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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Schuh who wrote (17529)	2/17/1998 11:39:00 PM
From: Daniel Schuh	Respond to of 24154

Antitrust For Libertarians -- Why does Microsoft's dominance trouble us so? One observer says the answer lies in the way the industry is structured. techweb.com Sheesh, that was a title. What next- Antitrust for Objectivists? At least one article has been truly eye-opening. In the Jan. 12 issue of The New Yorker, business writer John Cassidy introduces the theories of Brian Arthur, an economist who studies the limits of free-market economics in certain industries. Arthur helps clarify things for those of us troubled by the Microsoft juggernaut. I was going to put out a pointer to the New Yorker article earlier, but they don't have anything on line. What I found interesting is that the article credits Brian Arthur as more-or-less the inventor of the "network externalities" thing, and he's fairly troubled by Microsoft, but all the other references I've seen to "network externalities" have somehow twisted it into something like "Microsoft is a natural monopoly, so lay off". I guess you can't trust a theory's inventor to interpret it correctly. Cassidy trots out the ever-useful Betamax analogy, but he also contributes a provocative new one. He quotes Arthur comparing high-tech markets to "the land rushes the United States used to have in the 1880s; everybody lines up behind the starting line, they race their horses and buggies, and if they win, they get to stake out their hundred and sixty acres." But what happens, Arthur asks, if the winner uses the economic advantage he gains to buy a Toyota land-cruiser to use in the next race? A small advantage, gained by skill or luck or blunders by the competition, gets compounded indefinitely until no other contender has a chance. Those "consumer benefits" that Microsoft likes to talk so much about end up depending on one company's benevolence rather than the far more reliable competitive pressures of the marketplace. Bill Gates the benevolent philosopher-king is another ironic appellation I used long ago, needless to say I don't find that particular vision consistent with the standard Microsoft business practice so beloved by the hard-boiled investor crowd. But who can say? Is IE free forever? Or is there a cost to be paid? Cheers, Dan.