Microsoft's Crimes Against Humanity: The Wild West World of Antitrust Litigation

Capitalism Magazine ^ | June 20, 2002 | SM Olivia

[Alan Chapman]

A divided Iowa Supreme Court last week reinstated a class action lawsuit against Microsoft brought by Joe Comes on behalf of himself and his fellow Iowans who purchased computers that came pre-installed with Windows 98. As end-user licensees of the operating system, Comes charged that he was forced to pay “a monopoly price” for the privilege of using Windows, thus he should be justly compensated for this crime against humanity.

Under federal antitrust law, Comes has no case, since the U.S. Supreme Court has held that secondary—or “indirect”—consumers may not assert standing in antitrust cases, since such consumers do not suffer a legal “injury” as the result of companies running amok and subverting competition. Iowa’s own “Competition Law” says that the state will follow the federal interpretation in state antitrust cases, so that the enforcement of said laws are at least consistent.

The Iowa Supreme Court’s decision changes all that.

Now, in the state of Iowa at least, anybody who has ever bought or used Windows can essentially join a class action against the company for antitrust violations.

The court majority ignored the law and decided to impose their own view of what antitrust law should be—making companies pay for daring to produce and compete—and in doing so introduced further chaos into the already “Wild West” world of antitrust litigation. Now interest groups that have an ax to grind with a company can go forum shopping for states that allow secondary consumers to sue under local antitrust laws. This means that any company which sells products via retail will be potentially liable for charging prices that a judge or jury deem “too high”, “unfair” or “anticompetitive”.

Lost in all this is any sense that the consumers are voluntarily purchasing these products in the first instance. Joe Comes didn’t have to buy a computer with Windows pre-installed. He could’ve bought a Mac or installed Linux on the Intel machine he did buy. Instead he’s using the courts like it’s a giant rebate center.

He’s asking us to morally condemn Microsoft for having the audacity to actually take his money when he willingly offered it to them. And the Iowa Supreme Court sees nothing wrong with this—after all, if Microsoft was willing to allow Joe Comes to buy their “monopoly priced” software, who knows what the company will do tomorrow, they could be selling you software that you might want. And then the vicious cycle of supply-and-demand will spin completely out of control.

[parsifal]

"Everybody I know who is a Linux aficionado never buys a computer with Windows pre-installed. "

I think I have picked up on part of your mistaken reasoning. Laws are promulgated on a macro level, not a micro level. The fact that SOME consumers may be able to beat the monopolist, is not a defense for the monopolist not is it a justification for lack of legal deterrents.

Take this example. A Cow maker, unfairly corners the market on Cows. The price of cows, and hamburger skyrockets. BUT, I live in Arkansas and I can raise a cow out behind my trailer and butcher my own cow and grill my own hamburger. That has nothing to do with the price of cows in China, or in the USA. Most people can't raise their own cow, don't have a pasture, don't have a trailer, etc.

Expecting the law to micro-focus like this is silly and impractical. Better to outlaw unfair competition and notlook for "ducks ex machine" (which is Latin for ducks out of a machine and I don't know why people say it in situations like this, but they do.) solutions. parsy the great explainer.

[Alan Chapman]

We can stay on topic with Microsoft: excessive market share / lack of any real competition.

Lack of competition doesn't constitute a monopoly. Exclusive ownership and control are necessary to have a monopoly.

Is anyone prevented from competing with Microsoft?

Are there barriers to entry into the market? For example, is there anything preventing somebody from developing an OS of their own to compete with Microsoft?

MicroSoft truly doesn't have any real competition.

You're quite mistaken. Linux is Microsoft's worst nightmare. Linux is taking huge bites out of Microsoft's market share, both on the desktop and in the server markets. Apache runs over half the world's web servers.

If Microsoft had no real competition we'd all still be running MS-DOS.

[Alan Chapman]

By paying a higher price for the product because of anti-trust violations.

What is the appropriate price? Who gets to decide? How is it determined?

By unfairly reducing competition...

What constitutes a "fair" reduction of competition and how is this determination made?

...MS gains a monopoly and the price scoots up.

If Microsoft can charge whatever it wants for its software why don't they raise the price of Windows XP to $10,000?

[Willie Green]

Lack of competition doesn't constitute a monopoly.

Sure it does. But I certainly don't expecct a monopoly apologist to agree.

[Alan Chapman]

Please name a nationwide OEM that will sell you a PC without Windows.

Since when do you have to buy a computer from a nationwide OEM? You can order a complete computer system without Windows from thousands of computer dealers all over the country and they'll ship it to your home.

If you want a PC with support, you buy from a Gateway, a Dell or an IBM. None of them offer a PC without Windows.

If you want a PC with support Windows, you buy from a Gateway, a Dell or an IBM. None of them offer a PC without Windows because the product they sell is a PC with Windows.

If you will settle for buying a machine from a Mom and Pop operation or if you build it yourself, you can do it without paying the Windows tax. But if you buy from any of the big OEMs, you pay for Windows and you can't get your money back.

If you want a PC without Windows then don't buy a computer from a company that sells only PC's with Windows.

[parsifal]

What is the appropriate price? Who gets to decide? How is it determined?

In this case, a judge or jury. You are caught up in details. You are focusing on trivia and minor issues. People make judgments all the time. How do you think a jury figures out how much to award a plaintiff in a personal injury case. It ain't rocket science or calculus. They look at the medical bills, the injury, the future cost, the degree of fault and arrive at a number. Is it perfect in somesort of absolute sense? Heck no, but we do it all the time. MS has unfairly gained a monopoly. "Fair" is a subjective term. But it means something. You obviously feel comfortable with its opposite --"unfair."


