Adapted by:
Rubén Andrés
WriterWriter at Xataka. I've been working remotely for more than a decade and I'm a strong advocate of technology as a way to improve our lives. Full-time addict of black, sugar-free coffee.
Alba Mora
WriterAn established tech journalist, I entered the world of consumer tech by chance in 2018. In my writing and translating career, I've also covered a diverse range of topics, including entertainment, travel, science, and the economy.
The recent history of technology shows that being a benchmark in any sector can be a double-edged sword. On one hand, it allows a company to operate from a position of market dominance. On the other hand, it makes that company a target for its competitors.
In 1996, Microsoft co-founder Bill Gates, one of the world’s most influential and wealthiest individuals, was deeply concerned about the rise of a new technology: Java. He even admitted that it was keeping him away at night. In an email, Gates also said that Java threatened Microsoft’s dominance in the market.
Gates’ Primary Concern Wasn’t Apple
In September 1996, in a conversation revealed by Internal Tech Emails, Gates expressed his concerns about Java. He confided in Nathan Myhrvold, then Microsoft’s chief technology officer and a co-inventor on more than 800 patents, that he was “literally losing sleep” over Java’s impressive capabilities.
Gates was worried that he couldn’t devise a strategy to protect Microsoft from the vast potential this new technology presented. “It seems like it could make it easy for people to do competitive operating systems,” he said in his email.
To address this threat, Myhrvold suggested an “embrace and extend” strategy.
A Controversial Yet Winning Strategy
The “embrace and extend” strategy had two main components. First, Microsoft announced its support for standardization and collaborated with other organizations to develop technology collectively.
In the second phase, Microsoft implemented the Java standard while adding unique and differentiated features for its users. This approach created a competitive advantage for the company. It also encouraged users of other brands, which only offered the basic standard, to switch to Microsoft’s products.
The strategy proved highly effective for Microsoft, helping solidify Windows’ leadership in the market through features that no other operating system offered. However, some also viewed it as abusive.
In fact, the Department of Justice said in one of its rulings that the strategy’s goal was to “embrace, extend, [and] extinguish” due to its negative impact on competition.
There’s Always a Risk Lurking in the Tech World
Gates isn’t the first billionaire to admit that a new risk keeps them awake at night, especially in the technological field. Innovation can topple the biggest companies and elevate the most unlikely contenders from obscurity to prominence overnight. Just look at Nokia or DeepSeek.
The fear that a competitor might emerge out of nowhere and undermine all the hard work done by a company is a common concern among the CEOs of large corporations. This phenomenon is often referred to as “CEO paranoia.”
Nvidia CEO Jensen Huang has previously expressed his obsession with the possibility of making a management mistake that could lead to his company’s bankruptcy. “When you build a company from the ground up and you’ve experienced real adversity, and you experienced nearly going out of business several times, that feeling stays with you,” Huang told The New York Times at DealBook Summit 2023.
Image | OnInnovation
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