27 years ago, Microsoft bought $150 million worth of Apple stock after the company almost went bankrupt

The early 1990s were not an easy time for Apple. After losing the company’s main visionary, Steve Jobs, and falling into decline and disarray, the company was on the verge of financial bankruptcy by the start of 1997. But luckily, due to the return of Apple’s CEO, a settled lawsuit, and a $150 million stock investment by Microsoft, the company was saved from bankruptcy and went on to become the cultural and innovative icon that it is today.

The slow decline of Apple

Apple was Jobless until 1997

In 1985, Apple would be forever changed as Steve Jobs, the co-creator of Apple, would be let go from the company. After Jobs was replaced as the project lead for the Macintosh computer, he had a clash with the then-board of directors at Apple, which led to his dismissal. Steve Jobs then decided to “borrow” a few Apple employees and founded a new company, NeXT, that developed computers with advanced image software.

This era was not only important for PC history but also for film history. While Steve Jobs was CEO at NeXT the next year in 1986, he would go on to encounter a team working on 3D image and video animation. Jobs would later buy the video animation company so that he could use the 3D animations at NeXT. The company that he bought that day is now known as Pixar.

During this time, Apple continued a slow decline. The company’s Macintosh computer line wasn’t selling, the company management was constantly changing, and it didn’t help that Apple computers were twice as expensive as Microsoft alternatives. Without Steve Jobs, it didn’t seem like Apple was going to make it.

When Jobs finally returned to Apple in July 1997, the company was making pagers and PDA-style devices. Steve Jobs took a good hard look at the company and decided that the company needed a bold shift in vision. In the beginning, he only acted in an advisory role. Only later was he promoted back to CEO of the company in 1997, when he began to make real changes.

One of Steve Jobs’s requirements of Apple before he returned as CEO was for the company to acquire and merge with his new company, NeXT. Using the Apple brand and design, in combination with the operating system and GUI software created at NeXT, Jobs would go on to create the original Mac OS X, and start a new line of devices that we now know as the iMac and iPod.

Microsoft didn’t save Apple, it was simply saving itself

Copyright infringement, lawsuits, and monopoly

Microsoft is often said to be the only reason why Apple exists today. While this most likely wasn’t the case, it is true that Apple was not looking good towards the start of the 21st century. The opposite was true for Microsoft though, who, at the time, controlled around 92% of the PC market.

Between 1996 and 1997, Microsoft was hit with two major lawsuits and had both the public and the government watching the company as it was nearly monopolizing the market. In the early 90s, Apple had hired the San Fransisco Canyon company to create a video editor called QuickTime which would be used for future versions of Macintosh. This code would later be found on Windows operating systems and in Intel drivers. This meant that both Microsoft and Intel were guilty of copyright infringement and software piracy. The lawsuit was passed around for a few years, but the whole deal was ultimately settled outside of court. It is alleged that Microsoft paid at least $100-$200 million in settlement money.

During the same time, the US government had started to notice that Microsoft had a rather large market share in the PC sector, and its actions were putting companies out of business. There was an outcry from one of the largest internet search engines at the time, Netscape, who protested that Microsoft should not be allowed to monopolize the market by bundling Windows with Internet Explorer. Microsoft was offering the browser for free, which was not common at the time, as most internet search engines charged a fee for use. This all seemed to fall into the realm of unfair business practices, so both Netscape and the United States government took them to court. Netscape and other search engines did end up going out of business due to the launch of Internet Explorer.

How did it end?

So, in 1997, Apple was still on the verge of bankruptcy but had won a lawsuit against Microsoft, acquired the NeXT company, and welcomed back its visionary CEO, Steve Jobs. Then later that same year, at the Mac World conference, Steve Jobs stepped out on stage and announced that Apple would start its partnership program with Microsoft, including 5 years of Microsoft Office support for all Mac devices. Somewhere between the lawsuit and the near-bankruptcy, Microsoft also managed to get Apple to ship all next-generation Mac devices with… Internet Explorer.

While Apple probably would have suffered without the financial help of Microsoft when Steve Jobs first arrived back, it wouldn’t have failed. That being said, Microsoft was no saint here. For the most part, the company was far more concerned with saving their own neck by propping up a competitor so that the government wouldn’t view Microsoft as a monopoly unfairly controlling the market.