Answering the Monopoly Apologists

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When some people hear that the U.S. government is pushing for severe penalties -- including a possible breakup -- against Microsoft Corporation, they are shocked and dismayed. They believe that there is a true "free market" at work in America, and that any government intervention in the current marketplace is misguided and dangerous. They believe that all success springs from innovation and hard work (but never from corruption), and that the current economic conditions are the robust result of this "free market" at work. In other words, they believe Microsoft.

Others of us are wise enough not to trust Microsoft's siren-song of commercial Darwinism. Whether from good-natured skepticism, insightful understanding of the structure of the modern economy, or just the personal experience of "hard knocks" at the hands of manipulative and ruthless businessmen, some of us have taken a more rational, balanced approach to the topic of Microsoft and its so-called "success". How can we reason in an intelligent and calm manner with those whose credulous acceptance of Microsoft's crafty excuses leads them to question our fairness and common sense?

The following conversation gives some examples of the type of reasoning necessary to escape from the kind of clever, simplistic viewpoints that Microsoft's "true believers" and their dupes would seek to espouse. The "Q" is a question or an assertion by a supporter of Microsoft's viewpoint; the "A" is a straightforward debunking of the associated myth.


Q: "Doesn't every company have the right to innovate without outside interference?"
A: "Not every company. Would you like to see a Mafia-owned pizza factory use clever new technologies to take over and monopolize the market for pizza, for example?"
Q: "That's not fair. Microsoft does not have hit men or drug dealers."
A: "We'll give them the benefit of the doubt for now. But how do you feel about white-collar crimes, such as industrial espionage, consumer fraud, and extortion? If a different company in a different market engaged in such criminal enterprises, would their ability to "innovate" be a reason to grant exemption from punishment?"
Q: "Okay, fine, but every honest, decent company deserves the right to innovate freely."
A: "Good, then we agree that the right to innovate does not belong to *every* company, only to honest and decent ones. All we have to do now is draw the line."
Q: "Yes, but what does that have to do with Microsoft? You can't assume that they are crooked just because they are successful."
A: "No, but likewise, you cannot assume they are honest just because they are successful. Either assumption would be an illogical, extreme position."
Q: "But you have to give Microsoft the benefit of the doubt. Innovation is too important to risk clumsy intervention by the government."
A: "Would you agree that any agency that squashed an innovative, new company should be punished?"
Q: "Yes, exactly, innovation must preserved at all costs, even if some people get away with a few shady deals."
A: "So if that agency was Microsoft, and they crushed the innovative, small companies they competed with, they should be punished?"
Q: "That's not the same thing. Microsoft creates innovations. Microsoft is an innovative company."
A: "Do you believe that a pharmaceutical company that crushed its competitors out of existence, yet found a cure for cancer, should be exempted from punishment on that basis?"
Q: "Yes, that's exactly what I'm talking about! Microsoft's innovations are too valuable to ignore. Innovation must be preserved at all costs."
A: "Yet that pharmaceutical company may have put 20 other companies out of business, killing off the cures for 20 other diseases. Then we have lost 20 times the innovation we have gained. So your position is a contradiction; agencies that crush innovative companies must not be exempted from punishment, because we risk losing more innovations in the long run."
Q: "But there are economies of scale involved here. Just like pharmaceutical companies, the software industry needs powerful, gigantic companies in order to innovate. That's the only way to generate the huge amounts of capital necessary to innovate in software."
A: "That assertion is false; little companies and individual software developers can innovate without the need for huge infusions of capital. Ever hear of Linux?"
Q: "Well, you got me there."
A: "Yes, Microsoft has destroyed more innovation than they have created. If they get away this time, thousands of innovative ideas may be lost forever, or at least delayed by many years, because Microsoft will have to waste time re-inventing the wheel."


Q: "The current economy is booming. Microsoft is the reason for this. Microsoft has led us to an economic paradise."
A: "First of all, the current economy is a sham. Net personal, corporate, and federal debt now exceeds $12 Trillion and is growing rapidly. The economy is built on the shaky foundation of an overheated stock market, a mountain of debt, and millions of low-wage, foreign temporary workers in the high-tech industries."
Q: "Well, I got mine. Besides, as long as Microsoft continues to grow and prosper, the stock market will do just fine. Their innovations keep everyone working."
A: "Over the last two years, the majority of the stocks are down. Most of these are down 30% or more from their highs. And in 1998, half a million white-collar workers were laid off. Microsoft products have raised costs to the point that companies must constantly borrow to keep up, which makes them targets for takeovers and acquisitions."
Q: "Give me one concrete example."
A: "In 1999, First American National Bank of Nashville, TN, took over People's Bank of Dickson, TN. However, PB used Windows, which raised FANB's integration costs. Then FANB downgraded from OS/2 to NT and tried integrating their systems with First Guaranty Bank of Mississippi. The resulting integration costs pushed FANB into the poorhouse. Now AmSouth Bank of Birmingham, AL, a strong OS/2-using bank, is buying out FANB. Banks with lower TCO systems like OS/2 will eat banks that use Windows."
Q: "Well, Microsoft products keep the economy going by keeping up the "churn" in high-tech sales."
A: "Sooner or later, you have to pay the piper. The only thing covering up all this red ink is the absurd rate of mergers & acquisitions, along with the hyperinflated stock values that result. Sooner or later, somebody has to pay for the negative return on investment."
Q: "What do you mean, "negative?" Productivity is at an all-time high!"
A: "White-collar workers now put in 49 hours a week, but they only get paid for 40. It's easy to look 25% more productive when that 25% is free labor donated by the workers."
Q: "How do you explain the low unemployment rate?"
A: "Service jobs. A bunch of high-skill, low-wage jobs like computer technician and software tech support. Since 1992, every net new job in the L.A. basin pays less than $12 an hour. You ever try to feed a family in L.A. on $12 an hour?"
Q: "So you're saying Microsoft has got all the economists snookered?"
A: "Economists are no smarter than anyone else. Microsoft has done a great job of fooling almost everyone. But you can't fool all the people all the time."


