Why Google Won’t End Up Like Microsoft—Data Sheet

September 4, 2019, 12:17 PM UTC

You may have read a few months ago that Bill Gates said losing out on the mobile phone software opportunity to Google’s Android was his “biggest mistake” at Microsoft. But did you catch the why? “We missed being the dominant mobile operating system by a very tiny amount,” Gates claimed during a luncheon interview at the Economic Club of Washington. “We were distracted during our antitrust trial. We didn’t assign the best people to do the work.”

If you buy Gates’ theory, then Google is in big trouble. The Washington Post is reporting that a whole bunch of state attorneys general, perhaps as many as 30, will launch an antitrust investigation against the search giant next week. If the reported effort comes together, the probe will join the Justice Department’s big look into big tech, formally launched in July, the Federal Trade Commission’s task force looking into big tech, various Congressional investigations, and, of course, the never-ending story of the European Union’s competition probe, which has already sought to extract almost $10 billion in cash from Google plus forced various behavioral adjustments.

Still, we’ve been here before. In 2013, the FTC ended a two-year investigation of Google’s search dominance without doing much. That followed earlier endless reviews of Google’s ad deals and acquisitions. And yet Google marched on. In some ways, the company’s structure of loosely affiliated entities that seem to operate largely on their own is immune to the kinds of distractions that beset the top-down, command and control set up at Microsoft.

Finally, let’s return to Mr. Gates.

Microsoft didn’t lose out to Android on mobile because of a lack of skill or effort. It was a lack of strategy. Microsoft saw its mobile software as yet another opportunity to extend its Windows PC dominance. Not only was the design clunky and too PC-influenced, but, more importantly, Microsoft wanted to charge phone makers serious licensing fees for use of the software. Google made Android free, undercutting Microsoft’s whole business model. And in contrast with both Apple and Microsoft, Google was more than willing to allow phonemakers and carriers to tweak and twist its software, sometimes beyond recognition (the Motorola Droid Bionic, anyone?).

Maybe Gates thinks Microsoft could have reigned supreme way before Android and iOS entered the picture but the mobile revolution also depended on big advances in cellular networks and microprocessors that weren’t there yet in the 1990s. I love what Bill Gates is up to these days and the upcoming Netflix flick about him looks amazing, but it’s just not the case that Microsoft missed dominating mobile by “a tiny amount.” More like a massive amount (and mostly under Gates’ successor, Steve Ballmer).

Aaron Pressman

On Twitter: @ampressman

Email: aaron.pressman@Fortune.com


And they're off. Already well behind in the electric car race, Porsche on Wednesday finally unveiled its own entrant, the $90,000 Taycan. The four-door sedan is said to include a touchscreen even more massive than the one in Tesla's Model 3. We'll see how far Porsche's sales can stretch.

Shuffle dance. After one top exec hurriedly left, AT&T is resetting its top management team. CEO Randall Stephenson remains in charge, but deputy John Stankey, who was running the WarnerMedia unit, becomes a strong #2 in the new position of president and chief operating officer. John Donovan, who said last week he was retiring, will be replaced by Jeff McElfresh as head of the company's communication business. Donovan reported directly to CEO Stephenson, but McElfresh reports to Stankey.

Don't touch me. Forget messy fingerprint scans–Amazon is developing a full hand scan identification system for its retail stores that doesn't require pressing a digit on a germ-y pad. Code-named Orville, the hand scanner could be rolled out to some Whole Foods stores early next year, The New York Post reports.

Unicorn hunt. Online security service Cloudflare got more specific about its plans to go public. The company will seek to raise around $400 million at a total valuation of $2.9 billion to $3.5 billion. That's just circling around the $3.25 billion value from its final VC round six months ago.

Unicorn hunted. Turns out SoftBank's investment in Uber before the ride hailing startup went public may not have been so smart. With Uber's stock trading at a new low close to $30, down almost 33% from the IPO price back in May, SoftBank has a paper loss of about $600 million, CNBC calculates. That's got to sting.

Now listen closely. How did I miss this last week? An insurance company called Euler Hermes Group disclosed that one of its clients, a U.K. energy company it didn't name, was defrauded of almost $250,000 when crooks used artificial intelligence software to impersonate the voice of a top executive to order a money transfer.


Sure, sure, (or maybe I should say woo ooh, woo ooh, woo ooh) it turns out Taylor Swift and Miley Cyrus both have new songs out lately that are topping the charts at all of the music streaming services. But according to a deeper look at the industry by Anne Steele at The Wall Street Journal, it's older music that's dominating listening time.

Streaming is more tilted toward catalog than sales have ever been, according to Nielsen Music analyst David Bakula. Retailers—both online and physical—have tended to display new material front and center, and sales of tracks and albums historically have been around half catalog and half new music.

On streaming services, focused on listening rather than sales, consumption is about 65% catalog. It is just as easy for subscribers to turn to familiar favorites as current hits, and the services employ automatically generated recommendations that don’t necessarily emphasize new releases. "In a buying world, that recommendation doesn’t exist," Mr. Bakula said. "The lift of these songs is living longer than it would have in a sales world."


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Even as we focus on the tech news here, we can't help but feel for the residents of the Bahamas, suffering from the unprecedented devastation of Hurricane Dorian. The New York Times has a round up of links to charities and aid organizations that could use your donations, including the Red Cross, World Central Kitchen, and local relief group HeadKnowles.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.

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