If You Can't Beat 'em, Get the DOJ to Beat Them Up (MSFT, GOOG, DELL)

Includes: DELL, GOOG, MSFT
by: The Stalwart

The Stalwart submits: Nobody ever talks about the Microsoft (MSFT) monopoly anymore (well, except occasionally for EU and Korea). It's not because the legal action against the company had any real effect on the way the company does business, but because, with the rise of Google (GOOG), et. al. there are now real competitors to the Redmond-based hegemony.

Again, the rise of these competitors had nothing to do with the Justice Department, but because, in a capitalist system, it's really hard to sustain a monopoly, and eventually competitors, with brilliant products, will break through. It always seemed outrageous that the various digerati Sun, Novell, and other companies were among the chief backers of the Justice Department's action. But hey, this is America, and that's how jealous losers behave.

But is the story over, or is history doomed to repeat ourselves? Like our lessons not-learned in Vietnam, some think that we may, sooner than later, see the DOJ, engage in another costly traipse into trustbusting mode. Let's go waaaay back in internet history, over two weeks ago, before Google's earnings miss, when people still thought that Google was about to take over the world. Popular blogger Steve Rubel mused that Google's growing domination of every industry in the world would soon invite unwanted oversight:

In chapter eight John Battelle's incredible book, The Search, he astutely predicted that Google would increasingly fall under the watchful eye of the US government. As we saw earlier this month, John was right. The US government requested aggregate search data not only from Google, but from all of the major search engines. Only Google didn't comply.

Years from now we will remark that this was the beginning of the end of Google as we know it. The reason is one day - maybe sooner than we think - the government will try to break up Google. This may accelerate depending on the outcome of the 2008 election.

Whether DOJ would succeed here is entirely an open question. However, if this does indeed happen, it will certainly slow down the search giant and the Web economy overall, much as DOJ did for Microsoft and the PC economy.

Meanwhile, as written in the WSJ (sub. required) Google is starting to behave more like Microsoft did, with respect to PCs:

It takes only about five minutes to set up a new personal computer by clicking through a series of introductory screens. In that time, however, many consumers choose software and services they will often use for the life of their machine. Historically, Microsoft Corp. held great sway over this "first-boot sequence" as well as other software preinstalled in the factory.

Now PC makers including Hewlett-Packard Co. and Dell Inc. are beginning to take more control over this crucial real estate. They increasingly are trying to sell this space to service providers and software makers, such as Google Inc. After a year of sometimes tense negotiations with Google and PC makers, Microsoft has ceded ground on some key technical details.

In what would be the most significant example of this shift, Google is in serious negotiations to get its software installed on millions of Dell PCs before they are shipped to users, according to people familiar with the matter. Under the deal being discussed, Google, of Mountain View, Calif., could pay Dell fees approaching $1 billion over three years, these people estimate. The terms might change and the discussions could fail. Any agreement would be the latest in a series of similar deals with computer manufacturers the giant Internet search company has signed.

PC makers are turning their computers into the equivalent of a supermarket, capable of stocking products made by many companies -- for a price. The idea is similar to the way food companies pay grocers a fee to get space on store shelves and could help shift the balance of power in the software world.

Professor Larry Ribstein wonders whether the monopolist is here Google or Dell, also noting that before the DOJ went after Microsoft, it went after IBM:

Meanwhile, according to the WSJ, Google is negotiating for a big payment to Dell to, in effect, rent Dell’s “shelf space