RE: POL: Reaction to Microsoft Ruling

From: Billy Brown (
Date: Sun Apr 09 2000 - 11:33:17 MDT

Matt Gingell wrote:
> I think monopolization is a problem and that intervention is in some
> instances beneficial. I'd be interested in discussing arguments
> that this is not the case, but simply asserting there exist unnamed
> experts who disagree with me isn't useful. I'm not going to do your
> research for you.

Like I said before, this is the standard position of modern economic theory.
Look in any economics textbook if you don't believe me.

Now, I don't see much point in trotting out a dozen old chestnuts and
dismembering them without even knowing which ones you think are valid. So,
what actual historical event do you think lend support to concerns about
monopolies? Standard Oil? The 19th century railroads? Modern-day phone and
electricity utilities? Pick an example you think is valid, and I'll address

> This would be true if there were competition. There isn't.

And why not? Did MS wave a magic wand that caused all other OS vendors to
vanish in a puff of smoke? did they get the government to forbid OS
competition? Did they send thugs with guns to blow up competitor's

No. They simply did such a good job of convincing people to buy their
software that all of their competitors were reduced to bit-player status.
That, of course, is only possible if you are actually giving your customers
what they want, which means you are doing exactly what businesses are
supposed to do.

But that doesn't mean MS can now jack up OS prices, stop improving their OS,
and divert all the proceeds from OS sales into convincing people to use
their other products. If they do, that makes them a sitting duck for anyone
who wants to compete with Windows.

> This would be true if vendors had some credible alternative to
> shipping Windows. They don't.

And nothing the government has proposed would create one, either. Anti-trust
action cannot create new products, it can only destroy existing ones.

I'm not happy about the supine posture of the OS vendors either. I'd
certainly prefer to have someone out there mounting a vigorous effort to
compete with Windows in the same market. But MS is holding off competition
purely by means of legitimate competitive tactics, and there is nothing the
government can do to rectify the situation short of disbanding MS and
confiscating Windows - and doing that would ensure that no one else will
dare invest any real effort in their OS, for fear of the same punishment.

> >No, it isn't. A large company can not gain a competitive advantage
> >smaller rivals by selling its product below cost. Why? Because the bigger
> >is, the faster it looses money by dumping.
> Not true. The incremental cost of software is zero.

But the development cost is huge, and you have to recoup it somewhere. Every
copy of Word that MS gives away is a copy they don't make any money on. In
the end they have to actually charge you for the product, or they go under.
The bigger you are, the more revenue you give up by dumping. The fact that
big companies tend to have more overhead than small one's doesn't help them
in this equation either.

In general, a small competitor can usually fight a dumping war on pretty
even terms with a big one, as long as it is past the "tiny shoestring-budget
startup" phase.

> >The problem is that an OS that doesn't run a customer's software is
> >worthless. Most customers care a lot more about their apps than they do
> >about their OS.
> Exactly. Since the software most people want to run is only available
> on Windows any other OS is worthless - regardless of it's other
> merits or technical superiority to Windows.

It would be perfectly legal for another company to build an OS capable of
running Windows programs. If it were also superior to Windows in some other
respect, it should be a very lucrative investment for a company like HP or
IBM. So, why hasn't it been done?

IMO, there are two related factors. One is the fact that OS vendors are
generally either big, established companies that aren't willing to abandon
their investment in existing OSs, or tiny visionary efforts that don't have
the resources to write that much code. The other is that Windows is not
nearly as bad as its detractors claim, and its rate of improvement is fast
enough that it is difficult for a reverse-engineering effort to keep up.

But none of this amounts to an argument for anti-trust action against MS. I
mean, what exactly is the government going to do that would improve the
situation? Force everyone to use Linux instead?

> > If the benefits [of the Posix standard] were really all that great,
> > you wouldn't need a government mandate - people would be buying it on
> > their own.
> This gets into deeper game-theory questions. The consequence of
> individuals doing what is locally optimal isn't necessary the global
> optimum. (Nine out of ten dentists agree with me on this one.)

Nothing can ever give you an 'optimal' use of economic resources - that's
like trying to establish a utopian society or an incorruptible government.
What a free market does do is give you a very reliable way of ensuring that
you are always moving in the direction of whatever would currently be
optimal. You'll never get there, because by the time you do something better
will be possible, but you can count on steady long-term improvement.

Government intervention, OTOH, replaces this economic process with a
political contest that has no incentive to even try to find a global
optimum. That's why government intervention is so uniformly detrimental. No
matter what the motives for the intervention may start out being, the
process will simply end up serving the interests of those with the most
political clout.

> This reminds me. I forgot to mention vaporware as another monopolist's
> tool. But I'm not talking about backward compatibility - I'm talking about
> public standards. These are distinct.

Oh, please. I don't know about Unixland, but in the PC market everyone uses
vaporware as a marketing tool, and they've been doing it since MS was a
couple of guys in a garage. That isn't monopolism.

And there is nothing inherently good or bad about public standards. What is
good is giving customers what they want. Sometimes public standards help
with that, but very often they are simply obstacles to anyone who thinks of
a better way of doing things.

> Sure. Do what you want. I don't want to restrict your choice, I want
> to give you more options. Wouldn't you like to choose between
> different Windows or VB implementations?

I want you to leave the market alone. MS already gives me all of the choices
I actually want, and they work very hard to make sure that that remains the
case. The things you agonize over are completely unimportant to me, and the
things I care about seem to be incomprehensible or 'evil' to you. So, stop
thinking you can make my choices for me.

The government can't create new versions of Windows, or an improved
programming language, or anything else that I might want. All it can do is
ban products, retard development, punish success, and create
politically-motivated regulations.

> Anyway - I apologize if the above is a bit glib. I find this all
> somewhat tiresome. Doing a search on DejaNews will turn up gigabytes
> of variation on the arguments we've both advanced going back 10
> years. I think both our positions are clear, and I'm sure you find
> mine as ludicrous as I find yours. Do you see a middle ground we'd
> both be happy with - any room for constructive discussion?

Sure. How about we refrain from arguing about whether Windows is good or
bad, or even whether MS is nice or not, and stick with the question of
whether the government can do something to make things better by intervening
in the market?

Billy Brown

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