Q: "Allright, so Microsoft kills innovation and the economy stinks. But that still does not give government the right to interfere with the free market."
A: "Who's talking about interference? This is a law-enforcement action, just like arresting a burglar."
Q: "But the free market is too important to risk losing it. Government must stay out of the free-market economy, even if some companies get away with a few dirty tricks once in a while."
A: "So you don't believe in copyrights? Patents? Corporations?
Q: "What in the world are you talking about? Those are the foundations of the Information Economy!"
A: "So who grants the rights to a company to shield themselves from liability by forming a corporation? State governments. Who gives the companies the right to sell corporate stock? State governments. Who grants patent rights and copyrights? The Federal government. Who enforces these rights? State and Federal agents and courts. Do you still want to get rid of government as a player in the so-called "free market"?"
Q: "You're trying to say that Big Government is responsible for the free market!"
A: "No, I'm saying that a pure "free market" does not exist. Except maybe in a jungle somewhere, where the man with the biggest stick rules. The alternative to the current hybrid-market is either Socialism or Darwinism. You don't want innovation decisions to be made at the barrel of a gun, do you?"
Q: "All right, we need some regulation, but not interference."
A: "So we agree that a pure "free market" is a myth, and that government necessarily plays a role in any civilized economy. Now we just need to agree on where to draw the lines."
Q: "But who gave *you* the right to draw the lines?"
A: "I don't draw any lines. The Law does. All Microsoft has to do is obey the Law. But Microsoft is run by people who never learned the childhood lessons of obedience, respect for authority, and honesty. This is the root of the problem."


Q: "Technology requires standards to succeed. Radio and TV rely on tightly-controlled protocols. Microsoft has provided the standards that make personal computing a successful industry."
A: "Radio and TV rely on government-mandated standards, which guarantee a level playing field. Would you like one TV network -- say, CNN -- to control the broadcast standards?"
Q: "No, that would not be fair."
A: "Then why do you believe that one software company controlling programming standards is any fairer?"
Q: "It's better than chaos. Without Microsoft, there would be no standardization in the PC industry."
A: "Linux has many flavors, yet they are mutually compatible. Standardization can arise from many sources -- governments, monopolies, trade associations (the IEEE, for example), or even voluntary cooperation by participants."
Q: "But Microsoft's monopoly guarantees that standards initiatives will not fall apart. Linux might someday become as disorderly as the Unix market is."
A: "Who says that Microsoft is not disorderly? Do you know how many different flavors of Windows there are? How many different versions of .DLL files have shipped in the last ten years?"
Q: "Okay, but it's better than any of the alternatives."
A: "If you haven't tried the other alternatives, how do you know?"
Q: "Well, Microsoft is good enough. We shouldn't tinker around too much. If it's not broken, don't try to fix it!"
A: "Would you like one basketball team to own the Law of Gravity?"
Q: "No, that wouldn't be fair. It would get kind of boring to see them win all the time."
A: "Then we agree that some standards are too important to leave in the hands of a commercial enterprise."
Q: "How do you know which standards those are? How can anyone know that?"
A: "There is no way that one participant in the software market should control the OEM preloads, the software development APIs, the data file formats, and the communication protocols. These are as vital to computing as gravity is to sports."


