Yes, really large corporations are often under anti-trust scrutiny, IBM and Intel being two good examples. But they aren’t found always found guilty of anti-trust violations.
Corporations that big, with that much power in the marketplace, have to be careful that their size doesn’t destroy competition in that marketplace. That’s the point of the Sherman act, and a lot of really large companies seem to operate successfully within the bounds set by that law. A catch-22 implies that you’re screwed either way, but I don’t see how Kodak, Intel, or IBM have been screwed.
…only after Microsoft revised their licensing agreements with the OEMs to allow them to sell non-Microsoft operating systems, which they did only after they were pressured to do so by the DoJ in the late '90s. Before then, it was all but impossible to do so – see David Chun’s report on his failure to buy a PC without Windows.
And last I heard, Microsoft was still leaning on OEMs not to sell computers without any operating system preinstalled.
Really, Tejota, if you’re going to stick your fingers in your ears and run around saying “Nyahh nyahh nyahh, I can’t hear you, the Findings of Fact are all hooey!”, at least take it to a different forum. It doesn’t take a legal genius to look at Judge Jackson’s FoF (and the appeals court’s upholding of the same) to realize that Microsoft got caught breaking laws and strongarming competitors big-time.
I have some free time at work today, so I thought I’d dig up some excepts from the ALCOA case that I ramble on about so much (in multiple threads). I feel that these excerpts can yield a very clear understanding of why many people find that, though they may agree with the so-called spirit of anti-trust legislation, that its verbiage, case law, and results are not seen as a consequence of said spirit (which, you may note, is my problem with them). Taken from this site, whose article is most certainly biased, it does manage to present some direct quotes from Judge Learned Hand who presided over the ALCOA case. These are all that I feel is really improtant; you are welcome to read the article, of course (which is why I linked it).
This encompases business as usual period. Let us look at the face of this statement and discern why I feel that anti-trust legislation can be unavoidable onec you are a monopoly.
Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. Excuse me, but what? If the spirit of anti-trust legislation is such that it is meant to promote competition and maintain growth, certianly any particular company which grows is meeting that requirement regardless of whether or not it is a monopoly. The converse of the bolded statement is certainly just as true; that is, nothing compelled anyone else to enter the field before ALCOA doubled in size. We know, from this bolded statement, that there was room to grow. We see that ALCOA filled that gap.
It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections, and the elite of personnel.
Let us look deep into this statement and pretend that we are to take it at face value. JLH finds that ALCOA is guilty of excluding competition by being a company that jumps on opportunity. It hires the best people. It has experience. It is admittedly great (perhaps in size, but the context would seem to lean toward product quality and service). Seeing as ALCOA is on the supply side its customers are resellers, middlemen, and manufacturers. These people are themselves required to find the best deals. It is acting in its capacity as a business to simply provide the best service from continuing to take advantage of economies of scale.
That second statement is very indicative of what I mean, and probably what others mean, when we say that the government goes after monopolies for being too successful. In this case, “successful” means being a market leader; “too” means meeting or exceeding customer’s demands, having forethought, and preparing to risk capital and other resources in order to obtain more.
JLH found ALCOA guilty under section two of the SATA. They weren’t guilty of raising prices (gouging). They weren’t guilty of brute forcing competitors by price drops and losses geared exclusively to drive out competition (the ‘standard’ fear of monopoly power). They were simply guilty of growing to meet demand.
From a different site we see another example, though unfortunately no direct quotes from hand (and it, too, is another biased site):
I think that is a fine summary of the intent of the JLH quote I offered above.
“So, erl, how does that relate to MS? You yourself have noted that MS had done some admittedly predatory things.”
Correct; I have. My point is, very simply, this: if bad business practices are what is under target, then being a monopoly is not needed to prosecute. On the other hand, if being a monopoly is what is the target, then bad business is certianly not necessary to make such a case. Instead, what we have are companies that are being held accountable for being a monopoly, and then tried because of bad busness practices.
Which is it? I have no idea. The findings of infamous anti-trust decisions are ambiguous at best. Is the message that we want to send to businesses this?:
Or are we instead trying to say
Am I being clear here (that is a serious question, not meant to be ‘talking down’, I just know that I often ramble and fail to make concise points when I get excited)? My beef is with the laws themselevs in that a business cannot know before hand what is legal or not. Because the case law on monopolies demonstrates that one can be guilty of predatory business acts before you were a monopolyor one can be guilty of simply being a monopoly which grows, innovates, and serves the economy by taking advantage of economies of scale (whether or not your industry serves as a natural monopoly) to drive out competition who cannot, at start up, take advantage of economies of scale, then we see that any company which becomes or approaches a astate of monopoly, regardless of business practices or how well they have served the economy, can be tried and convicted.
