Microsoft Once Paid $280M For Rigging Early Windows Against Competitors

For those unaware, Microsoft once faked an installation error for Windows 3.1 if a user was trying to install it atop DR DOS, and the story is spreading quickly as a pertinent reminder of the ruthless ambition during the early days of the personal computer boom.

The death of DR DOS is a sad story. DR DOS was a highly-compatible, viable competitor to MS-DOS, and at the time of its release was widely considered superior to MS-DOS due to its lower price and generally better performance, without any major downsides. Since Windows 3.1 was essentially a GUI that ran on top of MS-DOS, the existence of DR DOS posed a threat to Microsoft's growing dominance at the time, and the team at Redmond simply would not have that.

So, what did Microsoft do? It made the Windows 3.1 installer false-flag DR DOS and report it as a compatibility issue. Attempting to install Windows 3.1 atop DR DOS would throw a "non-fatal error" with a #4D53 error code, preventing the Windows installation entirely. For the pre-release versions of Windows 3.1, this trick mostly flew under the radar, but within a month of its April 1992 launch, software analyst Geoff Chapell took a deeper look under the hood.

Chapell discovered that the installer wasn't discovering a real issue at all and was in fact obfuscating a function that existed solely to determine whether the user had MS-DOS or DR DOS installed on their systems. The story didn't end there, either. Windows 3.1's SMARTDrive utility also had a function dedicated to detecting DR DOS, which prevented SMARTDrive from running.

The sabotage would not have any real consequence for Microsoft until several years later. Two years after Windows 3.1 launched, DR DOS developer Digital Research and publisher Novell ceased all further development of DR DOS. In 1996, four years after DR DOS was shuttered, Caldera acquired the rights to the software and took the matter to court against Microsoft in the same year.

The jury trial granted Caldera access to Microsoft's internal emails, which revealed messages from Brad Silverberg, David Cole, Phil Barrett, and Jim Allchin that proved Windows 3.1 was intentionally blocking users of DR DOS strictly for anti-competitive reasons. Allchin even ordered Silverberg to "make sure it has problems in the future."

In response to this evidence, Microsoft opted to settle out of court with Caldera, paying the company $280 million to keep quiet about what it had discovered. It would have stayed that way had the settlement documents not been revealed to the public in November of 2009—15 years after DR DOS ceased development, and the founder of Digital Research, developer Gary Kildall, had died.

As MakeUseOf notes, Microsoft effectively paid $280 million for bragging about its anti-competitive moves internally. But in today's era of Microsoft's desktop dominance and walled garden software ecosystems, I find it hard not to say Microsoft won in the end.