---------- Forwarded message ----------
Date: Wed, 21 Jan 1998 17:50:28 EST
From: Das GOAT <[EMAIL PROTECTED]>
Subject: Your Options in "the Free Market"
The "Free Enterprise" gospel according to Bill Gates and other Capitalists:
> Asked how small software companies could compete ...
> [Microsoft] said [competitors] had three possible paths:
>They could fight a losing battle,
> they could produce a successful product and then
> sell out to another large company, or
> they could "not go into business to begin with"
_____________________________________________________
...Microsoft Makes Nice
Many voices debate the questions of monopolies and anti-trust in
the information age
TBTF for 12/24/97 [1]
With its contempt hearing coming up on Tuesday 1/13, Microsoft last
week decided it was time to apply some salve to the wounds it had
opened by treating the judiciary and the Justice Department in the
same manner it treats competitors. The company sent top executives
(but not Bill Gates) fanning across the country late last week giv-
ing interviews such as the one described here [2], in which COO
Robert Herbold (as Eddie Haskell) said that both the company and the
Justice Department may have made statements that were too strong.
A Bloomberg story (not online) reported this exchange with Herbold
during one of these damage-control sessions.
> Asked how small software companies could compete on products
> that Microsoft plans to fold into its operating system, Herbold
> said smaller rivals had three possible paths: They could fight a
> losing battle, they could produce a successful product and then
> sell to Microsoft or another large company, or they could "not
> go into business to begin with because, hey, if you're a betting
> person, you know which way it's going to go."
The Justice Department, meanwhile, has filed a motion asking that
Microsoft be assessed $1M / day in fines for contempt of Judge Jack-
son's Dec. 11 order [3].
To bolster its request for the removal of Special Master Lawrence
Lessig, Microsoft published [4] what it called disparaging email
notes [5] that Lessig had written last summer to an attorney at
Netscape. Following a telephone conference on 1/6, Lessig refused
to step down [6].
Here are a few other sidelights on the Microsoft-Justice dispute.
- A software entrepreneur, Rich Seidner, gives a blow-by-blow
account [7] of the Microsoft takeover of a small corner of
technology: "What I learned is exactly how Microsoft's com-
petitive practices can do harm."
- Virginia Postel writes that it was Apple, not Microsoft, which
has habitually behaved like a monopolist [8].
- Obtain if you can a copy of the 1/12/98 issue of the New Yorker.
(As far as I know the magazine does not have a Web presence,
although it secured the domain name newyorker.com in 1993.) In
this issue John Cassidy relates the gradual acceptance of the
big idea of Stanford economist Brian Arthur: that conventional
antitrust thinking is simply inapplicable to large parts of the
modern economy, in particular to high tech and telecomms. These
markets are characterized by "increasing returns" (this is
Arthur's term -- other economists tend to say "network extern-
alities"), and in such markets the value of a product increases
along with the number of people who are already using it. Network
externalities obviate the expectation that unfettered markets
will select the best products and maximize benefit to the con-
sumer. Instead, inferior products can win out because of mere
happenstance: small events, such as a misleading marketing cam-
paign or a "vaporware" leak, can be magnified into large swings
in sales. In this environment it is expectable that a few firms
will establish lasting and lucrative monopolies, almost regard-
less of the merits of their products; and competition will not be
restored without government intervention. These ideas were ana-
thema to mainstream economists in 1984 when Arthur first tried to
publish them; his paper "Competing Technologies and Lock-in by
Historical Small Events" did not see print until 1989. Arthur's
ideas have influenced, among many others, the economist Steven
Salop (an advisor to the Justice Department on the Microsoft
case) and the Silicon Valley lawyer Gary Reback, who works with
Netscape against Microsoft.
[1] http://www.tbtf.com/archive/12-24-97.html#s01
[2] http://www.news.com/News/Item/Textonly/0,25,17921,00.html?pfv
[3]
http://www.techserver.com/newsroom/ntn/info/011198/info11_17086_noframes.html
[4] http://www.news.com/News/Item/Textonly/0,25,17800,00.html?pfv
[5] http://www.microsoft.com/CorpInfo/DOJ/1-5lessigltr.htm
[6] http://www.news.com/News/Item/Textonly/0,25,17867,00.html?pfv
[7] http://www.news.com/Perspectives/Soapbox/rs12_30_97a.html
[8] http://www.reason.com/9801/ed.vp.html
___________________________________________
TBTF for 1/12/98: Immune response
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