IV: The Browser Wars

By 1995 the browser dominated the market. On December 7, 1995, C.E.O. Bill Gates gave a speech to his employees outlining Microsoft’s aggressive new approach to the Internet. He named as a target and rallied a team of top-notch programmers to build . The event is known in the industry as Pearl Harbor Day.

Lou Montulli: From a scientific point of view none of us really respected Microsoft. There was definitely a sense of: They’ve put out of business three or four major companies, and they did it simply by copying what they did and outpricing or outmaneuvering them in the market. This is a general feeling of computer scientists everywhere, that Microsoft doesn’t tend to innovate as much and really just enters the market late, takes it over, and then stays at the top.

Thomas Reardon was 21 years old when Bill Gates offered him a senior position at Microsoft, in 1991. Reardon became a program manager for Internet Explorer.

Thomas Reardon: I was the first at Microsoft to know about Netscape. I remember calling down there and saying, Hey, I’m with Microsoft, and I’m looking around at all these people who started Web browsers because I think we’re going to do one inside of Windows and we want to know if we might look at your technology as a source for this, do a license deal, or we buy your technology. And they told me basically to go fuck off.

In June 1995, Microsoft dispatched representatives, including Reardon, to Netscape’s corporate offices in Silicon Valley to discuss browser technology.

Thomas Reardon: I know it sounds like I was big bad Microsoft. You have to remember I was 24 years old here, so I wasn’t exactly a captain of industry. The big meeting that people have talked about that was really at the heart of the government’s anti-trust trial is a meeting we had in June. We tried to have a relationship with Netscape.

Gary Reback, with the firm Carr & Ferrell, in Palo Alto, was Netscape’s lawyer and would be instrumental in persuading the Justice Department to prosecute Microsoft.

Gary Reback: A group of Microsoft executives came down to Netscape and had a meeting, and the Microsoft people in effect said that if you’re going to make a browser that can serve as a platform for new applications it’s going to be all-out war with us. But if you want to do something smaller, that just hooks in with our stuff, we’ll give you the non-Microsoft part of the market to work with. And we’ll sort of draw a line, and you’ll have part of the market and we’ll have part of the market.

Thomas Reardon: The government’s argument that we went down there Mafia-style, telling Netscape that they have to do a deal with us or they were going to find a dead-horse head in their bed in the morning—it was kind of absurd. It turns out Marc was sitting in the meeting, taking notes on his laptop. They had contacted this famous anti-trust lawyer, Gary Reback. They had been working with him. They kept asking us these really loaded and weird questions. We thought we were down there for a business meeting, technology meeting, engineering meeting. And then they ended up taking all the minutes of that meeting, you know, and sending it out to this anti-trust attorney, who then turned it over to the D.O.J. that night. It was just a bunch of bullshit.

Hadi Partovi was the group program manager for Internet Explorer at Microsoft. He later co-founded Tellme Networks and is president of iLike. Jim Barksdale was Netscape’s president.

Hadi Partovi: Both Marc Andreessen and Jim Barksdale were trash-talking basically. I mean, there was a competition between the companies, but it got to the point where they felt they were far enough ahead that they might as well trash-talk to build up the perception that these guys are going to win. On the one hand, you know, they were the David and we were the Goliath. On the other hand, Internet Explorer only had 5 percent market share in the Web-browser world, and nobody had even heard of it when we started out. And it definitely got people’s competitive juices up. Marc Andreessen had said something along the lines of “Windows will be reduced down to being a poorly debugged bag of device drivers.” And what that means is basically the relative value of Windows will be pretty much meaningless.

Thomas Reardon: Andreessen said that Windows was just a piece of shit. Well, that became a call to arms for us. We had this famous meeting called the Pearl Harbor Day meeting that year. Bill was going from talking about the Internet to: O.K., now we need a battle plan. The Internet Explorer team went from 5 people to 300.

Hadi Partovi: I personally printed out the strongest quotes from the Netscape people, with their faces, so if you walked down the hallway of the Internet Explorer team, you’d see the faces of one of these Netscape executives and what they said.

Jim Clark: Microsoft was making it very clear that they were going to kill us. We were trying to negotiate deals where Compaq and Gateway and all these P.C. manufacturers would bundle our Web browser. And Microsoft threatened them. Microsoft threatened them that if they did they would revoke their license to Windows. So, needless to say, everyone backed off.

Thomas Reardon: We had an intensely competitive battle. We were releasing browsers every six months. The amount of software that got written in relation to the Web in that period of time was just insane.

For two and a half years Internet Explorer ate away at Netscape’s lead. The Browser Wars reached a pivotal moment when Microsoft offered Internet Explorer as a free feature in Windows.

In 2000, U.S. District Court judge Thomas Penfield Jackson ruled that Microsoft had illegally held a monopoly on Windows and used it as a platform to crush competitors such as Netscape. He ordered that Microsoft be broken into two companies. In 2001 a federal appeals court upheld his ruling, but reversed the order to split up the company. Later that year Microsoft reached a settlement with the U.S. Department of Justice, which permitted the bundling of Internet Explorer into Windows on the condition that users could choose other browsers as well.

Next: V: Going Public