Playing 'The Price Is Right' With Windows nytimes.com
On the old topic of "deadweight loss" (I think), we have this article out of the blue from yesterday's NYT.
If Microsoft Corp. is the predatory monopolist that the government claims it is, why isn't the price of its monopoly product -- its industry-standard Windows operating system -- higher?
That question is a central focus of a new study of Microsoft and the government's antitrust suit against the company by Robert E. Hall, an economist at Stanford University's Hoover Institution. Hall helped draw up the Justice Department's 1995 consent decree with Microsoft.
Somewhat contradictory credentials there, or maybe not. Hoover presumably puts him in the middle of "Chicago School" territory. Involvement with the '95 consent decree would seem to go the other way. But given that everybody, including Bill, considered the '95 decree meaningless right from the start, and that it was later held to be legally meaningless also, maybe he was just acting as a mole there.
The 48-page paper, "National Policy on Microsoft: A Neutral Perspective," written with Hall's son, Chris Hall, an independent software developer, is being published this week and will be available on the Internet at www.netecon.com.
The paper says the government's evidence puts it on solid ground in challenging some of Microsoft's contracts as violations of Section 1 of the Sherman Act, which condemns contracts that restrain trade.
In an interview, Hall pointed in particular to Microsoft's pacts with America Online and other Internet service providers. These contracts require the service providers to guarantee that 75 percent or more of their customers use Microsoft's browser software, crimping the opportunity for its main rival in the browser market, Netscape Communications. For a company with so much market power, a clause like that "shows that Microsoft really does push the limits," Hall said.
On the pro-Microsoft side of the ledger, the Halls find little merit in the march of government witnesses confidently proclaiming that operating systems and browsers are distinct products, and that Microsoft fused them only to squelch competition. "Given the complete malleability of software," the authors wrote, "this is a debate at about the intellectual level of trying to decide if the Gulf of Mexico is part of the Atlantic Ocean."
Ah, a ringing endorsement of the "ham sandwich defense". Which again casts suspicion on Prof. Hall's role in the '95 consent decree. What was the point?
A summary of the Hall paper is available at netecon.com , a pdf version of the full paper is available too. The summary seemed somewhat contradictory to me. Seemed sort of like the popular Microsoft "shotgun defense", where in the antitrust context things are way different than what gets preached in every other context. Beats me.
Cheers, Dan. |
