Interesting article on intel and microsoft from IBD:
Justice's Scales Tipped Against Software King?
Date: 1/19/98
Author: Matt Krantz
Why does software giant Microsoft Corp. face more government antitrust scrutiny than chip king Intel Corp.?
Both companies have a lock on huge market shares in their respective industries. Each is known to double, even triple, the norm in quarterly profit margin. And both are constantly on the Federal Trade Commission's radar screen.
Of late, though, Microsoft also has been put under the Justice Department's microscope. Microsoft faces a Justice probe for bundling its Internet Explorer Web browser with its Windows operating system. In '95, the department also blocked the company's planned acquisition of financial software maker Intuit Inc. of Mountain View, Calif.
George Bittlingmayer, former FTC economist and professor at the University of California at Davis, explained for IBD why Microsoft is getting a closer government look.
IBD:
Why is Redmond, Wash.-based Microsoft subject to a harsher antitrust investigation than Santa Clara, Calif.-based Intel?
Bittlingmayer:
Microsoft has more domestic competitors (via individual software applications) than Intel. Yes, Intel faces AMD (Advanced Micro Devices Inc. of Sunnyvale, Calif.) and Cyrix (Corp. of Richardson, Texas, a unit of National Semiconductor Corp. in Santa Clara, Calif.), but not much more. Domestic politics favor attack of Microsoft over Intel.
IBD:
Why would Microsoft's greater domestic competition make it more of a target?
Bittlingmayer:
You don't have nearly the domestic squawking over Intel as you do with Microsoft. Microsoft does have a reputation for sharp elbows that creates ill will. I don't want to sound too cynical, but these investigations are sparked by political pressure, not empirical measure of market share.
IBD:
How does the process work?
Bittlingmayer:
I'll explain with a case. Remember the case involving the proposed merger of Microsoft and Intuit? The market that was supposedly being monopolized, online banking, didn't even exist. And no one had any market share to speak of. That shows how a case is brought for political reasons, not market share measures. It also shows that there aren't hard-fast economic and legal principles guiding investigators.
IBD:
Is it possible that the Justice Department's investigation isn't about browsers? Could it be about holding back Microsoft?
Bittlingmayer:
Twenty years from now, there won't be a separate browser. We'll look back and say, 'These guys (regulators) were smoking something.' Legally, (the decision's) going to depend on (Justice finding) abuse. As a practical matter, you can always find something . . . . A big business is always doing something that someone will object to.
The antitrust laws are constructed with that potential abuse in mind. It's not illegal to be a monopoly. What is illegal is if a monopoly abuses its power.
IBD:
When did this begin?
Bittlingmayer:
The struggles of trust busters at the turn of the century created these terms. Just being big wasn't going to get you sued, but if you did something naughty, then you'd get broken up. And once political pressure heats up, you can always find something anti-competitive in a situation like this. In Microsoft's case, its ''naughty'' activity is charging prices that are too low (on the browser).
IBD:
How long do these antitrust cases last?
Bittlingmayer:
They can go on for years. One case against IBM went on for 13 years, between 1969 and 1982. Microsoft's a big case. And once the government's gone this far, it'd lose face to simply back off and call it quits.
That's the problem Intel has with the FTC. The FTC looked at Intel before, during the Bush administration. After looking at Intel, the case was dropped. The FTC is unlikely to (drop the case) a second time. That would make the agency either look like a bunch of patsies or like they don't know what they're doing.
--------------------------------------------------------------------------------
(C) Copyright 1998 Investors Business Daily, Inc.
Metadata: MSFT INTC INTU AMD NSC I/8065 I/3675 I/4010 E/IBD E/SN1 E/TECH |
