Having the government essentially watching their every move caused them to moderate their actions, and make sure they were on the right side of the law.
They were much more conservative than they otherwise would have been. It was described as a large cultural shift in the company and their way of thinking.
“Anyone who said that the 1990s prosecution of Microsoft didn’t accomplish anything — that it was companies like Google, rather than government lawyers, that humbled Microsoft — didn’t know what they were talking about, Reback said. In fact, he argued, the opposite was true: The antitrust attacks on Microsoft made all the difference. Condemning Microsoft as a monopoly is why Google exists today, he said.”
Microsoft lost its position of dominance through purely market ends (in my opinion -- certainly between the US actions and the EU actions you could argue that they made a difference).
In retrospect breaking up MS between Windows and Office was not a necessary condition to breaking MS's monopoly, and so we have an excellent test case for government intervention at that scale. Not definitive, of course; MS could very well be the exception, but certainly the Justice Department's actions against Microsoft should not be used as evidence that such actions are effective.
> In retrospect breaking up MS between Windows and Office was not a necessary condition to breaking MS's monopoly.
Quite the contrary. Since their monopoly is still in full force neither the meager settlement nor the market transformation were sufficient to break the monopoly. Breaking up OS/Office might have been enough but we'll never know.
In a sense they have a monopoly -- they are the only ones selling Windows. But ... even in the desktop/laptop area they are no longer the beast that they once were. And the prevalence of mobile as a platform means that even their dominance in the desktop/laptop market doesn't mean what it once did.
In office products they have a much stronger position, but the barriers to switching are no longer what they once were. I feel like I can confidently say that Microsoft can no longer coast on their monopoly power, but must actively move forward (with things like Office365) in order to stay competitive.
Are you arguing that even now breaking up OS/Office would be a reasonable thing for the Justice department to pursue? That seems like a barely tenable position.
Breaking them up today is debatable and won't happen so it's not worth discussing. But they're still leveraging their monopoly in anti-competitive ways by for example porting Office to Android but not desktop Linux to protect the very lucrative business of selling Windows licenses to corporates. But that doesn't mean that breaking them up 20 years ago wasn't a good idea. I'm saying two things:
1. Had they been broken up back then we'd almost surely have a much better balanced tech industry by now. It has taken us 20 years to get even a reasonable set of tech consumer markets back up, and it's doubtful we'd have even that if even what little was in the settlement hadn't existed. The Internet Explorer mess would have been enough to stifle Google/Facebook/etc for a while longer. The extremely anti-competitive practices of forcing OEMs to always carry Windows on their hardware would have been enough to at least stifle mobile for a long time if not even to hand over a new monopoly in mobile to Microsoft.
2. Saying that the hard slog through these 20 years to recover from such a distorted market is proof that further actions weren't needed (like breaking up Microsoft) feels almost insulting to those of us that had to live through the impacts of Microsoft's actions in the market. The fact that you no longer consider them a monopoly because they've "only" been able to maintain intact their original monopolies is a hard fought win, and should not be taken as evidence that even more anti-trust remedies were not needed.
I'm not by this taking any position on breaking up Google/Facebook/Amazon. As far as I can tell none of those are even remotely close to the level of anti-trust violations Microsoft got up to.
You could argue that the emergence of Firefox and Chrome was only made possible by the ability to assign a "default" non-IE browser in Windows, but that ability pre-dated any of the anti-trust stuff anyway; all you got out of that was a mandatory pop-up when you installed Windows asking you if you wanted to use a different browser.
The emergence of Firefox was by itself a huge shift, and Chrome another one, against Microsoft's browser monopoly. Its OS monopoly got broken (insofar as it is broken) by a combination of the rise of mobile and Apples re-emergence as a viable platform. Its office application monopoly got broken (insofar as it is broken) by a combination of online email systems (especially gmail) and the increased availability of online alternatives.
All the justice department did was waste their time; they could have just sat by the river and waited for the body of their enemy to float by instead.