Posted on 04/17/2002 11:22:48 AM PDT by Festa
Robert H. Bork, self-professed champion of the free market, has weighed in against Microsoft and lined up with the Justice Department's Antitrust Division under Clinton acolyte Joel Klein. Bork denies that he has reinvented himself, dismissing critics who say he was seduced by fat consulting fees from Microsoft's arch-rival, Netscape. Nonetheless, the former judge and Supreme Court nominee has astounded partisans on both sides of the dispute, who recall that his non-interventionist approach to antitrust dates back more than two decades.
What triggered this transformation? One explanation may be that Bork is wrong on the facts. Writing in the Washington Times, he contends that Microsoft's "restrictive license terms prevent any manufacturer from using competitive software." It would be tempting to forgive such an outright blooper, but Bork makes matters worse in the New York Times. There he asserts that PC makers are not permitted "to alter the first display screen from that required by Microsoft."
Those charges are utter nonsense. PC makers can load whatever software they want onto a Windows system, including software from Microsoft's rivals. They can promote their own content on the opening screen, display icons for competing products, create their own browser "channels," or even hide the channels altogether. More important, PC users -- the folks antitrust laws are supposed to help -- have virtually total control over the Windows desktop. They can add and delete products, add and delete icons, replace the Windows opening screen with a "shell," add channels or exclude the channel bar completely -- all with a few clicks of the mouse.
Bork's antitrust analysis rests on a 1951 Supreme Court case, Lorain Journal v. United States. A newspaper in Lorain, Ohio, served 99 percent of the families in the city. When a radio station began competing for advertising, the newspaper refused to accept local ads from anyone who advertised on the radio. The Court held that the publisher's exclusionary policy violated the Sherman Act. Bork writes in the Wall Street Journal, "the parallel with Microsoft is exact."
That's quite a statement from a reputed expert in law and economics. In fact, the Lorain case is irrelevant here. The shelf life of a newspaper ad is minimal, which gives a monopoly supplier considerable leverage. Customers must renew their purchase each time they advertise. By comparison, the shelf life of an operating system is measured in years. Accordingly, if Microsoft wants to extract added revenue from consumers -- say, by selling them Windows 98 -- it must convince them to discard a perfectly acceptable system (Windows 95 or 3.1, or maybe even MS-DOS).
That competition disciplines Microsoft: the company's most formidable rival is itself. Microsoft cannot alienate consumers who might buy its new system -- especially when those consumers already have a serviceable system that works fine. In short, Microsoft needs its customers more than its customers need Microsoft.
The relevant market share statistic is not the 85 to 90 percent of PC operating systems that Microsoft is purported to have sold but the 33 percent that represent Windows 95 installations. If the consumer already owns Windows 3.1, he cannot be "coerced" into buying Windows 95. How powerful is the "monopolist" that can persuade only a third of its own customers to buy its flagship product?
The remedy that Bork proposes for Microsoft's alleged misconduct is a "must carry" order -- a directive that Microsoft must load a competing browser, Netscape Navigator, on the Windows desktop. That remedy is an incredible overreach. Tellingly, it was co-opted by the Justice Department in its latest complaint, providing an important clue to what drives this crusade. Anyone who reads the complaint, along with the supporting memorandum, will be appalled to find "Netscape" mentioned no fewer than 130 times -- an average of once per page.
Robert Bork and his new-found friends at the Antitrust Division intend to mutate Microsoft's private property into something that belongs to the public, to be designed by bureaucrats and sold on terms congenial to rivals bent on Microsoft's demise. Bork endorses that foolishness, evidently oblivious to the destructive implications of stripping Microsoft's owners of their property.
The principles are straightforward: No one other than Microsoft has a right to its operating system. Consumers cannot demand that it be provided at a specified price or with specified features. Competitors are not entitled to share in its advantages. By proposing that the Windows desktop be expropriated and exploited for the benefit of competitors, or even consumers, Robert Bork has aided and abetted his enemies on the left, violated the principles he has long embraced and done an enormous disservice to those of us who still have a healthy respect for free markets and a free society.
Conviction I feel was valid. The scale of the penalty is beyond my study, but it sure looks like they are skating.
This would only be true if Microsoft was selling directly to the consumer. Such sales represent a miniscule fraction of Microsoft's revenue; they get the lion's share of their income from OEM contracts with hardware manufacturers. And there, there isn't any problem with persuasion; it's naked coersion. If the OEM doesn't agree to a contract on whatever terms Microsoft dictates, they don't get to buy any Microsoft products except at the retail price (or something not far off). The margins in the industry are such that that would be the kiss of death.
Well, shee-it howdy! Tell ya what, I'll allow you to make a certain amount of money--based solely on MY opinion of what would be a "fair" income for you--and all revenues you receive after that point must go to someone else who wasn't able to get as nice a job as you did. Fair enough?
Who said you couldn't get it? That's exactly it. If you don't like the law, get it changed; ignoring it because you'd like it to not exist isn't an option.
It'll do wonders for America, I tell ya!
The purpose of anti-trust regulations to protect against monopolies is to "PROTECT THE CONSUMER." The laws are not designed to protect the competition.
Oil companies that sell fuel below cost to put competing gas stations out of business can then gouge customers that don't have any other choice. Ditto for supermarkets, etc.
