Bill Gates just accidentally proved that even "unsuccessful" antitrust enforcement works

In 1992, the Federal Trade Commission opened an antitrust investigation against Microsoft; in 2001, the company settled the claims, making a slate of pro-competitive promises that were widely derided as too little, too late.

The common account of the Microsoft antitrust inquiry is that the US government spent a decade in court and came away with nothing to show for it. This version of history is pervasive, and it's why Bill Gates, Mark Zuckerberg and even the fearless EU antitrust enforcer Margrethe Vestager have all dismissed the idea of antitrust breakups for Big Tech.

But there's another version of this story, that goes like this: being dragged through antitrust enforcement actions for a decade was deeply, profoundly traumatic for Microsoft and for Gates, personally. This trauma changed the corporate culture at Microsoft: while there had always been those who argued against monopolistic tactics, they had been dismissed as goody two-shoes who didn't understand how to maximize the company's growth. A decade of traumatic antitrust made prophets of those Chicken Littles, and whenever the monopolists in Microsoft's board rooms argued for bullying, anti-competitive actions, the anti-monopolists could say, "Are you fucking kidding me? You want them to put Bill back on the stand?!"

This version has been repeated by many (generally anonymous) ex-Microsoft employees to explain how it was that Microsoft didn't crush Google with the kinds of tactics it used against Netscape and other competitors. This story has always been debatable, because we haven't heard it on the record from anyone who was actually in the company's top management echelon.

But now, Bill Gates himself has confirmed the tale. In a speech at the Dealbook conference, Gates says that Microsoft wasn't able to use Windows Mobile to destroy Android because the Microsoft was "distracted" by the antitrust action.

It's easy to think that Gates is saying that the company's lawyers and engineers were too busy replying to snoopy DoJ and FTC enforcers to put in the hours to make Windows Mobile a success, but Android launched in 2008, seven years after Microsoft settled its antitrust claims.

When Gates says the company was "distracted," what he means is that, seven years after the nine-year antitrust enforcement action, the company was still too traumatized and gunshy to deploy the kinds of tactics that once gave it 95% of the desktop computing market.

If you ever wanted proof that monopoly breakup actions — even ones that fail in the end — can discipline firms (and their competitors, who don't want to end up in the same kind of trouble) work, then now you have it, straight from the horse's mouth.

"There's no doubt that the antitrust lawsuit was bad for Microsoft, and we would have been more focused on creating the phone operating system and so instead of using Android today you would be using Windows Mobile," claimed Gates. "If it hadn't been for the antitrust case… we were so close, I was just too distracted. I screwed that up because of the distraction."

Bill Gates thinks Windows Mobile would have beaten Android without Microsoft's antitrust woes [Tom Warren/The Verge]