Software // Enterprise Applications
Commentary
1/23/2004
01:57 PM
Fred Langa
Fred Langa
Commentary
50%
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The Explorer: Microsoft's Loss Is Not Consumers' Gain

Clearly, where there's a better product or better marketing, all of Microsoft's vaunted strengths matter little: The better product (such as Apache) or the better marketing (such as AOL's) wins out. As it should.

None of this is to suggest that Microsoft is blameless or saintly: In fact, there's plenty of clear evidence that Microsoft acted in a hyperagressive way towards it competitors.

But curiously, harshly anticompetitive behavior is perfectly fine -- at least, it's not illegal -- in non-monopolies. In the strange world of legal reasoning, the behaviors that let Microsoft build its empire were fine when Microsoft was on the way up, but once Microsoft achieved desktop dominance, those same behaviors became illegal. There's no clear line of demarcation: What is legal one day can suddenly be illegal the next, and only the prosecutors decide, after the fact, when the change from aggressive competitor to monopolistic abuser took place.

Antitrust laws may be strangely constructed, but they exist: to protect consumers. Indeed in its writings, and especially in the press conferences and interviews that followed, the Court and its players repeatedly stated that the real reason the trail took place was "on behalf of consumers."

So it's reasonable to ask: Have consumers been harmed? Have you been harmed?

There are amazingly few concrete instances cited in the long document. The Court seems to focus on the unprovable assertion that we all would have been showered with wondrous new technologies, had Microsoft grip been looser. The Court cites no examples -- these high tech marvels remain unnamed, unknown, and unidentified. To me, that makes this an empty and emotional argument: You can't prove what isn't there or what might have happened.

But let's look at what is there. Of the few specific consumer abuses cited, perhaps the most damning is this: One legal sign of monopolistic abuse is the ability to set arbitrary pricing. When deciding what price to set for Windows 98, Microsoft toyed with $50, but then (in the words of the Court) Microsoft "...identifie[d] $89 as the revenue-maximizing price. Microsoft thus opted for the higher price."

What is normal business behavior in almost any other circumstance -- maximizing profits -- becomes illegal in a monopoly. OK, I can buy that: Microsoft's vast wealth is a pretty clear indication that didn't need the extra bucks to survive. To the degree that simple greed was at play, Microsoft was clearly wrong. To the degree it was illegal, Microsoft should be punished. But is it as black and white -- as unmitigated an evil -- as the Court suggests?

Even in the written findings, the court allows that the free browsers we all enjoy today are largely a result of Microsoft's actions. And it allows that the explosion in the Internet was fueled in large part by Microsoft products.

These are surely significant, but the Court does not include what is perhaps the clearest and most obvious monetary benefit to consumers: cheap hardware. The unified, worldwide standard that is Windows provides the economies of scale hardware vendors need to deliver the $500, $300, $200 -- or even free -- PCs we see today. Hardware vendors can create their systems and peripherals, set them up with Windows drivers, and have access to a vast market. Everyone who's bought a PC in the last several years has had far more choices and has saved anywhere from hundreds to thousands of dollars over what would have been available if the OS world were balkanized into myriad tiny warring factions, each of which lacked the enormous economies of scale made possible by Windows.

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