Last week, U.S. District Judge Thomas Jackson ruled that Microsoft
violated federal antitrust laws and harmed consumers. Jackson found that
the company: 1) used its position to "monopolize the Web browser market"
to the detriment of competitors 2) "unlawfully tied its Web browser to
its operating system" and 3) could be sued under state anti-competition
U.S. Assistant Attorney General Joe Klein said the decision against
Microsoft will benefit consumers by opening the door to competition. The
Clinton administration's attack on Microsoft, along with the court's
acquiescence, should worry all of us. Let's look at it.
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The government's chief economic expert witness, MIT's Professor
Franklin Fisher, accused Microsoft of predatory pricing, a practice
where low prices are charged in order to drive one's competitors out of
business and then later raised to high prices. Fisher's testimony is a
disgrace to the economics profession. If one surveys modern economic
literature, or polls academic economists, he'd find very little
evidence, if any, for the use of predatory pricing as a means to
monopoly wealth. There are far more effective means to monopoly wealth
that don't entail the costs and risks of a predatory pricing strategy.
Let's look at competition in general. The point of competition is to
attract, to the detriment of your competitors, customers. There should
be laws preventing people from bombing their competitors' production
facilities or spreading lies about the attributes and quality of their
competitors' product as a means to attract customers. Also, companies
shouldn't be able to go to lawmakers to get laws passed to the detriment
of their competitors. However, legislators encourage that practice in
return for campaign contributions. There's no evidence that Microsoft
has committed any of these despicable acts to capture their competitors'
Microsoft's competitors in the high-tech industry are the people
who've gone whining to Washington -- it wasn't customers. After all,
Microsoft is as profitable as it is because customers like you and me
voluntarily chose its product. Computer manufacturers voluntarily
installed its operating system, bundled as it is, rather than use some
other operating system they were free to use if they desired. Microsoft,
unlike Congress, has no power to coerce.
Many people think monopoly is evil by definition. Monopoly practices
are not inherently evil. For example, I hold a monopoly on the
affections of Mrs. Williams. She holds a monopoly on mine. Read the Ten
Commandments. The first says, "Thou shalt have no other Gods before me."
The second says, "Thou shalt not make any graven image. ..." A third
says, "... for I the Lord thy God am a jealous God." That sounds like a
monopoly to me. If you assume monopoly is evil, then marriage and
Christianity are evil.
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There are monopolistic practices that are evil that we need to
address. There's the U.S. Postal Service monopoly that threatens
violence against anyone who competes against it in the delivery of
first-class mail. There's the government education monopoly, a.k.a.
public education, that's destroying our children whilst charging us
higher and higher prices for doing so. Then there's the American sugar
industry monopoly that gets Congress to enact tariffs and quotas on
foreign sugar so they can charge us higher sugar prices.
The list of these government-backed and sponsored
harmful-to-the-customer monopolies is virtually without end. Unlike
Microsoft, who has been providing customers with higher and higher
quality products at lower and lower prices, the government-backed and
sponsored monopolies have been giving us at least higher prices if not
lower quality at the same time.
I say leave Microsoft alone and go after these evil monopolies.