Google's (GOOG) announcement that it will launch its own browser based operating system (OS), in direct competition with Microsoft's (MSFT) Windows, has prompted widespread analysis that has focused on the strengths and weaknesses of the respective companies.
Generally, Google is criticized as having failed to make significant inroads in terms of market share for any of the lines of business it has pursued outside of search/ad revenue - its bread and butter.
Microsoft however, tends to be held in contempt by anyone who has sampled an alternative to the Windows product; this population is typically forced to conform to Windows in the workplace though, as corporations overwhelmingly purchase computers with a Microsoft based operating system.
The problem we see with the majority of Chrome OS reactions, though, is that the viability of this product/concept is being judged from a very traditional point of view; usually involving side by side comparisons with Windows, an evaluation of strengths and weaknesses, and the declaration of a winner. This approach is similar to evaluating insurgent forces using assumptions that were developed through years of traditional warfare.
The premise that we think is necessary to adopt prior to an evaluation of Google's strategy is that, in all likelihood, no competitor has the ability to supplant Windows as the predominant operating system.
To clarify however, we would only apply this premise to a competitor that attempts to gain market share through the use of conventional tactics. The introduction of Chrome OS to the marketplace carries with it a potent unconventional option: antitrust warfare.
On the US Department of Justice's Antitrust website, the Sherman Antitrust Act is summarized in part by the paragraph below:
The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anti competitive conduct.
To be sure, the DOJ has chosen to invoke rather vague language in it's attempt to describe the nature of anti competitive conduct; probably because the concept itself is, like a majority of legal matters, open to significant interpretation.
What is clear, however, is that for a violation of Sherman to take place, one company's product must be aggrieved in a specific way by the actions of the monopoly-holding company.
Now that Google has positioned a product to be in direct competition with Windows, the conditions have been created for Google to highlight any specific grievances that may arise in it's pursuit of OS market share. The history of corporations in America is replete with companies whose operations so dominated an industry that nothing short of intervention by the federal government could loosen their grip on the marketplace. This may be a realization that guided Google's decision to introduce an operating system.
Regardless of Google's motivation however, Microsoft will be forced to consider the inherent antitrust implications; serving as a distraction and a diversion of resources for the company. If Sun-Tzu, author of "The Art of War" could weigh in, our wager is that he would approve of Google's latest product.
Disclosure: no position in any securities mentioned