Understanding Microsoft

Part 10. The Godfather

"I'm gonna make you an offer you can't refuse." -- *The Godfather, Part 1*

There is a certain kind of businessman who makes his own rules, who chooses to use fear and intimidation to get what he wants. Typically, what he craves is control, not just money. He wants to own an entire business segment or determine who can do business in a certain geographical area. He wants to be a king, not just a businessman.

Now in the case of the Mafia, or the drug lords, the kind of fearmongering that is done is simple and easy for everyone to understand, because it involves threats of physical violence. The threats may be directed at the rival criminal himself, or toward a close family member, or toward property. In the Old West, it might have been "We'll burn down your barn" or "We'll poison your cattle." In the urban drug zones, it might be "We'll kill you and your mother, too" or "You can't protect your little brother and sister while they're at school." In the business districts in might be "We'll break your legs" or "You have a nice business here, it's a shame you don't have fire insurance."

Nobody needs to translate these threats. The threat of direct physical violence is obvious to anyone with an I.Q. above room temperature. It's also obvious that these threats are illegal, and that they amount to extortion. What is being extorted is often more than just money, because it may include compliance with the mobster's business plan. Smart mobsters know that developing a franchise from the ground up is a lot of work; why not just manipulate and control somebody else's prosperous business, and save time and money? Think of it as an investment.

Of course in these cases, if you want help from the authorities, you mostly just need to prove that the threats occurred. Nobody will argue that there might be some cases in which a man's legs needed breaking, or that burning down his business would be good for urban renewal. Such Kafkaesque reasoning generally does not occur, because everybody understands the implication of such threats -- namely, that it leads to a barbaric society where the biggest bully rules.

However, in the computer software business, an unusual thing has occurred. Since the products being distributed are legal instead of contraband, big software companies can threaten something quite the opposite: they can threaten to be nice to everyone. "Give us the codes, or we'll give our version away free to everyone!" Yes, a new form of threat has arisen, and some people are even calling it a form of extortion. When one company is so much bigger than another, and has near-zero distribution costs, and is making an essentially zero-unit-cost product such as software, this is a recipe for intimidation. The sheer size and control of distribution of companies like Microsoft have many small companies shivering in their boots.

If a little old tailor in downtown Brooklyn wants to sell fine, handmade suits to his neighbors, is it a crime if a major retailer tells him that they "might" give away suits for free to everyone in Brooklyn? Yes indeed. The threat to do something "nice" is a crime whenever it is tied in with a business plan to put a competitor out of business. If Microsoft really wanted to be nice, they wouldn't be giving away product in the areas where their competitors are succeeding. They would give away product in markets where they already hold a monopoly, like operating systems. They would put operating systems into the public domain. Instead, they use their monopoly position to exert pressure on new areas of business, hoping to become an information Godfather.

Most recent revision: December 17, 1997
Copyright © 1997, Tom Nadeau
All Rights Reserved.

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