This is not a petty result.
So, when I read arguments like “Microsoft wasn’t tried for being ‘too successful’” I have to wonder about why you feel that way. If you didn’t like their predatory practices, then that is the problem, not being a monopoly. Many here have admitted that being a monopoly is not what the problem is.
And yet, that is what is attaked. The charge levelled is often ambiguous, as well. “They should have taken a hint.” From what, exactly? Since the Anti-Trust legisation is pretty ambiguous, should they have taken a hint from case law? If they did so they would have come to the same conclusion I have: you must stop innovating, growing, or otherwise being competitve (regardless of the level of competition, since one doesn’t have to be a monopoly io be guilty of “attempting to monopolize”) or you will find yourself in hot water. If they only followed the terms set out in DOJ requests, that certainly could not have protected them from being under investigation by the next political camp that steps in.
Now, understand that the Clayton Acts were taken as a method of clearing up the “problems” with the Sherman Acts. A rather rigorous listing of these total anti-trust laws can be found here and though a reading taking a “common sense” approach can yield some fuzzy feelings, I would ask one to consider a business or two in mind while reading them instead, and see how much you could prosecute them for under these acts. Such an experiment can be remarkable.
Again, the ability for a monopoly business to keep that monopoly through unethical practies is clear enough, IMO. I maintain, however, that these business practices should be held illegal in and of themselves. I have yet to read an econ book which boldly states that monopolies are, in some way, inherently bad. The court cases held since the Sheman acts were founded do not bear that out, however.
Because the laws and the cases based on those laws do not bear out a path that Microsoft could have taken, I find that the above supports my assertation that they simply had no choice in avoiding an anti-trust suit. What remains to be seen is that my argument depends, in many ways, on the assumption that the reason MS became so large was due to their otherwise legal business practices, and that if it hadn’t been Microsoft it would have been someone else because of the flexibility of taking a strict software route instead of Apple’s severely restrictive harware/software linking. This was, IMO, both MS’s blessing en todo and their downfall. I feel they should be prosecuted and find at a flat proportional rate based on net profits as a punishment measure; this serves to level the playing field in terms of dollars gained (that is, size is not the issue since everyone in violation would be fined the same amount) and it also serves to demonstrate that the problem we have with corporations is not their size, but their practices.
Anti-Trust legislation focuses on size, both in scope of the laws and in how they are enforced; I see this as running explicitly counter to the spoken intentions of the laws. I feel that though this is not deliberate in construction, it is deliberately carried out. Because of the nature of the booming “software” market, things that were effective in the growth were what is often desirable anyway (only moreso because it is a fledgeling market, and newcomers desire these things for ease of use, understanding, and scalability): consistency, predictability, and availablility. Anyone who met these three conditions was certian to dominate the market and fall under either the “you did bad business as a monopoly” cases (not the ALCOA case, but earlier ones which I will hunt down later for thoroughness) or “you are so good that that in itself is bad business” cases (the ALCOA case).
Thus, MS had no choice but to either succeed and be damned or hinder itself and be marginally profitable (in which case, either there would be no boom growth around the computer market or someone else would have filled MS’s current shoes and be in similar hot water). If anyone schooled in economics is reading this I would really appreciate a thoughtful analysis of just this point, because I feel very certain about it from a “common sense” view. I am not very comfortable about making arguments from a “common sense” view.
(now, I realized I have broached my own intentions for this thread by making what could be seen as a formal case; because of that, I can no longer, in good faith, be snippy about those who would seek to counter my statements. Perhaps this, too, was inevitable ;)).
Erislover, that was a helluva post. My econ degree is quite dusty at this point, but most economists would probably argue that monopolies are not the most efficient organization with the possible exception of public works/utilities. Just keep in mind that economists always make assumptions and simplifications that may have nothing to do with real life.
that said, the whole software/internet industry appears to be shaking out as a winner take all. Auction sites are a dime a dozen, but IIRC eBAY does about 80% of the business. It’s a self-fulfilling prophecy as more people list items oneBAY because there is a greater chance of a successful sale, and more buyers visit because eBAY now has more stuff for auction.
