Google - the new Microsoft?

The March of Progress (pt.94)


Analysis Google is the new Microsoft, reckons author Gary Rivlin in a New York Times article provocatively titled Relax, Bill Gates; It's Google's Turn as the Villain.

SiliconValley sources quoted by Rivlin compare Google's ruthless and paranoid culture today with the Microsoft of old, bemoan its influence on the recuitment market, and note the reluctance of VCs to fund bright startups which might find themselves competing with Google. All of which is true - but true enough to make the comparison stand?

Microsoft earned its status as a convincted monopolist in the US courts by exerting exclusionary tactics in several ways, both economic and technological. It locked down its distribution channels, for example, by insisting computer makers pay for a MS DOS license whether they shipped the OS with the system or not. The company sabotaged rivals, notably the DR-DOS and OS/2 for Windows products, by ensuring they weren't fully compatible with its products.

Another Microsoft tactic, of setting de facto standards to favor itself, is one that Google could well deploy, particularly through its recently-revived Web Accelerator plan. But to date there's no sign of it overstepping the boundary. So the only sensible judgement that Google is the new Microsoft would be "not proven".

However, passions run high. It's easy to forget that Microsoft hasn't killed babies or poisoned the water supply, and that Google hasn't saved lives or invented telepathy. People need their archetypes, and let's explore the context which creates such heroes and villains.

Going global

First we need to unwire a little conventional wisdom. The popular view of technology is its role in the grand, sweeping upward March of Progress. Great, global changes flow from this March, and it’s the role of Great Men such as Bill Gates and Michael Dell to carpe diem, and steer some of this our way. It's quite beyond the likes of us to understand or question it, but it's unarguably a) a Good Thing and b) inevitable. A prime example of this advocacy is Thomas Friedman, although you can throw a rock here in Silicon Valley and the odds are it will hit a dot-com pundit saying much the same thing.

Historicism of this kind would make a Marxist proud, and is perhaps why so many former Trots become evangelists of Technology and Globalization: the certainty and simplicity of telelogical narratives hold a strong appeal. It's easier to flip ideologies than think a little deeper. But such a view wouldn't be out of place from a forelock-tugging serf in Monty Python's Holy Grail, either.

To really understand the passions that Microsoft Corp. and Google Inc. arouse we must anchor them in a larger context, as both companies are very much products of their time.

Microsoft's big break came in August 1981, with the launch of the IBM PC. It coincided with the rise of Thatcher and Reagan, and the loosening of capital restrictions world wide. Over the next few years financial markets were deregulated and digitized, and the result was a lot of hot money flying around the world looking for returns. The war was on to dismantle old vertical companies and markets and create new markets instead, and Microsoft was perfectly placed to capitalize on the new vogue. Financial markets loved the horizontal model because it squeezed costs out of the system.

Some of the markets created in the 1980s and 1990s were genuine, such as the short-lived PC business software market, and others, such as derivatives and junk bonds and dot-coms were essentially fraudulent. This matters little to the "market maker" who has cashed in and departed by the time consolidation in the market occurs or after the Feds have been called in to investigate where the missing pension fund has gone.

So Microsoft took on a succession of vertical vendors and bested them: some, like IBM recovered from the trauma, while others, like DEC and Wang, didn't. But even as developers grumbled, the era of $300,000 database systems and $2,000 SDKs was passing. Microsoft put a shiny face on the era.

Today, Google is just as much a product of its times as Microsoft was fifteen years ago.

Next page: Pattern recognition

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