RE: what if microsoft disobeyed the breakup?

From: Matt Gingell (
Date: Mon Jun 12 2000 - 01:49:48 MDT

>> If I'm Microsoft, I can tell Dell to ship a copy of Office with every PC
>> or I'll decline to license them my OS and put them out of business.
>That isn't force. Besides, it is a power that absolutely must exist if we
>are to have anything even resembling a free market. If a business can't
>decide the terms under which it will sell its product, you've pretty much
>gutted competition. The result will be an anemic, dysfunctional market that
>invites even more intervention.

No, it isn't force. But what's wrong with drawing an analogy between
physical force and economic force: both can reduce the efficiency of a
market by artificially restricting choice. Microsoft certainly isn't
going to shoot me if I don't buy Windows, but in an unregulated market
they can make it infeasible to do otherwise. More importantly,
allowing them to do so engineers a fitness function where size and
brutality are selected ahead of price and quality. Do we want a
product to do well because it's tied to something, or because it best
fulfills some sectors needs?

And it's absurd to equate antitrust with a system where government
arbitrarily interferes with every contract and the terms of every
business agreement.

>> If I'm IBM and I don't like something your startup is doing, I can do a
>search on
>> my patent database, find a couple of dozen you could plausibly be
>> violating, and - right or wrong - bankrupt you in court.
>Here you have a valid point, but the problem isn't with the market. Rather,
>it is the fact that the U.S. civil justice system is badly broken. The
>solution is to fix the justice system (with a looser-pays rule, penalties
>for filing frivolous lawsuits, or other such measures).

I'd agree with you here, that was probably a bad example. I'd add
though that reforms in intellectual property law might provide an
optimal solution to natural monopolies in the software industry: 5
year copyrights, for instance, would allow a vendor to make a
reasonable return on development investment while lowering the barrier
to entry for competitors to something surmountable. This year, for
instance, we'd be seeing the first wave of Windows 95 derivatives. MS
would have a huge head start, as they should, but we'd actually start
seeing a bit of diversity.

>> In the long run, as they say, we're all dead. Just because a monopoly
>> can't last forever doesn't mean it can't do a lot of damage in the
>> mean time.
>My point is that the traditional approach to 'solving' these problems
>actually makes them worse, because it short-circuits the mechanisms that
>would normally act to erode monopoly power. I don't object (in principle) to
>the idea of fixing problems where they occur, but I want the solution to
>actually be an improvement over leaving things alone.

That's a valid argument - regulation could help, but government can't
be trusted to do more good than harm. I live in a rent controlled
apartment but I'm ambivalent about whether that does any good or it
just discourages new housing construction. It seems though that
letting an owner charge a new tenant whatever he wants then
restricting the pace at which he can increase it is a reasonable
compromise. You try to approximate the best of both worlds, find a
working medium between equally compelling arguments.

>The true test of any system of rights is whether it protects the people that
>no one likes. If Microsoft can be subjected to arbitrary, senseless (and
>expensive) penalties just because it is unpopular, then so can anyone else
>the public doesn't like. Since I qualify as a member of at least a
>half-dozen unpopular groups, I find that a rather ominous trend.

Do you find not being able to yell fire in a crowded theater an
ominous trend? There's nothing arbitrary or senseless about the
ruling, disagree with it though you might. Whether it's expensive, or
whether it'll just be another MS stock split, only time can tell.

-matt (Is this as bad as the gun debate? I can't tell from the inside...)

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