But the article implies, and I will state clearly here - Microsoft's biggest competitor is MICROSOFT. Why upgrade if you like the current product. Only by innovation, etc., can Microsoft encourage people to get newer products. And if the cost of the upgrade is too high ... too few do the upgrade.
An old '486 computer with Windows 95 and Office 95 will perform quite satisfactorily. Just like a stripped down economy car will provide the same basic transportation that a Lexus car can provide (at a fraction of the cost). But consumers are "seduced" into upgrading because of the new and enhanced features.
Microsoft has tremendous advantages - it can offer deep discounts on the Operating System to computer retailers, who then pass those discounts on to customers. Microsoft sets the terms for those deep discounts ... and the retailer benefits (more sales) and the customer benefits (new computer, latest OS at a low cost.) And the customer is still free to install other competing products .. and only the competition is whining about the need to give a product away for free that it used to get paid for. How is the customer hurt?
But in the same way, when automobile manufacturing companies offered installed radios, installed windshield wipers, etc., the third party vendor that intially offered these products lost out in the marketplace ... because when the auto maker offered the installed product, it had better "fit", functionality and appearance. (And often, the customer had to pay more than if he bought and installed a 3rd party product .... ) But I don't recall any successful anti-trust suits by 3rd party radio companies, etc.
I think Bork sold out, or is ignorant of the facts, or both.
Mike
For that to be a true analogy, the radios would have to be sold to all the auto manufacturers by a single giant corporation. Since all radios would be from a single company using its own proprietary electromagnetic modulation, radio stations would preferentially broadcast their signals using that modulation. Since the radio manufacturer would change the modulation every few years, owners, manufacturers, and broadcasters would be required to "upgrade" their radio equipment if they wish to continue listening to the radio.
If the radio company then forced the auto companies to sign contracts requiring them to pay the cost of installing radios in every vehicle they sell, even if none is actually installed, or refused to sign a contract if the auto company wanted to install some other company's radios in even a fraction of its vehicles, then you'd have an anology.
While you are correct that I didn't cite the specifics (and can't from memory at this late date), the article fails to even address those underlying issues that caused the conviction in the first place. The public interest is in a competative and free market, free from actions such a MS conducted against Netscape. Reversals of the trial judge had nothing to do with the issues of findings of fact or the basis for the issues of law in those findings as I understood them. The trial judge's penalty conduct was the basis for the reversal of the penalty, IMHO, and such reversal I also felt was correct.
As zdnet quotes:
In April 2000 a federal judge ruled that Microsoft used anti-competitive means to thwart Netscape's browser, which once had a leading position in the market but now is a distant second to Microsoft's Explorer. In June 2001, a panel of seven appellate judges upheld eight separate antitrust counts against Microsoft.When I read the "sell out or we will destroy you" type accounts conducted by MS management against Netscape (See the New, New Thing, for example) I felt this was conduct that would have put any of us in court.
Original case
The Justice Department and 20 states filed their antitrust lawsuit against Microsoft in May 1998, but only 19 states pursued the case. One more state dropped out last year.The suit alleged that through a variety of business tactics--exclusive contracts and integration of the Internet Explorer browser with Windows 98, among others--Microsoft used its monopoly power to squash Netscape.
The government argued that Microsoft believed Netscape could develop into middleware that could eventually replace Windows. The government also asserted that Microsoft used anti-competitive means to preserve its monopoly. These arguments and evidence introduced by the government resounded with Jackson, who presided over the trial.
"Through its conduct toward Netscape, IBM, Compaq, Intel, and others, Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products," Jackson wrote in his findings of fact in November 1999.
Jackson concluded that Microsoft's actions prevented consumers from having more choices and innovations. "Many of the tactics Microsoft employed have also harmed consumers indirectly by unjustifiably distorting competition," he found.
Although lawyers have filed more than 100 private lawsuits on behalf of consumers, the government's case actually does a better job bolstering civil lawsuits brought by competitors.
Gray estimated damages could be anywhere "from the hundreds of millions to the billions of dollars."
In the quarter ended Dec. 31, Microsoft set aside $660 million to cover the potential cost of settling the class-action suits pending against the company. Still, Microsoft has nearly $40 billion in cash.
AOL's recent lawsuit, proportedly to effect the damages earned by the conviction is not one that I have analyzed, but how can the injured party, the Public, have competition restored except through damages making the competator whole?
You know...if someone is going to write a lengthy editorial about something, he ought to be sure of his facts. The above is a blatant lie. There are indeed limitations on alterations to "opening screens" for OEMs who preload Microsoft Windows. Those "opening screens" are the screens which come up before the desktop is displayed.
It gave away for free its version of a browser to
destroy a competitor and then would sell its product.
It also apparently writes the operating system to give
its programs preference in memory allocation and keeps certain
parts of the operating system secret to cause
third party makers to have to do work arounds when programming.
The issue is once Microsoft "won" what did they do?
Even having lost this case, they still won because
they are No.1 in the browser war, and they can still
write exclusionary code in the operating system.
They will bite the bullet in this case and in 10 years
after this case, no one will care.
btw: the are eventually forcing you to upgrade your windows program.
The idea of an unconected computer is going the way of the dinosaur.
Interesting. Netscape was giving away its browser, too. And Microsoft still is giving away its browser, contrary to what you state.
It also apparently writes the operating system to give its programs preference in memory allocation and keeps certain parts of the operating system secret to cause third party makers to have to do work arounds when programming.
And no one else writes proprietary O/S software, huh?
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