TIME Companies

Reddit Co-Founder Announces Full-Time Return as CEO Resigns

US-POLITICS-CONGRESS-INTERNET
Alexis Ohanian, investor and founder of Reddit, speaks about net neutrality for the Internet during a discussion hosted by the Free Press Action Fund on Capitol Hill in Washington on July 8, 2014. Saul Loeb—AFP/Getty Images

It's been a turbulent few months for the online community message board

The chief executive of the online community message board Reddit has resigned, the company announced Thursday after months of internal turbulence, and one of its co-founders will return full-time.

Outgoing CEO Yishan Wong came under fire after employees were asked to relocate to San Francisco or find work elsewhere, and after Wong publicly disputed the details of a former staffer’s termination process with that ex-worker on Reddit itself. An adviser to the company wrote that Wong’s departure came last week after a disagreement with the board over the location and cost of new office space.

Ellen Pao, the company’s strategic partnerships head, will step in as interim CEO during a search for a permanent replacement. But perhaps even more notable is the return of Reddit co-founder Alexis Ohanian, who left four years ago and will return as Executive Chairman.

Ohanian, who founded the site in 2005 alongside his former college roommate Steve Huffman, became a household name in the tech community in 2012 when he positioned himself as a leadership figure and spokesperson at the fore of a since-successful movement against a pair of congressional bills designed to curb online piracy. Many opponents deemed them too broad.

On Thursday, Ohanian told TIME he decided to return to Reddit full-time after getting pressure from the company’s board — of which he was a member — after Wong submitted his resignation.

“I had a bunch of my fellow board members asking me to get back involved,” Ohanian said. “And I had a long conversation with my girlfriend, I talked to my dad about it, and ultimately decided that this was the time to get re-engaged full-time with Reddit.”

For Ohanian, part of the draw of returning to Reddit, which he calls “this baby I’ve watched grow for the last ten years,” is getting its house in order after months of negative press. Aside from personnel issues, Reddit received heavy criticism over its initial reluctance to police a sub-community dedicated to sharing nude photographs of celebrities — some of them minors — that were obtained by hackers targeting users of Apple’s iCloud cloud storage system. Reddit eventually took action against those communities following mounting pressure.

“While I do believe I’m going to bring, as a founder, a kind of stabilizing presence and vision for the company, I know I’m not the only one who has to get it right,” he said. “I’m going to do everything I can to help, and I think it will, but it’s going to take every one of us.”

“I was very, very cognizant of not being a helicopter parent during the years when I was a just an advisor to Reddit,” Ohanian said. “I didn’t want to be that founder who is still calling at two in the morning to suggest some product change. And I think I did a good job of that, of not being that,” he added. “But now Reddit is in a different situation — I’m in a different situation — and I want to do everything I can to help. And I’m in a place to do that now, surrounded by a bunch of people who care just as much as I do about helping this continue to thrive.”
With Pao serving as interim CEO, that leads one to wonder: Is Ohanian eyeing the top gig at a company that’s clearly such a big part of his life? It doesn’t sound like it: “Even as a founder,” Ohanian said, he has “at least enough self-awareness to know I may not be the best person for that job.”

“Ellen has done a tremendous job,” he acknowledged, “especially in this transition phase — not to mention in the last couple of years she’s been here — and the things that I excel at, the things that are my strengths, are things that compliment her strengths and what she excels at. And so we’re still going to do a CEO search, but it really is her job to lose. I want to see this company do amazing things, and I think Ellen is the person to get us on that path.”

TIME Security

Report: Feds Using Airplanes to Target Criminal Suspects’ Cell-Phone Data

Cessna taxiing
Wellsie82—Moment Open/Getty Images

Devices on planes said to simulate cell towers and trick phones into reporting data

The Justice Department is using equipment on board aircraft that simulates cell towers to collect data from criminal suspects’ cell phones, according to a report Thursday.

Citing “people familiar with the operations,” the Wall Street Journal reports that a program operating under the U.S. Marshals Service is said to use small aircraft flying from five different airports around the country. Devices aboard those planes called “dirtboxes” essentially trick the suspects’ cellphones into thinking they’re connecting to legitimate cell towers from big wireless carriers like Verizon or AT&T, allowing the feds to scoop up personal data and location information about those targeted.

