by Rick Lowe
On Second Thought was a weekly column this blogger wrote for The Bahama Journal from July 7, 1998 through September 7, 1999. Some of them might be dated by now, but I republish them here for what they are worth.
On Second Thought! – August 10, 1999.
Antitrust
“Internet Explorer should not be forced on computer sellers because Netscape doesn’t sell operating systems.”
“They are just too big.”
“They use strong arm tactics to coerce people into selling their product exclusively.”
These are all the positions being advanced against Microsoft as reasons for the US Justice Department to decide against them in an antitrust suit.
Let’s examine these positions for a minute or two.
Internet Explorer should not be forced on computer sellers
The initial argument when the courts ruled against Microsoft in 1997 was that Windows and Explorer were not integrated systems and therefore the PC sellers should be able to include another “browser.” Well this decision was overturned in 1998 “on the grounds that the products were indeed “integrated”.”
In any event it has been suggested that Microsoft does not forbid the PC manufacturers from including other browsers or software in their contracts. As a matter of fact I believe that the consumer preference has been to use the Microsoft products. They perceive them to be cheaper and adequate enough to get the job done.
They are just too big
I can accept the fact that Microsoft is the major player in the computer software industry. They may well be the biggest and most powerful however their product is what has propelled them to their lofty position. Yes Macintosh may well be more user friendly, but their price kept most consumers in the Windows based PC systems.
These two companies chose two different methods to distribute their product. Microsoft happens to have taken the path to reach more consumers. Macintosh had specialised more and therefore does not expect to be in every household like Microsoft.
I will have a problem with Microsoft being too big when their prices become predatory or their product does not satisfy my needs. Unlike other giant firms in the past, Microsoft has remained on the cutting edge of technology and no one has designed a better mousetrap. Or at least it has not been mass marketed as well yet.
They use strong-arm tactics to coerce people into selling their product exclusively
“But Microsoft places no outside restraint on PC makers with respect to the installation of competitive products, including browsers. In any case, from a marketing perspective, such contractual restrictions are often counterproductive; in evolving market competition, consumer desire for the best product at the lowest price eventually prevails.” (Dr. Dominick Armentano from a September 1998 paper on Antitrust and Microsoft.)
Antitrust for The Bahamas
Because of all the recent press about the US Department of Justice going after Microsoft and Intel among others some people have been suggesting that we need to have a form of Antitrust legislation. I think this would be a tremendous mistake. I can see it now, our courts would be deciding if the owners of FOCOL made too much money from the sale of their stock. How about dragging Commonwealth Brewery or Sun before the courts because they are too profitable?
Envy is the root of many of these cases…and we sure have enough of that to go around. This is no less true in Netscape’s case against Microsoft. Here again Dr. Armentano strikes right to the heart of the matter when he suggests that “Netscape Communications Corporation complained that Microsoft has leveraged the success of its Windows operating system into browsers at Netscape’s expense. True, perhaps, but Microsoft ought not be condemned for the consumer acceptance of the total Microsoft package and for the fact that Netscape has no such competitive package. The analogy with baseball would be the rational preference by team management (and fans) for ball players who perform well both defensively and offensively. Good defensive players who can’t hit may just never make the majors.”
“Moreover, the court said, (in overturning the Netscape ruling referred to earlier that) “antitrust scholars have long recognised the undesirability of having courts oversee product design”.”
Even Michael Milken, the famed “junk bond king” allegedly went to jail for reasons other than the charges he initially faced in the antitrust court. In fact this legislation leaves wide discretion for the judge which leads to emotional rulings deciding that someone was not “fair.” And we all know that fairness is extremely subjective.
The law should be enforced
We will rue the day we are saddled with legislation that allows one group to use the weight of the courts to slow a legitimate competitor. I emphasise legitimate because there are many obvious circumstances where individuals and businesses break the law with impunity. We do not need antitrust legislation to deal with these, nor do we need antitrust to decide what the consumer should or should not have.
There are already enough laws in place to “protect” the consumer and responsible business people if they were enforced. We do not need another reason or law to enhance trivial lawsuits. I realise the number of attorneys are increasing and they need work, but not at the expense of the taxpayer and consumer please. The taxpayer already has to bear the expense of an oversized Cabinet and government bureaucracy, we don’t need another.
