Understanding Trump’s Approach on Energy

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Microsoft, Netscape, and the Trump Energy Policy  

July marked the end of the first six months of the second Trump administration—an almost inconceivably consequential period that saw the United States withdraw from international climate agreements and repeal much of the Biden administration’s climate legislation. Those dramatic policy reversals have drawn heated criticism from climate advocates, who warn that the United States is failing to compete with China in the industries that will dominate the world’s energy future. That framing, however, risks obscuring the strategy that the Trump administration appears to be pursuing.  

Like any incumbent technology leader faced with an upstart competitor, the United States has two choices: it can work to out-innovate its new rival, or it can try to use its market power to reinforce the status quo. The Trump administration seems to have chosen the latter course.  

Rather than engage in serious competition with China in renewable energy technologies, a sector in which Beijing already enjoys a significant lead, the administration is pressing the U.S. advantage in fossil fuels. 

It is taking steps to boost the supply of U.S. oil and gas, easing drilling restrictions on federal lands and loosening permitting requirements for pipelines and other fossil infrastructure. At the same time, it’s pulling multiple levers of power to suppress demand for alternatives. Congress cut public support for renewable energy generation and electric vehicle adoption, reducing competition for fossil fuel-powered incumbents. The United States has also used trade negotiations to secure major energy purchase pledges from the European Union and South Korea, and Vietnam said that it would import more U.S.-made SUVs. 

This is not, at least in the abstract, a crazy approach. Microsoft, for example, pursued a similar strategy in the 1990s. Microsoft’s Windows was then the predominant operating system, installed on more than 80 percent of all desktop computers. For years, its comfortable position atop the market was self-reinforcing: software developers wanted to write applications that could be widely adopted on a single system, and businesses and consumers wanted computers with numerous and interoperable applications. Windows PCs satisfied both sets of demands. 

The internet, however, threatened to undermine that equilibrium. Netscape Navigator, a web-browsing program not made by Microsoft, surged far beyond Microsoft’s Internet Explorer in both technological quality and consumer adoption. Worse, Navigator opened new doors for software developers, enabling them to more easily develop applications for operating systems other than Windows. Over time, that could have eroded Microsoft’s dominant position in operating systems, threatening its core business.  

Faced with that prospect, Microsoft played hardball. It spent millions improving the quality of Internet Explorer, and then millions more driving Navigator from the market. It gave Explorer away for free to consumers and internet providers. It bundled Explorer with its Windows operating system and offered free desktop space on Windows PCs to internet providers who committed to using and promoting Explorer. In some cases, when internet providers were already contracted to buy licenses for Navigator, Microsoft bought out the contracts.  

According to the U.S. Department of Justice, Microsoft’s actions violated antitrust laws. But the strategy worked. Microsoft settled with the government and enjoyed nearly complete dominance in internet browsing for more than a decade. More importantly, from Microsoft’s perspective, more than 70 percent of desktop computers still run Windows today. 

The Trump administration’s approach on energy appears to track, in important respects, Microsoft’s strategy in the 1990s. Its priority isn’t to out-engineer the leaders in competing technologies. It is to produce an acceptably functional product and then leverage its preeminent position to encourage or induce allies and consumers to accept it. 

The analogy is not, of course, a perfect one. The United States has extended public support for some low-carbon energy sources, including advanced nuclear and geothermal, signaling an intention to engage in those critical industries. And, as a sovereign state in a competitive international system, Washington enjoys substantially more freedom of action than a private company like Microsoft; what counts as anticompetitive behavior for a firm is often just a Tuesday in a realist foreign policy.  

Whether that strategy will work as effectively for the Trump administration as it did for Microsoft, moreover, remains to be seen. Wary of low prices, U.S. oil and gas companies have so far not increased production, and there is good reason to be skeptical that the purchase pledges from international partners will (or even can) be fulfilled. Meanwhile, driven by rising fears of climate change and rapidly falling prices, global demand for renewable power, electric vehicles, and other leading clean energy technologies shows little sign of abating.  

Nonetheless, Microsoft’s experience offers a helpful way to conceptualize the administration’s actions. Washington’s priority isn’t to win a slice of the electric vehicle market or make an outstanding battery—it’s to compete against the new energy paradigm itself.