Clearly, anyone that uses a PC for net surfing, word processing, spreadsheets, presentation software, which is WAG what 90% of PC users actually use PC’s for, can buy a non-Microsoft setup. So, I don’t see a monopoly for at least the basic desktop setup.
I agree with your assertation (assuming I’m not butchering your words), Microsoft was going to get sued no matter what they did, so they might as well go for the gold.
Once again, you engage in hyperbole. MS OEM licensing agreements have never required manufacturers to ship Windows only. That has always been the choice of the OEM.
The per-processor licensing agreements were optional, and even when the OEM choose them, the agreement doesn’t prohibit the OEM from shipping other OS’s.
The fact that you can’t get PC from Dell without Windows on it is Dell’s decision, not Microsoft’s. And indirectly, customers decision, Dell isn’t going to go to the expense of supplying other OS’s until enough customers ask for other OS’s for it to be worth their while.
So, of course, back when Linux was first beginning, it’s no surprise that you couldn’t get Dell to sell you a copy. I could understand if that made you angry with Dell, but it’s silly to blame MS.
Good for them. A PC is useless without an OS, so an attempt to buy an empty PC is a clear indication that the user intends to use an unlicensed copy of Windows (or OS/2?)
Anyone who wanted the PC empty so that they could put Linux on it should have no problem with Dell shipping the PC with Linux preinstalled.
Once again, The link says something different that what you say it says. If you read the whole link, it seems that can get a PC without Windows in Belgium, but that Dell will no longer give you a discount. (Aparently they did at one time)
This makes sense, because it costs Dell more to handle special orders than generic componants. What Dell saves on a Windows license, they end up spending on extra inventory costs, etc.
You may not be aware of this, but the way large PC manufacturers like Dell ‘preinstall’ Windows is buy hard drives with all of the software already on it.
Every operating system that they support pre-installed is a multiplier on the number of different HD’s that they have to keep on hand to build machines with.
With Window’s only they may stock 4 kinds of drives, with Windows optional they would have to stok 8 kinds.
Then you’ll forgive me if I believe that you are engaging in hyperbole again. Vague allogations of misconduct can’t be answered, but you will notice that every specific allegation of misconduct in this thread has proven to be either an outright lie or a half truth.
It takes only a merely observant person to realize that Jackson made up his mind from something other than the trial.
Some have argued that Jackson has a right to form his opinions in trial, but it’s clear from the transcript that he didn’t even bother to listen to what the MS witnesses had to say. He slept though much of the testimony in fact.
The Conclusions of Law are interesting reading, but certainly beyond my ability to analyze, not so for the findings of fact. The FoF is simply wrong. It’s clear from the FoF that Jackson just didn’t understand the testimony that was presented to him.
At one point in the trial, he removed the IE icon from the desktop, and stated that he had proved that MS was lying when they said IE was integrated.
It’s that level of extreme ignorance that MS was trying to fight against, and since he refused to listen to MS witnesses, they were unable to educate him.
That level of ignorance also shows in the FoF. If you skip over the poetic license and get to the facts in the FoF, there is suprisingly little there. And some of it is just plain wrong, like the definition of the market that MS monopolized. The market defined in the FoF is one that MS isn’t even IN!
And why should I take a debate to a different forum? I’ve been enjoying taking your arguments apart, and I’m willing to hang out and keep it up as long as you want.
There’s no question that there’s a large group of people like you and hansel who feel harmed by MS and are willing to slander them. Just stop by Slashdot.org if you want to meet up with several thousand of them.
In most rational circles, I wouldn’t be considered a MS defender, I have my own grips. But unlike you and hansel my gripes are based on things that actually happened.
I’ll be happy to go a few more rounds with the likes of you and hansel. If you guys ever start telling the truth, maybe I’ll even agree with you
Rather than slink out silently by never posting again, I’ll withdraw as gracefully as possible. Tejota and China Guy have shown that my sources are unreliable and my interpretation faulty, so given the extensiveness and depth of erislover’s arguments, I don’t I have anything useful to contribute.
I’m sorry you feel that way hansel, I have appreciated the links you have provided. Quite honestly, the Wired article was incredible (though you brought it up in the other post), and before reading it I had no idea about some of the things Microsoft had done which I would find unethical.
Anti-trust regulation is a big thorn in my side, and the Microsoft case is very intriguing to me because of that alone. I have no special empathy for MS other than their involvement with the DOJ.
