Markets Will Dethrone Microsoft
I am a long-time Macintosh devotee. I have long believed that William H. Gates is a major demon incarnate visited upon the unsuspecting and undeserving computer users of the world. You can imagine my glee, then, at seeing him on CNBC testifying before the Senate this week.
I enjoy seeing the pain that Billy G. must have gone through, but I don't think that there is a real case for anti-trust action against Microsoft. The company is very powerful, but it has not ended the competition that will one day bring it down.
Microsoft does have the power to be anti-competitive. Republican Senator Orrin Hatch from Utah repeatedly asked about Microsoft's brutal tactics: "You've been somewhat hard to nail down. Do you put any limitation on content providers for advertising or promoting Netscape?"
Gates finally admitted that web sites featured by Microsoft are prohibited from promoting Netscape or even being listed on Netscape's pages. "On those pages, you don't promote other browsers," he said.
Clearly, the government needs to watch the company like a hawk. If competition is what is going to bring Microsoft down, it cannot be permitted to engage in anti-competitive practices.
There are a lot of reasons to fear Microsoft. Think about just how powerful Gates is: with the financial power of Microsoft, he has the market power to buy General Motors, Ford, and Chrysler. All this was built on the power of something as crappy as DOS and Windows 3.1.
That financial power can be used to squash new competitors. How do you finance a start-up that can compete with those pockets? If Microsoft is not forced to play by the rules, you simply can't.
And there is plenty of evidence of rule breaking. Michael Dell of Dell Computer testified on Gates' behalf, but under questioning, it was revealed that his company won't sell computers with the Netscape browser because of its relationship with Microsoft.
This is exactly the type of behavior that the government should be trying to regulate. When Microsoft takes actions that prevent competition based on the merits of the products, it is going to far.
Some would argue that the anti-competitive damage is already done, but on this point, I agree with Gates: "Another sign of a healthy, competitive industry is lower prices. The statistics show that the cost of computing has decreased ten million fold since 1971."
I am a firm believer in the power of markets. So long as the market can reasonably function, Microsoft is not guaranteed to win. The dropping prices mean that the market is working in some way. It is very difficult to argue that Microsoft is making monopolistic profits without fear of competition as the prices on products that do more continue to drop.
We still have time to see if Microsoft is truly capable of preventing any competitors from arising. If it turns out that Microsoft has stifled competition, we can just rip it apart like we did Ma Bell. We can break Microsoft up into the Word Co., the W95 Co., and even the NT Co. We can watch prices fall even further.
But we may not need to take such dramatic action right now. There is precedence for the market triumph of the small over the large. In the early 1970s, no computer maker was more feared than IBM. Many observers feared that IBM was creating a monopoly. Clearly, IBM was no where near nimble enough to evolve with the market, and its dominance ended.
Have you seen the film yet of Gates getting hit in the face with a cream pie? Some day, someone is going to build the better operating system. They are going to copyright it it, and we are going to see a big pie explode in the face of Gates and his company.