However, the individual companies might not survive in that scenario. The price competition would have Office at 10 dollars overnight. None of them would have a strength to lean on, a product to distinguish them. No bargaining position.
Well, collectively, they'd have Microsoft's strengths. Each would have Microsoft's corporate culture, full access to the full range of Microsoft's intellectual property and full freedom to use those assets in any way they see fit. Each could build its own OS, own office suite, own browser, own whatever. Or, they could branch off into different directions, using their common patrimony to differentiate themselves, by, for example, addressing markets too small to interest the present Microsoft but with the potential to be really large down the road.
As for Office being $10 or 10 cents, as a public official, it would not concern me. It would be up to them to set the price and sell it or its derivatives at whatever price they could turn a profit. And, I would not care if these companies lived or died, merged or splintered, as long as competition were preserved. After all, the goal of antitrust law is not to protect specific companies or competitors but to create a competitive market in which products are priced efficiently.
As a shareholder, I would care, but I also would have confidence in the ability of Microsoft's people to compete in a free and open market and to do what it takes to make the offspring profitable. Furthermore, I have greater confidence in their ability to succeed in that kind of environment than in an environment characterized by pervasive government regulation. I think that currently unfolding events and the history of companies like IBM bear this out.
Maybe 4 companies this way:
1. Windows: Windows and networking products.
2. Back Office: - web server, internet, office mail, database company. Internet explorer.
3. Office & Home: Office, games like flight sim, etc. Mac products. Any loose stuff like mice and keyboards.
4. Media: All the media stuff like slate, msn, msnbc, etc. And any other non-computer assets.
In deciding how to divide up the company, the government has got to keep in mind what problem they are trying to remedy: the leveraging of the OS monopoly. The purpose of splitting off parts of Microsoft along functional or product lines is simply to limit Microsoft's ability to leverage the OS monopoly into other markets. So splitting along product lines is, in my view, unnecessary if you split it up in a way that eliminates the underlying monopoly whose leveraging you want to prevent.
There is nothing wrong with splitting it up the way you suggest as long as the individual business units are not restricted in what lines of business they can pursue. If the "Windows company" wants to leverage its OS expertise into applications, let it, but also let the "applications company" and the "media company" do an OS. Also keep in mind that, if Java advocates and the Linux people are right, Windows will become a commodity, as will most "bloatware" apps, and these companies should have the freedom to respond to that in any way they see fit.
I also think there is something to be said for letting Microsoft decide how to do the actual split, as long as the goal of a competitive OS and/or applications market is achieved.
It is when you impose arbitrary restrictions on what these companies can do that you get into problems and start needing to impose a huge regulatory superstructure, with all of its attendant inefficiencies and drawbacks, to deal with those problems.
The main thing is to keep barriers to entry for potential and actual competitors low enough for competition to be able to operate and keep prices efficient. This you would accomplish by giving all offspring companies equal access to the underlying intellectual property, since it is that intellectual property which sets the software standards that create the barriers to entry in the first place. You might accomplish the same thing for the OS market by simply turning Windows over to a standards body and letting anyone, even non-Microsoft companies, have access to it, but that might also slow down innovation in the setting of standards and is not, I believe, necessary to address the antitrust problem at hand.
The bottom line is that I believe Antitrust, unlike, say, regulation of the Telephone Industry prior to Ma Bell's breakup, is grounded in the idea that markets should be free and unfettered by government regulation, except for the occasional intervention by DOJ to restore markets to their normal, competitive state. I am also biased in a sort of libertarian direction in the sense that I have greater confidence in the ability of free markets than of government regulation to promote economic welfare.
What do you say to that? |
