On this day in 1997, Microsoft invested $150 million in Apple, saved it from bankruptcy (2024)

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On this day in 1997, Microsoft invested $150 million in Apple, saved it from bankruptcy? ›

The show of friendship between rivals Bill Gates and Steve Jobs shocked the tech and business communities. On August 6, 1997, Microsoft's Bill Gate invested $150 million in Apple which was in the brink of bankruptcy. Following the deal, Steve Jobs told Gates, “Bill, thank you. The world's a better place.”

Recognizing the potential for a win-win scenario, Microsoft agreed to invest a substantial $150 million in Apple, acquiring non-voting shares. In return, Apple dropped a lawsuit against Microsoft and made Internet Explorer the default browser on its computers, increasing Microsoft's reach and influence.

The company had seen its market share decline due to increased competition from Microsoft and IBM. Apple's operating system at the time, System 7, was outdated compared to Microsoft's Windows 95. Additionally, Apple had tried to launch its own handheld device called the Newton, but it was a commercial failure.

The deal between the two companies was mutually beneficial from every angle. Apple got some much needed cash while Microsoft was able to keep a weakened competitor afloat, thereby alleviating concerns about the company's monopolistic power.

It was in early August 1997 that Microsoft rescued Apple from the brink with a life line of $150 million. Remember, that was a princely investment in those days. The deal was all the more remarkable because Gates and Jobs did not see eye to eye on most issues.

On August 6, 1997, Microsoft's Bill Gate invested $150 million in Apple which was in the brink of bankruptcy.

Microsoft invested in Apple, because they believed it was a good bet to return to profitability. Steve Jobs had just returned to the company, and Bill Gates had known Jobs for more than 20 years. They hadn't always had the best working relationship, but there was undoubtedly a great deal of mutual respect there.

In August of 1997, Gates stepped in and saved Apple, which, at the time, was on the brink of bankruptcy. “Bill, thank you. The world's a better place,” Jobs told Gates after the Microsoft exec agreed to make a $150 million investment in Apple.

Does Bill Gates own Apple stock? Within Jobs' first year back as CEO, he entered into a partnership with Bill Gates' Microsoft, which made a $150 million investment in Apple and committed to developing software for macOS. In 2003, Microsoft opted to sell all of its Apple stock for $550 million.

Microsoft (NASDAQ: MSFT) recently overtook Apple (NASDAQ: AAPL) as the world's most valuable company. As of this writing, Microsoft's market cap has reached $2.89 trillion and remains higher than Apple's market cap of $2.87 trillion.

Why did Microsoft loan Apple money? ›

Gates always had a soft spot for Apple

Not only that, but Apple got him into the application software business (and now one of Microsoft's most valuable product areas). Rather than letting Apple bleed to death, Gates decided to take it as an opportunity to work with a competitor.

In 1992, the court ruled in Microsoft's favor, stating that the majority of the features Apple claimed were infringed upon were not actually protected by their copyrights. The ruling was based on a contract signed by Apple and Microsoft in 1985, allowing Microsoft to use certain Macintosh GUI elements for Windows 1.0.

When Jobs came back as interim CEO, in 1997, he was faced with the task of making Apple profitable again. What he did is nothing short of amazing: the company went from losing $1.04 billion to turning a $309 million profit a year later. Jobs saved the company and set the course for decades of innovation.

August 6, 1997: In one of the most famous moments in Apple history, Steve Jobs reveals that Microsoft invested $150 million in its rival. Although often presented as an inexplicable gesture of good faith on the part of Microsoft boss Bill Gates, the cash infusion into Apple actually benefits both companies.

For Microsoft, 1997 is filled with big moves as the Company announces the immediate availability of Office 97, we sign an agreement to acquire WebTV Networks for approximately $425 million in stock and cash and Microsoft's Internet Explorer 4.0 is released to critical acclaim and enormous customer demand.

Saving Apple

Jobs quickly forged an alliance with Apple's erstwhile foe, the Microsoft Corporation, scrapped Amelio's Mac-clone agreements, and simplified the company's product line. He also engineered an award-winning advertising campaign that urged potential customers to “think different” and buy Macintoshes.

Microsoft's ascent to the top is attributed to its early lead in generative artificial intelligence. This technological advantage played a pivotal role in Microsoft's market valuation surpassing that of Apple.

On Friday, Microsoft surpassed Apple, claiming the crown after its market value surged by more than $1 trillion over the past year. Microsoft finished the day at $2.89 trillion, higher than Apple's $2.87 trillion, according to Bloomberg.