Bearded one, as usual your posts are a cut above in terms of value-added. This one is no exception. Here, again, is the article you link to:
infoworld.com
Not to denigrate this effort, but it sounds like it's going to be a regulatory nightmare. In the true tradition of the peanut-gallery, I could not resist taking just a few potshots at the proposed remedies:
Separate the Applications Business Units from the Operating Systems Units; equal access to technical information.
Not to deny the importance of the conflict the article raises, but what is an "application" and what is an "operating system"? What happens if the applications side wants the operating system side to include certain calls or features to make the application they are developing work better? In order to communicate with one-another, what hoops will they have to jump through?
Prohibit the Crippling of Competing Products; Open Windows Interfaces.
What constitutes "crippling of competing products"? For that matter, what does it mean to "cripple" something, and what is a "competing product"? Defining these terms is going to be a litigation sinkhole.
Prohibit Tying the Operating System to Other Applications. Each of Microsoft's products must be sold and priced separately from the OS.
See questions above about what is an application and an OS.
This is the Consent Decree writ large. All the problems DOJ is having with "tying" (pun intended) them down on the Consent Decree are going to rear their ugly heads here. What is a "product" vs. a "feature"? How, without getting into some pretty invasive investigation of Microsoft's R&D processes, are you going to decide what constitutes a fair price for a given "product"? Or, are you going to let them get away with charging $99.99 for the OS and 1 cent for the browser?
Prohibit Predatory Pricing. Free isn't free when the vendor owns the operating system. Free products for more than an introductory or promotional period of time (three months) must be presumed to be part of a predatory pricing strategy.
Again, to carry this out, you are going to need some pretty invasive regulatory intervention. Also, I am not aware of anything in the antitrust laws that forbids giving something away. Right now, in order to outlaw giving something away, you first have to prove it is part of a predatory pricing scheme that violates antitrust law. So, on what legal basis are you going to ground the "presumption"?
Prohibit Anti-Competitive Contracting and Licensing
What does this mean? Volumes are written on what constitutes "Anti-Competitive Contracting and Licensing."
Permit OEMs to Interrupt the "Boot-Up Sequence."
What is the "Boot-Up Sequence"? Right now, we all know that it is the series of events that unfold as the OS is loaded into main memory. So I guess that means that OEMs can interrupt the process of loading the OS into main memory. What if that creates problems of reduced efficiency? Are we going to to apply a "rule of reason" to decide what interruptions are permissible and which are not?
Prohibit Any Discriminatory Access to Internet Content through the Operating System.
I guess what they mean is, the government can tell Microsoft which links to feature on its desktop. But the phrase "A dominant operating system should not be used to favor Internet content that is owned, offered by, or preferentially licensed to the operating system vendor" could also mean that Microsoft is not allowed to render the content of certain sites, such as those that use Active-X, better on IE than it is rendered on other browsers, such as Netscape. So how is this going to be enforced?
Prohibit Pre-Announcements of Products more than 6 months in advance.
My guess is that this one is going to create real problems for Microsoft, given their chronic inability to release anything on time.;) What are they going to go with something like NT, which ended up being years behind schedule -- unring the bell?
Divestiture of Compatibility Laboratories. We believe that it is ultimately unworkable to have the owner of the dominant operating system manage the testing of compatibility for software and hardware products. Only a third party can properly manage that sensitive process of certification of compatibility.
Well, there are two separate issues here all jumbled together, "testing" and "certification." Also, though there is nothing wrong with third party testing and certification, not allowing Microsoft to test its own products and then release the results raises, I think, serious issues regarding their right to protect their trademark and brand. In any event, what happens if Microsoft does the tests in secret and leaks the results?
Industry Monitoring of Compliance with the Remedies Identified Above.
This is the clincher. Who is going to decide all these issues?
The proposed restrictions on Microsoft's business practices are broad and complex.
You're not kidding.
We believe it is unworkable to require the Justice Department to file suit for any and all infractions.
This is a crucial point: the traditional antitrust litigation model does not work for Microsoft. Antitrust laws are ineffective. You need something more. I think this was the point Barksdale and Mc Nealy were making when they said, respectively, that Netscape cannot afford to sue Microsoft and Sun does not yet have a case.
Antitrust laws rest on the premise that you had a free market that was "monopolized" and that, once DOJ files a lawsuit, removes the monopoly, and restores competition, it goes away.
However, once you allow the monopoly to stay in place, on the theory that "a monopoly obtained through legal means is legal," you have to regulate it in order to make sure it does not "abuse" its monopoly power. In Microsoft's case, because of the rapidly changing nature of the software industry, enforcement of any remedies of a regulatory nature are going to need to be ongoing and pervasive. If the problem is serious enough, they are going to have to get regulatory clearance in order to blow their nose.
It is therefore necessary for Justice to establish an industry review mechanism that has the ability to hear complaints related to non-compliance, determine the accuracy of such complaints, and propose remedies that can be effectuated without judicial intervention.
In other words, what we need is an FTC for the internet, the very thing Orrin Hatch threatened Microsoft with at the hearings, the very thing he is holding over their heads to get them to agree to all their concessions on contracts and the like. Furthermore, it won't be an "industry review mechanism" but a government agency that will have to do the oversight. It is not fair to have a commission dominated by the industry determine the legality of Microsoft's practices. From their perspective, they would never get a fair shake from their competitors, and from the nation's perspective, it's a conflict of interest to have the industry regulate itself on an issue of such importance.
So, the difference between "antitrust enforcement" and "regulation" is not so great after all. Adopting a regulatory approach like the FTC will reduce litigation-related costs and delays but will impose its own set of problems. What practices can Microsoft engage in without obtaining prior governmental approval? What investigatory and enforcement powers will the new agency have? What about protecting due process? How will other, non-dominant companies be regulated so as to ensure they do not obtain an unfair advantage over the regulated Microsoft?
These are just a few questions, but they are enough to suggest that adopting this proposal or anything like it would result in a regulatory quagmire that would stifle innovation and undermine whatever good might come from the ongoing existence of the Microsoft monopoly.
Furthermore, since Microsoft (I think) will never agree to this, and since antitrust law was not really designed to foster this kind of pervasive regulation, I think you are going to need new legislation.
I repeat: they should just break up the company and save us all the hassle of having to deal with proposals like this. |