However, the report details those devices could be gathering data from “tens of thousands” of Americans in a single flight, meaning nonsuspects are likely to be included in the data roundup. The new report could shed some light on earlier reports of mysterious “phony” cell towers that security researchers have found around the country.

Read more at the Wall Street Journal

TIME technology

4 Things You Might Not Have Known About the World Wide Web’s Inventor

Tim Berners-Lee
Tim Berners-Lee at The Royal Society in London on Sept. 28, 2010 Carl Court—AFP/Getty Images

Tim Berners-Lee proposed the idea on Nov. 12, 1990

If you’ve ever used a hyperlink — a bit of typically underlined online text like this that, when clicked, helpfully takes you to another website or document — you should thank Sir Tim Berners-Lee, a Briton who on this date 24 years ago first proposed an idea he called at the time “WorldWideWeb.”

“HyperText is a way to link and access information of various kinds as a web of nodes in which the user can browse at will,” Berners-Lee and Belgian computer scientist Robert Cailliau wrote in the Nov. 12, 1990, proposal for what would become the World Wide Web.

The Web has since become such a dominant means of sharing information over the Internet that many people don’t know there’s a difference between the two. (That difference? The Internet is a network of networks, a way for a handful of computers connected to one another to share data with billions of other such networks worldwide, while the Web is a hypertext-based information-sharing system that runs atop the Internet, literally and figuratively linking websites to one another.)

It took TIME seven years after Berners-Lee first proposed the web to write a profile of him. Here are four fun facts from that May 19, 1997, piece:

1. He credits his status as “inventor of the World Wide Web” to random chance. “I happened to be in the right place at the right time, and I happened to have the right combination of background,” Berners-Lee said of the reasons he wrote the proposal, which he made while working at Switzerland’s CERN nuclear research facility and trying to connect the organization’s resources.

2. Those 404 “Website Not Found” pages are a necessary evil. Earlier hypertext arrangements kept a record of every single link in the system to avoid “dangling links” — links pointing to nothing. But creating the Web at scale meant users would have to be able to delete documents without telling every single other user about the deletion, even if that document was being linked to from elsewhere. Berners-Lee “realized that this dangling-link thing may be a problem, but you have to accept it.”

3. He also hated how hard it once was to write on the Web. “The Web . . . is this thing where you click around to read,” Berners-Lee said, but if you want to write, “you have to go through this procedure.” That’s much less true now in 2014, with services like WordPress, Blogspot and social media making it dead simple to share your writing and other creativity online.

4. He played with the idea of starting a company to make a browser, a move that would’ve set him up to compete with the likes of Mosaic and perhaps make him rich. But he feared sparking a war between incompatible browsers and permanently dividing the web. “The world is full of moments when one might be other things,” Berners-Lee said. “One is the decisions one’s taken.” Meanwhile, Marc Andreessen, coauthor of the Mosaic browser, later cofounded Netscape and has since become a wealthy and outspoken tech investor.

TIME legal

Comcast Just Trolled Us All on Net Neutrality

National Cable and Telecommunications Association Cable Show
The Comcast Corp. logo is seen as Brian Roberts, chairman and chief executive officer of Comcast Corp., right, speaks during a news conference at the National Cable and Telecommunications Association (NCTA) Cable Show in Washington, D.C., U.S., on Tuesday, June 11, 2013. Bloomberg—Bloomberg via Getty Images

Comcast says it agrees with President Obama on net neutrality. It doesn't.

Oh, Comcast.

The country’s largest Internet provider wants you to know that it “agrees with the President’s principles on net neutrality,” as a headline on a Tuesday afternoon blog post from EVP David Cohen reads. Net neutrality is the idea that all Internet content should be treated equally in terms of speed, a concept that’s in jeopardy because of a Supreme Court decision at the beginning of this year that struck down the Federal Communications Commission’s 2010 Open Internet rules enforcing it.

It’s an attention-grabbing headline from Comcast, a company that net neutrality advocates are making out to be among the most nefarious of the bad guys in the ongoing open Internet debate. Right off the bat, it looks like Comcast is agreeing with President Obama, who on Monday unexpectedly came out in favor of reclassifying broadband Internet as a utility. That’s a move big telecoms like Comcast should hate, because it would give the Federal government more authority to regulate their business. So what’s the deal?

It turns out Comcast’s post is just clickbait.

