1.5 billion acquisition of the dominant personal financesoftware company, Intuit.
D ECEMBER 1994Netscape Communications, officially incorporated under this name in November, ships the first commercial Internet browser. Sales and Internet usage soar, with Netscape soon achieving an 80 percent market share, zooming from one million to fifteen million customers in a year.
F EBRUARY 1995Federal District Court Judge Stanley Sporkin, after reviewing the consent decree, rules that it is an ineffective remedy to constrain Microsoft. The Justice Department and Microsoft join in urging a higher court to overturn Sporkin.
J UNE 1995The U.S. Court of Appeals spanks Sporkin and reinstates the consent decree. Showing its fury, the appeals court removes Sporkin as the judge administering the consent decree and replaces him with Thomas Penfield Jackson.
In the face of Justice Department opposition, Microsoft drops its proposed purchase of Intuit.
At a secret meeting with Netscape at its California headquarters, Microsoft allegedly threatens to cut off its air supply if Netscape does not agree to cede its browser business.
A UGUST 1995Microsoft introduces its own free browser included with each copy of Windows.
A UGUST 1995Judge Jackson concurs with the Court of Appeals, upholding the terms of the consent decree.
D ECEMBER 7, 1995An alarmed Gates announces that the Internet compels Microsoft to alter its business model, and henceforth Microsoft will become Internet-centric.
A UGUST 1996Netscapes attorney forwards to Assistant Attorney General Joel Klein a 222-page white paper sketching Microsofts alleged strong-arm tactics. Klein orders the head of his San Francisco office, Phillip Malone, to investigate.
O CTOBER 1997The Justice Department files a motion in Federal District Court charging Microsoft with violating the 1994 consent decree and asking the court to order the company to cease tying its separate browser to Windows and forcing PC makers to choose its browser. Microsoft insists the two products are integrated.
D ECEMBER 1997The Justice Department hires renowned litigator David Boies to prosecute. Judge Jackson issues preliminary injunction, ordering Microsoft to decouple the browser from Windows 95, and appoints a special master to advise him on technology and the law. Microsoft files an appeal.
M AY 12, 1998Court of Appeals unanimously supports Microsofts request that it not be stopped from shipping Windows 98 in June.
M AY 18, 1998After settlement negotiations collapse, the Justice Department and twenty state attorneys general file a lawsuit charging Microsoft with antitrust violations.
J UNE 23, 1998A three-judge Court of Appeals panel overturns Judge Jackson and rules that Microsoft did not violate the consent decree by including a browser in with Windows. The court, however, did not exonerate Microsoft of possible antitrust violations.
S EPTEMBER 1998On the eve of the biggest antitrust trial since the 1911 Standard Oil case, almost half of all American homes have a PC, and Microsofts Windows serves as the operating system for 90 percent of these. Meanwhile, Internet usage has grown exponentially, with thirty-three million users now online.
Judge Jackson rejects Microsoft summary-judgment motion to terminate lawsuit.
O CTOBER 19, 1998Federal antitrust trial begins in Judge Jacksons court and is expected to take six weeks.
N OVEMBER 24, 1998America Online announces the purchase of Netscape, and Microsoft says this proves their contention that competition is alive and well.
D ECEMBER 7, 1998South Carolina withdraws from lawsuit, leaving nineteen states engaged.
D ECEMBER 31, 1998Microsofts profits of nearly $4.5 billion are twice those of the worlds largest corporation, General Motors.
F EBRUARY 26, 1999The twenty-fourth witness concludes his testimony, and Microsoft rests its defense. Trial recesses for three months.
June 1, 1999The trial resumes for three weeks to hear six rebuttal witnesses.
N OVEMBER 5, 1999Judge Thomas Penfield Jackson issues his Findings of Fact, concluding that Microsoft was guilty of holding monopoly power. He rejects most of Microsofts proclaimed facts.
N OVEMBER 19, 1999Judge Jackson appoints Richard Posner, Chief Judge of the Seventh Circuit Court of Appeals, to serve as mediator, hoping to induce both sides to settle.
J ANUARY 2000Handheld and wireless devices are projected to soon outnumber PCs.
A PRIL 3, 2000After four months of effort, Judge Posner terminates the mediation.
Judge Jackson issues his Conclusions of Law, finding that Microsoft violated the nations antitrust laws. Microsoft appeals.
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