Q: "You're just jealous of Bill Gates and his friends. They are fabulously wealthy, and you are not. Get over it!"
A: "Tell me, do you approve of the fabulously wealthy drug cartels in South America?"
Q: "That's a bogus comparison. Drugs are illegal, software is not."
A: "All right, how about the tobacco companies. They sell a legal product, yet people are angry at them. Would you call that jealousy?"
Q: "No, but it's not the same. Smoking is hazardous, at least sometimes."
A: "So we agree that prosecution of the wealthy is not always the result of envy. Sometimes there are legitimate concerns about the quality of the products, or the tactics used by so-called "successful" people."
Q: "Yeah, but software doesn't cause cancer! Leave Bill Gates alone."
A: "The reason people are angry at the tobacco companies is not just the chemical composition of tobacco. It's because they lied to Congress, and they have sold a product that keeps people hooked in a stupor, and they have targeted children."
Q: "What does all of this have to do with Microsoft?"
A: "Not only are Microsoft products of very poor quality, but Microsoft's court testimony was an abomination -- rigged videotapes, phony denials, excuses, and doubletalk. The design of Windows targets technologically illiterate people and keeps them that way, dependent on Microsoft and unable to think for themselves. And of course Microsoft wants to swamp the schools with their products exclusively, so children will grow up incapable of using computers without Windows."
Q: "You would do the same if you had the same opportunity. It's just business."
A: "No, there are still some honest people in this world. I take pride in the quality of my work and the quality of the things I buy and sell. Societal decadence, the lowering of standards, and the spineless acceptance of deceptive business practices are no excuse for cheating people out of their hard-earned money."
Q: "Are you saying that everybody out there is stupid?"
A: "If Microsoft's shoddy products were physical objects -- such as cars, furniture, or stereos -- people would hate being forced to use them. People would be much angrier about a monopoly of products that they *knew* were bad, unlike software which fools people into blaming themselves for the problems. How else could they sell millions of books that called people "Dummies?" But sooner or later people wise up, and Microsoft is running out of suckers."


Q: "Microsoft would not be a monopoly unless they had the best products. Under Capitalism, only the best products win. Surely somebody else would be competitive, if they had a good product."
A: "But you're assuming that nobody is cheating. That is like saying "Of course Joe Schmo is the fastest race car driver, he finished first. Surely one of the other 42 guys would have beaten him if they were better." What if all the while he was using an illegally modified engine, or unauthorized fuel, or maybe he just played demolition derby and knocked all the other guys off the track! Success without integrity does not prove greatness; instead, it proves weakness. If you cannot win without cheating, then you don't deserve to be in the game."
Q: "Look, people like Windows, otherwise they wouldn't use it."
A: "How often do bosses take a survey, and ask their employees what they prefer on their computers? Never. Operating systems are like the electrical outlets in your house -- you just take what you're given and don't complain about it."
Q: "But Windows is everywhere. That proves that people prefer it."
A: "The common cold is everywhere. Does that prove that people like it?"
Q: "That's not a fair comparison. The cold virus doesn't do anything good."
A: "Neither does Windows. It's not supposed to be good for you, it's just supposed to spread. The main purpose of Windows is to prevent other operating systems from gaining an established base."
Q: "But you can't prove that Microsoft has cheated. They deserve the benefit of the doubt."
A: "If you have read the Antitrust Trial transcripts, there is no doubt whatsoever. Microsoft cheats."
Q: "Then how do explain their success? Doesn't Capitalism always pick the best products?"
A: "If you build a better mousetrap, but the other guy gives his cheap mousetrap away for free, how many mousetraps will you sell?"
Q: "So are you against Capitalism?"
A: "No, I'm a realist. Capitalism is like any other system in that it relies on the integrity of the participants. Any economic system can be corrupted, no matter how well-designed it is, or how well-intentioned its sponsors. Capitalism can devolve into Fascism under the right conditions."
Q: "Are you saying that Microsoft is un-American??"
A: "Microsoft is the closest thing to Facism that we have right now. They believe they are judge, jury, and executioner for every other company in the information business. They believe in innovation by the few, not by the many. They believe that in any market they have the right to blow the whistle, stop the game, declare a winner, and then devour that winner."
Q: "So you're saying that Microsoft has stifled innovation, ruined the economy, and betrayed the principles of American free enterprise."
A: "I couldn't have said it better myself."


It is not necessary to use deep, philosophical arguments, or to quote chapter and verse from Federal antitrust law, to prove that Microsoft is a dangerous company in need of severe punishment. It just takes a little common sense, and a clear understanding of the foundations of the American economic system. To those who believe that government has no role to play in a "free market," the questions must be asked: Do they really believe that instead of the FBI, Microsoft should have a private squad of armed guards to help them enforce copyright laws? Do they believe that patents and copyrights should even exist, seeing that they are fictional standards created in the offices of Federal bureaucrats? Do they believe that Capitalism is immune to greed and corruption? Do they believe that Monopoly and Freedom are twins?

The principles are clear. Innovation by lawbreakers does not grant them exemption from punishment. Commercial entities that squash innovative companies are just as dangerous as political ones. A strong economy only results from the use of reliable tools by honest, hard-working people. "Busy-work" does not make a strong economy, just a busy one. Financial success does not guarantee the moral or intellectual value of a company. The best standards are stable, open, published, and free, just like the law of gravity. Since Government authored the artificial set of "rights" embodied in copyrights, patents, and corporate charters, Government has both the right and the responsibility to regulate how these tools are used. Dishonesty angers more far more people than success does. Popularity based on enforced ignorance is phony and un-American.

Oh, and one more thing. The U.S. Government sponsored and guided the development of the global network that became the Internet. Every now and then, the government gets it right.


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