Cohen’s post claims Comcast agrees with Obama’s goals for an open Internet — no blocking content, no slowing down content, more transparency about network practices and no paid fast lanes. Cohen goes on to say that Comcast disagrees with the President on how those rules should be enforced. There’s a wide gulf here: Obama only made news Monday because he called for the Internet to be reclassified under Title II of the Communications Act, a bold move that would categorize Internet providers as “common carriers” and trigger an all-out legislative and judicial war between telecoms, the FCC and advocacy groups.

Comcast, meanwhile, says the Internet should fall under Section 706 of the Telecommunications Act, which gives the government far less authority to regulate Comcast’s business. So there’s no real agreement here at all.

That aside, the problem with Comcast’s Title II/Section 706 logic is that the FCC tried to use non-Title II authority to enforce its Open Internet rules starting back in 2010. But the courts ruled that wasn’t a valid approach, because the agency had previously and explicitly decided not to classify broadband under Title II — meaning the agency starved itself of the regulatory power it would need to legally enforce those rules. Since that ruling, the FCC under Chairman Tom Wheeler has been scrambling to find a way to enforce the Open Internet rules without running afoul of the courts.

Comcast, in its blog post, maintains that the courts left the FCC a way of doing that without triggering the Title II nuclear option — but the reality is that scenario is looking increasingly unlikely. Instead, many observers, including the President, see the FCC’s best path forward as reclassifying broadband providers as common carriers under Title II, but practice what’s called “forbearance,” or use only the regulatory power afforded under Title II the agency deems necessary to enforce its Open Internet rules. How comfortable you feel with that idea, of course, entirely depends on how much you trust a government agency to practice regulatory restraint.

It’s also worth pointing out that Comcast’s blog post makes it a point to advertise that it already practices the Open Internet rules for which Obama’s arguing — but it’s also legally obligated to do so through 2018 as a condition of its merger with NBCUniversal, a fact that’s missing from the post. Comcast also makes a dubious-at-best claim that it doesn’t “prioritize Internet traffic or have paid fast lanes,” even though Netflix is paying Comcast (and, since, other Internet Service Providers) to more quickly deliver Netflix’s content to Comcast subscribers. Whether or not the Comcast/Netflix deal violates “net neutrality” per se is a subject of debate, but that’s splitting hairs: It’s hard to see the arrangement as anything other than a “paid fast lane.”

TIME Gadgets

Your Gadgets May Soon Be Spying on Your Conversations

Amazon's latest gadget foreshadows a smart home that's listening to everything you say

Are you listening right now? Because your technology may be.

Amazon’s newest product, the Echo personal assistant and speaker, is just the latest in a long line of tech that aims to make our lives easier by responding to voice instead of touch. Probably the best known example is Apple’s Siri, which you can ask to dial your mom, write a text messages and get directions. Google and Microsoft have their own personal assistants, too—Google Now and Cortana, respectively, with the latter being named for the artificial intelligence in the Halo Xbox series.

But Amazon’s Echo, a standalone device that doesn’t rely on a phone to work, is less like Siri or Cortana and more like another Microsoft product—the Xbox Kinect, which hooks up to your home theater system and awaits your every entertainment-related command. Say “Xbox, watch TV,” and boom, on goes your television, cable box, speakers and anything else you might need to enjoy a new episode of The Walking Dead.

While Kinect is at the forefront of Microsoft’s efforts to dominate your entertainment center, Amazon is pitching Echo as a life assistant that can be helpful anywhere in your home: your living room, sure, but also your kitchen, bedroom or even the bathroom. Echo draws power from a wall outlet and gets an Internet connection through your home Wi-Fi network. To activate it, you simply speak a pre-selected “trigger word.” The family in Amazon’s first ad for Echo call it “Alexa,” but Star Trek fans might get a bigger kick out of calling it simply “computer,” though a more rarely-spoken word is probably your best bet to avoid accidental triggers.

Once you say the magic word, Echo can tackle a wide assortment of questions and requests. Amazon’s commercial reveals that Echo knows how tall Mount Rushmore is, it can spell “cantaloupe,” and it can add things to your grocery list. Probably the most helpful use case shown in Amazon’s commercial is Echo as kitchen assistant. It can provide, for instance, the number of teaspoons in a cup without you having to get your flour-covered hands all over your $500 iPad.

