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Technology Stocks : COMS & the Ghost of USRX w/ other STUFF -- Ignore unavailable to you. Want to Upgrade?

To: DMaA who wrote (15475)	5/18/1998 2:12:00 PM
From: Scrapps	Respond to of 22053

Not to worry Dave...they're not tornados...just mushroom clouds! <eow>

To: DMaA who wrote (15475)	5/18/1998 3:19:00 PM
From: Moonray	Read Replies (1) \| Respond to of 22053

Antitrust Action Against Microsoft Would Strengthen Competitors And Harm Consumers, Leading Economists Declare 01:40 p.m May 18, 1998 Eastern OAKLAND, Calif., May 18 /PRNewswire/ -- The U.S. Department of Justice's antitrust suit against Microsoft will likely hurt consumers and only help its politically favored rivals, according to several leading economists. Microsoft's rivals -- chiefly Netscape -- are attempting to use the Justice Department to compensate for their own failures, they argue. These include the failure to develop server-side software and not expanding their Web site into a general purpose search engine like Yahoo! or Lycos. "Netscape will have secured an important competitive advantage if Microsoft is again forced to accede to Justice Department demands. But a victory for Netscape is not the same thing as a victory for consumers," write economists Richard McKenzie and William Shughart, in a forthcoming article for The Independent Review: A Journal of Political Economy. Stephen Margolis, a leading economist in the field of competition in high technology, observes: "There is a long history of firms that have lost out in the marketplace seeking a different outcome through the courts. Microsoft is the latest victim. Its products are standards in the PC industry because Microsoft has persistently pursued a vision of low-cost computing that meets the demands of large numbers of consumers. This is not a crime, but rather the way that the market works." If this process of competition and innovation is hampered to accommodate the mistakes of Microsoft's rivals, consumers will be the ultimate losers in the long run. The claim that Microsoft is an anti-consumer "monopoly" is incorrect. Although Microsoft enjoys a 90% market share in PC operating systems, it hardly qualifies as a "monopolist" or exploiter of "monopoly power" because it has not used its market position to restrict output and increase its prices and profits -- the generally accepted criterion of "monopoly behavior" used by economists. Instead, Microsoft has kept the price it charges computer makers for its operating system the same for years -- approximately $45 -- while at the same time increasing output and adding new features. And it has given away copies of Internet Explorer, its Web browser, to consumers -- the same strategy that Netscape also employs. If Microsoft someday becomes tempted to restrict output and raise prices too high, it can expect swift and intensified competition from its current competitors like IBM, Oracle, Sun, Apple, Be, DEC, Psion, 3COM, and GEM -- as well as established non-proprietary operating systems such as Unix and Linux -- and from new competitors. Anyone who has followed the computer industry has witnessed intense competition that has constantly challenged -- and often overthrown -- market leaders. To recount some of its turbulence: -- VisiCalc lost to Lotus, which lost to Excel. -- WordStar lost to WordPerfect, which lost to Word. -- Dbase lost its dominance. Ashton-Tate disappeared. -- IBM lost its dominance in PC hardware. -- Hayes lost to US Robotics in modems. -- CompuServe and Prodigy lost to America Online. (Microsoft Network badly trails AOL.) -- Borland virtually disappeared. Many of these names we cannot remember, yet they have all stood at center stage within the last 15 years. Yet had antitrust action been taken at the behest of the losers, this competitive process of "creative destruction" would have been undermined -- much to the detriment of consumers, who have unquestionably benefited from this intense competition. Political favoritism, inertia and ossification would have replaced dynamic entrepreneurship, effort and innovation. Among economists, the belief that antitrust is often the tool that sore losers use against successful competitors is gaining ground. "The conviction that antitrust serves as a bulwark of free enterprise is not based on careful studies showing that enforcement of the laws has actually promoted market conditions -- there is no such evidence in the historical record," write McKenzie and Shughart. Shughart's 1995 book with Fred McChesney, The Causes and Consequences of Antitrust: A Public Choice Perspective, provides considerable evidence of antitrust's failure to produce benefits for consumers. Economist Dominick T. Armentano, author of Antitrust and Monopoly: Anatomy of a Policy Failure shows that antitrust restrictions on price discrimination and tying agreements have served to protect inefficient competitors and thus harm consumers. As Independent Institute Fellow Paul Craig Roberts puts it: "Economists have known for decades that antitrust is what losers do to winners." Ultimately, consumers will be the greatest losers in the Justice Department's war against Microsoft and the marketplace. Not only will consumers have a harder time getting access to quality software, through their taxes they will be forced to ante up for this antitrust fiasco. The Independent Institute is a non-profit, non-partisan, scholarly research and educational organization that sponsors comprehensive studies on the political economy of critical social and economic problems. For more information or to reserve a press pass, please contact Mr. Carl Close, Public Affairs Director, at 510-632-1366 or cclose@independent.org. SOURCE Independent Institute o~~~ O