Brian and all : Excerpts from the latest Barron's article "Power of Paranoia" using Power to control market place by T.G.Donlan
Monopoly power
Like Network Associates and the Labor Department, the Department of Justice and 20 state attorneys general are promoting fear to sell a product. The government lawyers present Bill Gates as a raving monopolist, using "a barrage of illegal, anti-competitive practices ... to destroy its rivals and to avoid competition."
At least Network Associates is actually selling a computer program that probably works as advertised to shield customers and their computers from unwanted intrusion. And the Labor Department at least is responding to its union constituency to protect existing jobs. The antitrust lawyers are satisfying nobody but a few of Microsoft's competitors -- themselves.
The Antitrust Division and its state allies seek, in the words of the Washington Post's news story one day last week, "to set new rules for competition in the digital age." The Post's sweeping language accurately went far beyond the Microsoft case, for the Justice Department is indeed attempting to build a 21st century marketplace according to its own theories.
The attack on Microsoft is an attack on all companies that succeed in the marketplace. Under the trustbusters' idea of the marketplace, winners in fair competition must tie their own hands in every succeeding round of competition. They seem to think business is a bridge tournament, in which the winners of the first game are made "vulnerable" and forced to proceed with special caution in the fight to win a second game.
What adds to the fun in bridge cannot work in the market. Imposing special requirements on supposed monopolists like Microsoft results in the creation of a powerful police force monitoring each competitive play of the cards. That is a force that threatens liberty more than any private monopoly ever could.
Money machine
With a sigh of resignation, we note that Microsoft is the modern equivalent of Willie Sutton's bank-it's "where the money is." The company has $12 billion in cash, and that's more than five times as much as all contributors-big and small, union and corporate -- spent trying to buy all the federal candidates in the last election.
What should Microsoft do with that money? Should it keep funding software research and development to the tune of $3 billion a year? Should it pour those billions into campaign contributions in hopes of fending off ambitious persecutors? Which investment will have the better return?
China apparently spent only a half-million or so to influence decisions worth several hundred million dollars. Even Philip Morris, which faces most of the federal government arrayed for the destruction of one of its core businesses, spent less than $5 million on campaign contributions in 1995-96, though that investment and its continuous repetition may be enough to save it many billions of dollars. The pernicious question must be asked: How much would Microsoft have to spend to buy off the Clinton Administration?
The efficacy of money may be limited for a tobacco company because so many citizens hate its product. But Microsoft is under no such limitation. It can use its money to underscore citizens' respect, admiration and even gratitude for its products. If the government's extortionate case forces Microsoft to buy a get-out-of-jail-free card in the political marketplace, we will all regret it eventually.
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