Still, always-listening devices like Echo or the Ubi, a similar device that obliterated its fundraising goal on Kickstarter two years ago, come with a certain creep factor. After the Snowden leaks, it’s a big ask of Amazon or any other company for us to put Internet-connected, always-listening microphone in our homes. The 1984 comparisons write themselves, and aren’t totally without precedent. Korean electronics giant LG was accused last year of using Internet-connected TVs to collect sensitive data about their owners’ viewing habits. Even if Amazon doesn’t do anything questionable with your Echo interactions, it does store them in the cloud, which, as we saw during the iCloud nude photo leak fiasco, isn’t totally hacker-proof.

Amazon acknowledged potential privacy worries right from Echo’s launch, making it a point for the dad in its family-based announcement video, above, to dispel her daughter’s fears over the device. Amazon also says Echo only grabs audio when somebody says the wake word (and for a few seconds beforehand, oddly enough). On the pro-transparency side, Echo owners can view, rate and delete any of their audio recordings. And if you’re having a conversation about which you’re particularly paranoid, you can turn off Echo’s microphone with a physical switch on the device, like a high-tech version of commanding your kids to “earmuff it for me.”

For those who can get past their privacy concerns, Echo, Kinect, Ubi and other devices like them promise to move us one step closer to a smart home that’s actually useful. Asking an Internet-connected cylinder to add stuff to the shopping list instead of doing that yourself might seem silly to those of us that would just as soon do the same thing on our smartphones, but there are already viable use cases: The kitchen example, sure, but a blind person could use something like Echo as a smartphone supplement; a grandparent who’s suffered a fall could ask it to call for help; a parent with a sick baby in his or her arms could ask it for medical advice.

Still, the world’s initial reaction to Amazon’s Echo felt muted at best. Echo doesn’t benefit from being packaged with a popular gaming console like Microsoft’s Kinect does, so it’ll have to prove its merits as a product on its own. The only way it’ll do that? If customers ultimately decide Echo’s utility outweighs everything else. If the Echo has an advantage over the Kinect here, it’s that the Kinect not only has a microphone, it’s got an ever-watching camera, too.

TIME Net neutrality

All Your Questions About Obama’s Internet Plan Answered

President Obama wants a say in the future of the Internet

President Barack Obama on Monday leapt from the sidelines to the scrum of a fierce ongoing battle over the future of the Internet. Here’s what you should know about the President’s plans:

1. Before you start, why should I even care about this wonky “net neutrality” debate?
Because you’re using the Internet right now. It’s hard to overstate how big an impact whatever comes of this debate will have on the future of how we connect with one another, do business and so on.

2. What is net neutrality, anyway?
At its simplest, it’s the idea that your Internet Service Provider (ISP) should treat all Internet content as equal in terms of speed. It’s become a major issue because some of our biggest ISPs are also media companies, like Comcast, which now owns NBCUniversal. Advocates warn that opens up a scenario where an ISP like Comcast could slow down, say, Netflix, in an attempt to get users to view Comcast’s own video offerings instead, or the ISPs could ask Netflix for money to get its content to users faster than that of upstart rivals that have less cash on hand, stifling competition.

Others, however, say enforcing net neutrality puts an undue burden on businesses, arguing that the free market will keep things fair without the government getting involved — though broadband competition in the U.S. is severely lacking.

3. Why would Obama get involved now?
On the surface, it looks like the man who Obama appointed to run the Federal Communications Commission (FCC), Tom Wheeler, isn’t as dedicated to net neutrality as Obama might like.

A little history: the FCC enacted net-neutrality rules for broadband Internet back in 2010, leading Verizon to quickly sue the agency. An appeals court struck down those rules in January, essentially saying that the FCC couldn’t enforce them without reclassifying broadband Internet as a common carrier under Title II of the Communications Act of 1934, a move that would open those services to increased federal regulation. The FCC had the chance to get broadband under Title II’s umbrella back in 2002, but decided instead to call it an “information service,” a decision that made it much harder for the agency to regulate it.

All that history leaves Wheeler, a former telecoms lobbyist, with few options. He’s tried to craft a middle-of-the-road approach, but advocates say his idea would still let ISPs create so-called “fast lanes” and “slow lanes” for Internet content, thereby violating net neutrality. Another recently leaked proposal had the FCC planning a sort of hybrid approach, but pretty much everybody on both sides of the debate hated the idea.

