In a number of high-stakes antitrust actions, the US government is battling some of the biggest digital corporations in the nation. One thing we’ve learned from previous battles is that even if the government loses, these lawsuits may open the door for a new generation of businesses.
Think about Microsoft (MSFT). The 1969 federal prosecution against IBM (IBM), which the government finally withdrew after 13 years owing to what an assistant attorney general called “flimsy” evidence, helped the Seattle software and cloud computing giant.
In the legal dispute, it was claimed that IBM had unfairly monopolized the market for commercial computers.
Later, between 1998 and 2001, Microsoft came to be constrained by its own protracted antitrust dispute with the Justice Department. This dispute led to a settlement that allowed for greater competition in the market for internet browser software, but Microsoft was nevertheless hampered by it.
Tech Titans Under Fire
This scenario may be ripe to repeat itself with a new set of federal and state lawsuits that seek to break up Google, Facebook-owned Meta (META), and possibly Amazon (AMZN).
The settlement, which required Microsoft to design its Windows operating system to interoperate with competing browsers, email clients, media players, and instant messaging software, created an opportunity for Google (GOOG, GOOGL), then a startup, to start its period of meteoric growth in the 2000s.
According to former FCC Chief of Staff Blair Levin, there is a chance that new digital goliaths may arise as a result of the lawsuits, but there is no clear way. Levin, who is currently a fellow at the Brookings Institution, stated that “these things are highly unpredictable.”
I’m pretty sure nobody would have predicted that the government’s antitrust case against IBM would have produced Microsoft or that the government’s antitrust case against Microsoft would have produced Google, but they did,” said Levin. Google wasn’t a direct rival of Microsoft, and neither was Microsoft in a direct battle with IBM.