I do feel MS should be held accountable for their actions (which actions are a matter of debate, of course), which you have brought to my attention. It is my fatal flaw to often only see one side of the story and form judgements. This board is a perfect outlet to stop me from doing that.
The question in your O.P., erislover, seems intrinsically flawed to me. There appears to be practically nothing Microsoft could have done that would NOT have allowed it to maintain its market hegemony!
If it had acted ethically and responsibly, it would be still be the market leader.
There is no honest legal or ethical way to defend Microsoft’s actions (outside of the dubious world of extreme libertarianism). All you have to do is read the Finding of Fact. It broke the law, willfully and deliberately. The facts are unassailable. Yet, it did not need to!
It acted out of anti-competitive, ethically indefensible, short-sighted greed.
I turn the question around to you, erislover: How would acting within the law have ruined Microsoft or kept them from their market dominance?
Because market dominance itself can be illegal. My whole point. They couldn’t have avoided an anti-tust suit regardless of ethical responsibilities. What I’m trying to find out is if anyone feels they could of and what form that would take.
You say, sure they could have. How do you address the points I made two posts ago on page two here (the big long one) which demonstrate the plausibility that anti-trust law can mean whatever the current political camp wants it to mean, and so MS could have been busted on unethical business pursuits or being a monopoly which can be interpreted as being bad in itself?
If the findings of fact found that MS prformed unethical business practices, then why is there talk of break-up? MS can act unethically regardless of whether or not it is a monopoly, see?
The problem I see with the implications of your position is that you seem convinced that had Microsoft NOT been a monopoly (however you wish to define it) it would not have either acted unethically or been charged with acting unethically. This is the clear implicit assumption in your last response.
Yet that assumption seems completely unwarranted!
Detach yourself for a moment from the issue of monopolies and monopolistic practices and let’s look at just one issue: Java.
Microsoft’s wretchedly unethical practices in regards to deliberately destroying an accepted standard are JUST as unethical whether it had been a “monopoly”, a “market leader”, or just another business!
You appear to be illogically and unfairly combining two separate issues: Microsoft’s unethical practices that would and should be illegal for any company and Microsoft’s additional crimes regarding monopolistic practices.
You also confuse “market dominance” with a “monopoly”. The two are most emphatically not synonymous.
If, as you claim, market dominance is illegal in and of itself, could you please direct me to any statute that makes this illegal? Sony (I’m guessing) has market dominance in color TVs, yet they are doing nothing wrong. They are not a monopoly. Microsoft IS.
Actually, you can. Dell has been selling thier “workstation” line of PC’s with Linux for quite a while. If suddenly demand for Linux from home users were to skyrocket, I’m sure Dell would be more than happy to supply Linux on thier lower-end machines as well.
[sub]Not that I can see my Mom using Linux anytime soon…[/sub]
Well, ambushed, I am not entirely certain Sony dominates the market of color TVs. At least, my last trip to Best Buy to buy a TV certainly didn’t bear that out.
Certainly. So why do we have to try them under anti-trust laws? Unethical business practices are unethical regardless of size; and yet, size is a crucial element of trying companies under the anti-trust laws.
It doesn’t hinge on them being a monopoly; more that it hinges on them being a sufficiently large company (where “sufficiently large” is not well-defined either—which is the problem with the laws!). It, secondly, hinges on the lack of guidance in terms of the laws that they are tried under.
They technically are not a monopoly; linux, unix, Solaris, and OS/2 all run on PCs, among other even lesser-known operating systems. If we include being a monopoly over personal computing then they definitely aren’t one. I consider them to have a monopoly anyway because their portion of the market is significant enough that if we removed any competitors MS’s profits wouldn’t noticibly change (from PC personal computing).
I will reiterate a small portion of my post above:
This apparent conundrum is really what spurred this thread: what could Microsoft could have done? I maintain that legal cases make it clear that there is nothing they could have done. Whether or not they were acting unethically they would have been tried, and possibly convicted of violations of the second section of the Sherman Act.
You said in your first response to me:
So all they had to do was promote their competition, hire philosophers, and think of longer-term greed to avoid the suit? That does not compute for a number of reasons.
erislover, please allow me to express my appreciation for your admirable courtesy and patience in dealing with someone who is admittedly neither a lawyer nor an economist nor even well versed in either specialty.