Obama is getting closely involved as the FCC has struggled to come up with a solution and, notably, after Democrats lost control of the Senate in this year’s midterm elections. Net neutrality was a major Obama campaign promise, and he’s likely thinking about what his legacy will be when his time as President is up about two years from now.

4. What’s Obama’s plan exactly?
Obama’s plan is fourfold: stop ISPs from blocking access to legal content; prevent them from “throttling” some types of Internet traffic; apply net-neutrality rules between ISPs and the rest of the Internet; and ban paid prioritization of content, which involves a content provider paying an ISP to get its offerings to your home faster than other content is delivered.

However, the courts have made it pretty clear the FCC can’t do any of this without first triggering the so-called “nuclear option” of reclassifying broadband as a common carrier utility under Title II of the Telecommunications Act. That’s why Obama is also calling for the agency to make that move.

4. Why is Title II the “nuclear option?”
It would set off a legal and legislative fight on a scale that hasn’t been seen in the tech policy world in decades. It’s pretty much a law of nature that big businesses will fight tooth and nail against any increased government regulation, and Title II is exactly that: a move that would allow the FCC more control over corporate behemoths like Comcast and Verizon. The lobbyist and advocate group emails were flying just as Obama’s statement went live, foreshadowing a major fight in Congress and probably the courts as well.

Notably, however, Obama is also calling on the FCC to practice “forbearance,” or the idea that the government shouldn’t enact regulations beyond what it sees necessary to enforce his four-point plan. Title II, however, would allow the FCC to enact regulations beyond Obama’s plans. Expect that point to be a major talking point as the debate develops — opponents of Title II reclassification will argue the federal government will, by its nature, enact as many regulations as it possibly can, adding undue burden to businesses. They’ll also say that federal regulation can’t possibly move fast enough to adequately govern something as ever changing as the Internet.

5. Does the President have any real power here?
The FCC is an independent agency, and although Wheeler was appointed by the President, what the FCC does is up to Wheeler and the agency’s four bipartisan commissioners. It’s hard to say how much of an impact the Oval Office will have on the decisionmaking process.

6. Where do we go from here?
Even though Obama can’t force the FCC to do anything, his getting involved in such a major way brings a wonky tech-policy debate right to the fore. Some 4 million Americans have already contacted the FCC to offer their opinions about net neutrality, setting an agency record. It’s easy to see more Americans will take the time to learn about — and form an opinion on — the debate now that the President’s made headlines about it.

One possible scenario is that Wheeler and Obama have this whole time been playing a little good cop/bad cop. Wheeler could’ve made his proposals knowing full well they would drum up serious public opposition, leaving Obama free to swoop in and ride that public sentiment to come out in favor of Title II. Wheeler, then, could follow the President’s lead knowing he has the Oval Office’s support in triggering the nuclear option — a move he might’ve wanted to make all along.

Wheeler, meanwhile, responded to Obama’s statement Monday with one of his own that essentially boils down to this: the FCC needs more time.

“I am grateful for the input of the President and look forward to continuing to receive input from all stakeholders, including the public, members of Congress of both parties, including the leadership of the Senate and House committees, and my fellow commissioners,” Wheeler said. “Ten years have passed since the commission started down the road towards enforceable Open Internet rules. We must take the time to get the job done correctly, once and for all, in order to successfully protect consumers and innovators online.”

TIME Video Games

Check Out This New Halo Ad Set to Queen’s ‘We Will Rock You’

Halo: The Master Chief Collection is out next week

Halo: The Master Chief Collection, a jam-packed collection of specially remastered Halo titles, rolls out on Xbox One consoles next week, just in time for the holiday shopping season. To celebrate the launch, Microsoft is running this TV ad starting today, featuring footage from the game set to Queen’s “We Will Rock You.”

Microsoft is hoping that The Master Chief Collection, which includes Halo: Combat Evolved, Halo 2, Halo 3 and Halo 4 in addition to access to the Halo 5: Guardians multiplayer beta, will boost sales of its Xbox One console, which many people think is losing the sales battle against rival Sony’s PlayStation 4 console. In another attempt to boost holiday sales, Microsoft recently lowered the price of new Xbox One consoles by $49 down to $350 through the end of the year.

