[COMP] MS, DOJ, fun fun fun.

Well, I've done it again!  I've gotten myself into another "Microsoft is bad"
discussion on another list.  The economics of the whole situation came up this
time though, and I'm flexing my new semester Econ100, which has helped me
a bit on the technical side of the monopoly problem, so I'm flexing it...
Anyway, here's my response to a "oh yeah?  tell me why MS is bad for us.."


On Sat, 29 Apr 2000, you wrote:
> John tell me where to send a Crying Towel.   Tell me just in detail how
> Microsoft is bad for the economy?  I don't know what Econ class you took but
> it sure wasn't one that  they teach in most countries.

You asked for it. :)  Sorry that it's a bit long, but I'm trying to be
complete...


Mircosoft is, by defnition, a monopoly.  

The Sherman Antitrust Act of 1890 outlined the definition of a "trust," which
is really the body that holds a monopoly.  It was mostly intended to deal with
the trust held by Standard Oil, a massive petroleum conglomerate.  They held
tight control of nearly every aspect of the oil market, from the oil wells to
the gas stations, and everything in between.  

Microsoft can easily be compared as being a monopoly, as they control the OS
market (90% of it), the software development market (with visual studio et
all), the browser market (with IE), about half of the streaming market with
WMA, the Office suite market (office 95/97/2000), and probably a couple others,
but those are the big ones.

So who cares, right?  They worked for it, right?  Well let's put it this way,
and I'm not the first to say it, so I'll quote it: "Bill Gates never had an
original thought in his life."  DOS was a rip-off of IBM-DOS and Unix, Windows
was a ripoff of MacOS and Xerox-Parc (who had the first gui), IE was a ripoff
of Netscape (who basically reinvented what Mosaic had done first), WMA is just
a cracked-up version of RealMedia (although it really is better, imo), office
95/97/2000 was simply a ripoff of Corel's WordPerfect Suite.  Ok, so this whole
"Freedom to Innovate" campaign is a crock- but we knew that anyway.  Moving
on...

On that note, let's remember that Bill Gates originally thought the internet
was just a fad, and thus didn't invest many resources in it.  That allowed
Netscape to justifiably have a large portion of the market share until ol'
Billy woke up and relized "hey, I can make money here."  Hence, we have
Internet Explorer.

One defining point for a monopoly is the entry-to-market barrier.  I don't
think it can get much worse than MS here.  Their entry to market practices are
really pretty ridiculous: they'll buy any technology they can use, and if they
can't license it, they'll just buy the whole company.  They've also got a long
history of buying into a company, learning the trade secrets, and dumping the
friendly business relationship to resell the ideas elsewhere.  

Entry to market is also inhibited by their monopoly by its definition: Things
like visual studio holding the development market basically mean that you're
going to develop for Windows, and you have little choice in the matter.  You're
also forced to use Windows if you want to use the devel software (which, for
RAD, is pretty decent).  The trust-like situation helps to enforce the
deadlock: using Windows, using Office, using IE?  

And there's another point: by packaging IE with the OS, you're pretty strapped
to whatever they will you to run.  Now granted, you can install Netscape if you
want, but think about that -- how many people who don't know any better will go
out of their way to use a different browser?  This is something I'm not
personally against; I think they should be allowed to throw the browser in
there too (but it has to be removable), but it certainly doesn't help them with
the monopoly-or-not question. 

It was proven in court, apparently, that Microsoft had embedded code in Windows
(especially win98) that would cause applications like WordPerfect and Netscape
to occaisionally just... crash.  That is what we call unfriendly software
development. :)  It's also a nasty way of defending your monopoly.

The second part of the monopoly definition involves the economics of price,
quantity, and quality- I'll keep it short for this one.
-Price: no surprises here.  Everything for the PC has decreased in price,
except for your Microsoft-based OS, which has hardly changed in price in years.
It's now one of the most expensive parts of your machine.  In fact, relative
to the rest of the platform, Windows has *increased* in price over the years.  
-Quantity: This one's a bit more tricky.  A monopoly will generally decrease
production to maximise profits, but I'm not sure Microsoft really complies with
that one.  If you count the number of people and compare them with the number
of copies of the OS, perhaps you could get away with the conclusion, I don't
know.
-Quality: No question here.  Windows has always been a joke of an OS, relative
to the rest of the market.  Windows finally picked up some minimal multitasking
with Windows 95, but only after being scared of losing their win3.x-realm
dominance to IBM's OS/2, a truly excellent multi-tasking platform.  

Now, why are all these things bad for the economy?  Well, uhm, I think you can
put the pieces together for yourself, but just in case:

-Barrier of entry: Bad for competition.  Causes higher prices, lower quality to
the consumer.
-Price/quantity/quality: Obvoius impacts to the consumer and the market in
general (confidence, investment, enthusiasm, etc).
-Economic "Dead weight" of the market carrying a monopolist: loss of economic
benefits to society.
-Lowered value to the consumer.

Hope that clears it up a bit...

John




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# Sys-Admin / Webmaster, Avenir Web: http://avenir.dhs.org
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# Linux, Apache, Perl and C. All the best things in life are Free!

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