Microsoft’s attempted merger with Intuit

Before Microsoft was obsessed with Netscape, it was obsessed with another piece of software: Quicken. Unable to beat it in the marketplace with a clone called Microsoft Money, Microsoft tried to buy its publisher, Intuit, outright. On May 20, 1995, Microsoft and Intuit abandoned that merger over antitrust concerns.

What was Quicken and why did Microsoft want it?

Online banking pretty much replaced Quicken in the 21st century, but before banks offered online banking themselves, Quicken was a program to help you balance your checkbook, plan financial goals, and help you pay your bills, which could mean transferring money or printing paper checks for you. Intuit sold Quicken for $40 but also charged a small fee on electronic transactions. It provided a revenue stream that lasted beyond the initial purchase.

Microsoft took notice. In 1991, Microsoft released its Quicken clone, Microsoft Money.

Quicken was intuitive and easy to use and Intuit offered excellent customer service, so Quicken’s 6 million users were very loyal. Microsoft cloning your product often was terrible news. Just ask Lotus and Wordperfect and Digital Research. But Quicken remained resilient. Quicken outsold Money by a ratio of more than 3 to 1.

Intuit also published Turbotax and Quickbooks. Today, Intuit is much more (in)famous for those two products. But in 1994, Quicken was the reason for the deal, even if those two products proved to have more staying power.

Microsoft’s failed merger with Intuit

Intuit went public in 1993, and on October 14, 1994, Microsoft attempted to buy Intuit outright for $2 billion, which would have set a record at the time. As part of the deal, it would sell Microsoft Money to Novell, who at the time owned DR-DOS and Wordperfect, so it would seem like they would be interested in losing to Microsoft in yet another product category. Microsoft hoped selling Money and its 22 percent market share rather than discontinuing it would ward off antitrust concerns. Robert X. Cringely speculated in his Nov 21, 1994 column in Infoworld that Microsoft would divest itself of Quickbooks as well to try to get the deal past regulators.

James Wallace, in his 1997 biography of Bill Gates titled Overdrive, quoted an anonymous industry pundit as calling the deal “Everyone’s favorite software company being bought by everyone’s least favorite software company.” I remember seeing the quote in 1994, but can’t remember who said it. I wish I could give proper credit to who said it, it’s an amazing line.

The DOJ makes its move

The regulators were slow to move even though speculation that the US Department of Justice would object started immediately. A little over six months later, on April 27, 1995, the DOJ sued to block Microsoft’s purchase, stating it would be impossible for a new competitor to enter the market and compete effectively. Quicken had 70 percent of the market, Microsoft Money had 22 percent, and “Managing Your Money” from H&R Block and “Simply Money” from Computer Associates combined had less than 10 percent, according to DOJ analysis. And Novell’s track record competing with Microsoft didn’t bode well for its prospects of holding on to 22 percent of the personal finance market after it acquired Microsoft Money.

There was no path to make the sort of concessions that made Microsoft’s much later acquisition of game publisher Activision tolerable to regulators.

Microsoft had other antitrust concerns on the horizon, which may have led to abandoning the merger a month after the DOJ filed suit rather than fighting it. As valuable as Quicken was, Windows and Office were more valuable. Microsoft paid a $46.5 million termination fee to Intuit to back out of the deal.

Less than a week later, Microsoft pivoted to the Internet, with the release of Bill Gates’ Internet Tidal Wave memo. And that led to another more famous lawsuit from the DOJ in 1998, one that sought to break up the company.

Intuit today

Today the statement that Intuit was everyone’s favorite software company might ring a bit odd, amid revelations Intuit and H&R Block lobby Congress to keep the U.S. tax code complicated so that it’s impossible to file your taxes without either a computer program or an accountant. But in the 1990s, Intuit cofounder Scott Cook kept a high profile and cultivated an impression that he and Intuit really cared about your personal finances.

Today, you can listen to personal finance coaches on the radio who offer financial advice with a healthy dose of condescension and bullying. Scott Cook took a softer approach, coming off as the helpful neighbor who sold you financial tools and really wanted you to be successful with them without judgment.

But today it’s much easier to sell tax and accounting software than to try to unify the personal finance market again. As a result, Intuit shifted focus and Cook no longer has a need to keep a public profile, although he hasn’t really gone anywhere. He remains an executive at Intuit and a director at Ebay and Procter & Gamble.

Dave Farquhar

David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.