There seems to be a number of definitional problems hampering our discussion. One of the problematic terms is “market dominance”, which I in my admitted ignorance of formal economic terminology define as having the largest share of the market. If Sony has 20% of the TV market and its nearest competitor has only 15%, I would consider Sony to have market dominance. Microsoft (to guess wildly at the figures for discussion’s sake) may have 90% of the Intel-box market, with Sun and others fighting over the remaining 10%. To me, this merely means that Microsoft, like my hypothetical Sony, has market dominance. These figures in and of themselves do NOT a monopoly make in my understanding. (As for the term monopoly, I agree with your own definition.)
So, I don’t understand how simply obeying the law would have sunk Microsoft or even kept them from this kind of market dominance! Sure, perhaps a competitor would have 5% of the market now instead of 2%, and Microsoft would have 85% of the market instead of 90%.
But so what?
With respect, I still contend that all Microsoft had to do to avoid this highly justified (in my opinion) prosecution was simply not to break the law. The actions of Microsoft’s employees clearly and unambiguously showed illegal intent. It had the choice not to break the law, but it did it deliberately and with foreknowledge nonetheless!
Sure; Microsoft just made it financially unfeasible for the OEM to ship other OSes with their computers. For instance, in November 1994, the German computer company Vobis was selling computers with a choice of either running Windows or OS/2 and Windows. Unfortunately, Microsoft was out to squeeze OS/2 out of the German market, and changed the terms of Vobis’ agreements – Microsoft would provide per copy licenses only at prices that more than doubled the cost of the operating system. To keep choices available for the customer, Vobis would have had “at least 30 to 50 percent higher volume of products that have to be stocked simultaneously” (Vobis president T. Lieven; The Microsoft File, p. 203-205).
But I suppose that doesn’t matter to you, since Microsoft was still giving them a “choice”. I believe the mob works in the same way…
Yes, let’s just ignore Microsoft’s pressure on Dell (and other OEMs) not to offer alternatives, shall we?
"Microsoft sold bundled products to computer makets. It priced the operating system so that its applications software cost next to nothing if bought along with the operating system. The same scheme was used to encourage system integrators to exclude products of competing companies…
“Microsoft withheld promotional perks from (OEM) companies selling competing products. It denied software companies promised promotional and marketing support, forcing distributors and dealers to exclude competitors from their promos.”
–The Microsoft File, p. 133
Ah, now you’re assuming the customer is a criminal, eh? Maybe he just wants to run an older (legal) copy of MS-DOS? Maybe it’s a defense contractor that wants to install their own proprietary OS for a new weapons system? Why should he pay for another operating system that he’s not going to use? It couldn’t possibly be because Microsoft has tied the OEM into volume pricing that forces them to include a copy of Windows with each PC they sell, could it? Just because Microsoft did it in the past with MS-DOS, and Windows 3.1, and Windows 95, and Windows 98… Naah!
I notice you conveniently ignore any possible threats and punishment on the OEMs from Microsoft, preferring instead to blame Dell, Compaq, et al instead.
Yes, I think it was the blatant lying from Microsoft’s witnesses, Bill Gates’ incredibly dodgy disposition, not to mention the several doctored videotapes MS submitted as evidence, that collectively did the trick. Rather impressive, really, considerning that before the trial started, Jackson was considered by court watchers to be a pro-business Reagan-appointed conservative-leaning judge. Microsoft had to really work hard to piss him off.
Wow, you mean the judge got down from the bench, sat behind the keyboard, and removed an icon from the desktop? Or are you simply misremembering things now?
What really happened was that Dr. Edward Felten, a Princeton University computer science expert, demonstrated a program that removed the IE software from Windows 98. Microsoft tried to disprove his demonstration by showing that (a) the computer could still access the internet, and (b) the computer was made unstable as a result. Microsoft failed (a), and (b) screwed up when it was revealed (and Microsoft admitted) that they filmed several computers and edited the tape to try and show system degregation.
(a = “US Witness says Browser Split Is Feasible,” New York Times, 12/12/1998)
(b = “U.S. Attacks a Microsoft Videotape as Misleading,” New York Times, 2/3/1999)
Yes, I’m sure it doesn’t take much effort to stick your fingers in your ears and run around singing “I can’t hear you!” I have a two-year-old who does the same thing for hours.
Of course, you’re defining “truth” as whatever Microsoft publishes on its corporate web site, right? Just so I understand what fantasy world you’re working from…