TIME Smartphones

This Easy iPhone Trick Will Save You Tons of Photo Space

Apple Launches iPhone 5s And 5c In China
A customer inspects the new iPhone at the Wangfujing flagship store on Sept. 20, 2013 in Beijing, Lintao Zhang—Getty Images

How to use the cloud to free up more room

We’ve all been there: Running low on iPhone storage space, scrambling to delete photos we can live without to record new memories. Well, Apple’s newest iOS update gave us a handy new way to get more storage out of our iPhones without upgrading the hardware.

Apple’s iOS 8.1 activated a feature called the iCloud Photo Library, which automatically uploads your photos and videos to your iCloud account — Apple’s version of cloud storage. iCloud users get 5GB of storage space for free, but can bump that up to 20GB for $.99/month, 200GB for $3.99/month, 500GB for $9.99/month and so on.

If you choose to activate iCloud Photo Library, your iPhone will by default keep big, high-resolution files both on your device and on iCloud. But here’s where the storage-saving trick comes in: You can set the iCloud Photo Library to upload the higher-resolution files to the cloud and keep only compressed (read: smaller) versions on your iPhone. Those compressed versions are still good enough to show off your photos to family and friends on your iPhone screen, but they take up much less space on your device — leaving you free to take more photos and videos.

To turn on the iCloud Photo Library on your iPhone or iPad, first make sure you’ve got the latest iOS 8.1 update installed and that you’re signed up for iCloud. Then go to Settings, select iCloud, find Photos and turn on iCloud Photo Library. Then, for the space-saving trick, activate the “Optimize” feature, which is also accessible by going to Settings, selecting Photos & Camera, then iCloud Photo Library.

Read next:

TIME Gadgets

Yes, the Gold Apple Watch Will Be Crazy Expensive

Maybe not $5,000, but it'll cost you

Got a hankering for the highest-end Apple Watch, the one that comes in 18K gold? Then you better be ready to pay hand over wrist.

So far, Apple’s only officially said that the Apple Watch’s start at $350. But that’s likely the price point for the entry-level model, the Apple Watch Sport. How much will the super-fancy 18K gold Apple Watch Edition cost? We don’t know for sure yet, but a French Apple blog is claiming this week they’ll run somewhere between $4,000 and $5,000. That’s after similar rumors put it at a much more palatable if still a wee bit crazy $1,200.

“$5,000?! For a smartwatch? That’s nuts!,” a reasonable person might exclaim at this point. But $5,000 is actually a steal for an 18k gold watch. A quick perusal of Google Shopping reveals that full-18K luxury watches (not the merely gold-plated timepieces) tend to run upwards of $10,000, and can be as much as $30,000, though many of these watches use more gold than the Apple Watch will. That aside, 18K gold is expensive, and despite all its magic, Apple can’t simply will the material’s price to go down—as of this writing, one ounce of 18K gold is worth roughly $858.

Ultimately, we won’t know what the high-end Apple Watch will cost until Apple tells us. That said, that the $5,000 rumor is even remotely believable reveals who Apple is really targeting with the 18K gold Apple Watch Edition: The kinds of people who would spend on a watch roughly what I spent on my college degree. (Thanks, state school!) For the upper crust, $5,000 is a paltry sum compared to what they’re used to spending on timepieces.

Where the Apple Watch could get into trouble with these buyers, however, its in the value retention department. If I were to win the lottery tonight and go off and buy a $20,000 gold Rolex, I could probably sell the thing for at least what I paid for it 15 years from now to, I don’t know, finance a house. The Apple Watch, however, is more of a consumer tech product, likely to be subject to the same depreciations in value as aging iPhones and iPads.

Who would pay $5,000 for a gizmo that’s going to be obsolete in a year or two? That’s a question Apple needs to answer if it wants to actually sell any of the high-end Apple Watches. One idea: Perhaps it could sell them on some kind of subscription model, where consumers pay a certain amount over time to get subsidized upgrades when new models are out, similar to the model with which some wireless carriers are now experimenting.

If the gold Apple Watch Edition indeed retails for $5,000, it’ll be far from the most expensive device Apple sells. A fully-tricked out iMac With Retina 5K Display, packed with Apple’s creative editing software, costs $5,147.97. But hey, free shipping!

