How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

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To: Charles T. Russell who wrote (33243)	11/8/1999 6:51:00 PM
From: RTev	Read Replies (1) of 74651

Excellent post. (I don't agree with all of it, but it's refreshingly well argued.) What ultimately got Microsoft into trouble was the predatory nature/posture they took when dealing with Sun, Netscape and AOL. It was documented. And when it played back in court it was pretty frightening. ... Separating the browser from the operating system is just a red herring. It is nonsense. I think that you're right on that point. The bundling was attacked because the DOJ hoped that they might be able to use Microsoft's '95 Consent Decree to put a wedge between what they saw as predatory practices and the market. The Circuit Court closed off that less severe track by agreeing to Microsoft's liberal interpretation of the decree. That left DOJ with little option but to mount a full-scale antitrust action. In that action, they defined the single tying act as part of a broad pattern of acts designed to protect Microsoft's platform franchise. Jackson seems to suggest that it's too late for any change in the tying practice to fix the alleged (and now decreed) market manipulation. The cost of the various products to consumers is mentioned -- sometimes prominently as when they analyze Microsoft's high costs of developing and marketing a free browser -- but it doesn't become a prime aspect of the case. In fact, the plaintiff case, as Jackson has refined it, comes down to something that Microsoft correctly identified early on: "Freedom to innovate." Microsoft did many things wrong in this case, but something they did right is pick up on that phrase and use it throughout as their prime PR stance. The gov't case charges that Microsoft's practices stifle the market and put a damper on innovation. Microsoft did not successfully counter that charge in court, but they have at least been successful in the PR battle. I appreciate you're point that "the consumer secretly wants a monopoly, defined as standard-bearer" and that other monopolies are likely to rise in the internet economy. I agree except that I think the consumer cares mostly about the standard and doesn't care whether it comes from a monopoly or from some other mechanism. Several standard-setting methods have developed. Only in a few instances have they depended on a monopoly to set them. The standard that's eventually embraced by mixed market forces might not be the best standard, but it's at least as likely to be a good one as a standard imposed on a market by a monopoly. The DOJ didn't grab onto the clever catch-phrase, but their case boils down to "Freedom to innovate". It's just that they define it as a broader freedom.

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