What constitutes a "fair" reduction of competition and how is this determination made?

Legislators and courts decide. Businessmen know what is "unfair" competition. So do I. So do you.

If Microsoft can charge whatever it wants for its software why don't they raise the price of Windows XP to $10,000

Because no one would buy it. (That was too easy. Are you trying to trick me?) parsy.

[Rebel_Ace]

Knitebane, you posted:

"Please name a nationwide OEM that will sell you a PC without Windows. If you want a PC with support, you buy from a Gateway, a Dell or an IBM. None of them offer a PC without Windows."

Well, here we go:

Check out this page at IBM, where you can get an Intellistation with Linux

Check out this page at DELL, where you can get systems pre-loaded with Linux

Check out this page at GATEWAY, where you can get SUPPORT for Gateway servers running Linux.

Mind you, I am not a Microsoft employee.  I am just tired of people complaining that they can't get what they want from those "terrified OEM's". 

[Alan Chapman]

...Laws are promulgated on a macro level, not a micro level...

Meaningless double-talk and totally irrelevant.

The fact that SOME consumers may be able to beat the monopolist, is not a defense for the monopolist not is it a justification for lack of legal deterrents.

ANYBODY (not just SOME) can buy a computer without Windows. Because some don't, or choose not to, or are unaware of the option, does not indicate a failure of free-enterprise or the presence of a monopoly.

A Cow maker, unfairly corners the market on Cows.

Hahaha! A totally loaded scenario. How was the market cornererd unfairly? Who decided it was unfair and by what criteria was it decided?

The price of cows, and hamburger skyrockets.

As a result of what?

...I live in Arkansas and I can raise a cow out behind my trailer and butcher my own cow and grill my own hamburger. That has nothing to do with the price of cows in China, or in the USA. Most people can't raise their own cow, don't have a pasture, don't have a trailer, etc.

Huh?? I'm sorry but I have no idea what you're talking about. You make some erroneous assumptions:

• If you are unable to make your own hamburger then you are entitled to buy one from somebody else at the price you want.
• If somebody controls a large market share then everyone else is prevented from entering the market to compete.
• Somehow the price of cows in China and the USA are related.

Expecting the law to micro-focus like this is silly and impractical. Better to outlaw unfair competition and notlook for "ducks ex machine"...

Who gets to decide what constitutes "unfair" competition and how is it to be determined?

[Alan Chapman]

[Lack of competition doesn't constitute a monopoly.]

Sure it does. But I certainly don't expecct a monopoly apologist to agree.

You can't answer my questions because you have no answers so you attack me personally.

[HardStarboard]

>>>Ten years ago the cost of a copy of Windows was about $100 retail. The cost today?<<<

Of course the fact that it not only supports every device you could hook to a PC ten years ago, today it supports a couple of thousand more devices and a few thousand independent developer programs that support features that didn't exist back then.

But in your ignorance of market forces, you want MSFT to supply this extra stuff to you for free. If your so damn clever - go write a couple million lines of code and solve your own problems.....

Or Stop Whining - It Doesn't Look Good On You!

And by the way - the cost of Windows when imbedded in the cost of a PC is less than 15% of the total. Get a life...

[RWG]

I live in Sioux City and am going to see if I can become part of the action. It's an illusion to believe that there is a free market, the farm bill proved that.

[usconservative]

Ah yes, good ol' IOWA:

Idiots
Out
Walking
Around.

There's a reason I left in 1978 and never looked back as I crossed the Mississippi river into Illinois. In fact, I tore the rear view mirror off the windshield so I wouldn't see it at all!

Attention Microsoft: Stop selling Windows in Iowa, and threaten to prosecute ANYONE who runs an Illegal Windows OS in that state, and watch what happens.

[Alan Chapman]

[What is the appropriate price? Who gets to decide? How is it determined?]

In this case, a judge or jury. You are caught up in details. You are focusing on trivia and minor issues.

Uh, Parsy, hehe, why should the courts be deciding what we pay for things? Should the courts decide how much you pay for a car? A house? A movie ticket? Would you like it if the court decided that you had to work for less money than you were asking your employer for?

MS has unfairly gained a monopoly.

How?

"Fair" is a subjective term.

That's right. Which is precisely why it can't be determined by the state. Only a buyer and seller can determine what is fair and what isn't.

Legislators and courts decide. Businessmen know what is "unfair" competition. So do I. So do you.

In a free-market system legislators and the courts ought not decide. You seem to think you know what constitutes "unfair" but you can't explain it.

[If Microsoft can charge whatever it wants for its software why don't they raise the price of Windows XP to $10,000]

Because no one would buy it.

But, I thought you said Microsoft was a monopoly. If Microsoft was a monopoly they could charge whatever they want, right? And since they have the market cornered and no real competition you'd have no choice but to pay the price, right?

[PatrioticAmerican]

"Today, with the prices of PCs falling the cost of a Microsoft operating system accounts for between 20% and 30% of the cost of a new PC. "

What?? OEM prices are about $25 a machine. How is that "between 20% and 30%"? A new machine runs about a $1,000 for OEM hardware, making OEM Windows a 2.5% cost.

[Alan Chapman]

It's an illusion to believe that there is a free market, the farm bill proved that.

You're on to something there. Very close. How does this relate to free-enterprise and monopolies? (I'm not being sarcastic)

[Willie Green]

You can't answer my questions because you have no answers so you attack me personally.

When you make stupid statements like "Lack of competition doesn't constitute a monopoly", you earn the response you get.

[Alan Chapman]

When you make stupid statements like "Lack of competition doesn't constitute a monopoly", you earn the response you get.

You can't engage in honest debate without name-calling. You've got nothing.