MSFT Internet Explorer vs. NSCP Navigator Message Board

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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator

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To: Daniel Schuh who wrote (18617)	4/21/1998 5:42:00 PM
From: Eugene Goodman	Read Replies (2) of 24154

Krugman and the Cato article say the the Theory of Increasing Returns is the basis of the DOJ law suit. I quote from the Cato article: Taking one specific case, path dependence arguments have been used to support antitrust actions against Microsoft. A white paper by Gary Reback and a group of coauthors, with assistance from Brian Arthur, uses path dependence arguments to claim that Microsoft's successes in the personal computer software market are due not to Microsoft's ability to provide consumers with handy solutions to their problems, but instead are caused by consumers' inabilities to escape from a path controlled by Microsoft. Reback, et al. chillingly portray the ominous end of that path: "It is difficult to imagine that in an open society such as this one, with multiple information sources, a single company could seize sufficient control of information transmission so as to constitute a threat to the underpinnings of a free society. But such a scenario is a realistic (and perhaps probable) outcome." The theory is important to the DOJ because they are breaking new ground. Microsoft does not have a controlling market share. They do not hurt the consumer by charging high prices. The DOJ law suit is based on what might happen if the government does not help. Microsoft will get a 70 % [isn't this what Netscape has now?] or higher market share, then they raise their prices and screw the helpless consumer. Since none of this is has happened, an economic theory is essential to predict the future. [Good luck. it will be a first] If the theory is flawed so is their law suit. If I remember correctly, none of this stuff is in the Sherman Act. Anti-trust is based on prior case law. This gives the Act flexibility and durability so that the trustbusters can focus on consumer protection, vertical or horizontal integration, price fixing or take a 12 year vacation as as it seems they did under Reagen and Bush. Anti-trust law is not immutablle so Microsoft will only know to what extent they have broken the law after the DOJ, the court and Microsoft come to an agreement. Gene

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