TIME Business

A Judge Ordered Microsoft to Split. Here’s Why It’s Still a Single Company

The Nov. 15, 1999, cover of TIME
The Nov. 15, 1999, cover of TIME Cover Credit: MARK FREDRICKSON

The monopoly ruling never led to the creation of "Baby Bill" companies

It was Friday, Nov. 5, 1999 when then-Microsoft CEO Bill Gates got the bad news. Judge Thomas Penfield Jackson had declared that his company was a monopoly. And not just any monopoly, but the very worst kind: one that uses its power to squash would-be rivals before they’re even out of the gate. At the time, Microsoft packaged its Internet Explorer web browser with its Windows operating systems, which gave Microsoft an incredible advantage over rivals like Netscape in an era when dial-up Internet meant that downloading and installing alternative web browsers was a slog at best.

“It’s actually hard to imagine how, for Microsoft, it could have come out any worse,” TIME wrote in a Nov. 15, 1999 cover story on Jackson’s decision. But Jackson wasn’t done yet — the declaration that Microsoft was a monopolist was only the first half of his decision. Jackson’s conclusions and remedy wouldn’t come until April and June of the next year, respectively, after Gates had already stepped down as CEO and transitioned into the newly created role of “chief software architect.”

“Assuming he says yea [to the question of whether Microsoft's monopoly was used to violate antitrust laws]–a near certainty considering Friday’s findings–he can impose a remedy as far-reaching as the total dismemberment of the Gates empire,” TIME wrote in 1999. “The gamut of possible outcomes runs from a mild go-forth-and-sin-no-more to the truly Draconian stuff: forcing Microsoft to share its Windows source code with its competitors or carving up the company into the so-called Baby Bills.” (“Baby Bills” was a clever riff on the “Baby Bells” born of the 1982 breakup of the Bell telephone system.)

In 2000, Judge Jackson took the harsher path, decreeing that Microsoft should be split into two halves, one dedicated to Windows and the other to everything else Microsoft.

So why aren’t there two Microsofts today?

Jackson’s word was far from final. The case found its way to the D.C. Circuit Court of Appeals, which rejected Jackson’s remedy and accused him of unethical conduct after it was revealed he had private conversations with reporters about the trial while it was still ongoing. Microsoft would settle the case with the Department of Justice in November of 2001 by agreeing to make it easier for Microsoft’s competitors to get their software more closely integrated with the Windows operating system — a tough pill for Microsoft to swallow, but hardly on the same level as a forced breakup.

These days, it’s harder to see Microsoft as the big monopolist bully Judge Jackson once described. Microsoft Windows operating systems still dominate the PC OS market, but PC OSes are less important than they’ve ever been before, diminishing Microsoft’s ability to use Windows’ market share to make life harder for its rivals. Thanks to the rise of high-speed Internet, web-based solutions and cloud computing in general, it doesn’t really matter what OS you use — Facebook and Gmail don’t care if you’re accessing them from Windows, OS X or Linux. On top of that, we do more of our daily computing on mobile devices like smartphones and tablets, a sphere that’s owned not by Microsoft but by rivals Apple and Google. (Interestingly, that latter company has increasingly run afoul of antitrust regulators, particularly in Europe, where a four-year investigation of Google’s potential abuse of its dominance in search to favor its own secondary products over those of its competitors was just reopened. As the power has shifted from Microsoft to its rivals, so have the watchful eyes of regulators.)

Sure, there have been fresh calls to split up Microsoft — except they’re not coming from regulators, but from Microsoft stockholders and analysts, surely inspired by the trend of corporate spinoffs that’s already hit massive players in tech like eBay, HP and now, potentially, security and storage firm Symantec. Microsoft, the spinoff advocates say, would be better off jettisoning its consumer-facing products, like the Xbox and its Bing search engine, so it can focus on enterprise solutions for corporate customers.

Will we ever see the birth of the Baby Bills? Maybe, but not for a long while: Microsoft’s newest CEO, Satya Nadella, hasn’t even had the reins for a full year yet, but he’s already well underway in changing course to a mostly software-oriented, platform-agnostic company. Microsoft’s stockholders seem to be willing to give Nadella some time to enact his vision, which could preserve the single Microsoft that’s been around since Gates and Paul Allen founded it in 1975 — a single company, even if that’s not so threatening anymore.

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser