Keeping business accountable to law seems a given.

However, I don't understand how you have business at all if the government can step in whenever it wants and appropriate assets or abrogate contracts.

I'm not saying anything about the situation in Russia specifically. It's perhaps beyond human capacity to arrange. But accountability has to run both ways.

you say business not accountable to "citizenry"

They are accountable to customers (the ones paying the bills) which is better than the government which is accountable to only a portion of the "citizenry" (that portion which may or may not pay the bills)

Like Harry above, I make no judgement of the Russian situation and certainly am not suggesting that "business" is above the law. However defenders of the "citizenry" should not expect ambiguous or arbitrary laws to have a salutary effect. Why not try something really radical like equal protection of the law? It works someplaces I hear.

h:

Law and order have to precede the business though.

Criminal enterprise like Microsoft? Name one IT company that is in the game for, say a market share limited at 20 percent. Fifty percent? No company is in the IT game for limited market share. Microsoft has to fight for its survival and relevance just as do Sun, IBM, Apple, Lotus, AOL, and Palm (all of whom know how to play hardball). Next time you revel over the fact that the average Joe in the world (including you) can get his mitts on astonishing computing power and a better and vaster library than Alexander the Great's for under $400, remember it was Microsoft and the Windows open hardware platform that made it possible. Ask any hardware engineer in the computer hardware capital of the world: Taiwan. Criminal enterprise my foot.

OJ --

You do realize that this post can't really coexist with your post on "The Psychic Disconnect", right?

George: Really? Ask any intermediate microeconomics theory student about the "waste due to monopoly." Compare that mighty Microsoft product to any operating system of its time, in terms of price, ease of use, and comfortable interaction with hardware. I can walk you through Amiga to MacOs to Linux, each one considerably easier on the nerves and considerably more user-friendly than DOS or Windows. And I'd point out that we had all that information available for much less than $400 due to Steve Jobs's little gadget in 1985 (cheaper and faster than on the PC Clones), quite aside from DOS 2.1 (or was it 1.2 back then? I'm only good with the dates on the late 5.xs and 6.xs).

Criminal is exactly right, too. I'm pretty sure the various anti-trust acts are unconstitutional (obviously not on Commerce Clause grounds), and I know they're bad policy; but you'd have to be a flack for Microsoft to say they don't leverage their monopoly to improve their market position in other, related markets; that's illegal.

David:

Why?

George:

I worked for a company in Chicago that sold PC's. If we wanted to purchase MicroSoft's operating system and programs, which we had to because most customers wanted it, they required us to pay them as if the stuff was installed on every PC we sold, even if it wasn't. They did lots of stuff like that which is more generally associated with the mob than with a responsible corporation.

OJ -- Our economy is as dynamic as it is becase the government, more or less, minds its own business and contracts are enforceable.

You had to do it because your customers insisted? I can't really say I'm horrified.

Chris -- Microsoft is not a monopoly, except in a very particular way -- it is the only source for Windows. In other words, your problem isn't so much with Microsoft, but with intellectual property law. I agree that it is ludicrously tilted towards "authors" -- Let's change it. But can you really blame Microsoft (and Disney, for that matter) for taking advantage of it?

David:

No. MicroSoft requires it as a condition of acquiring their products. Customers have to pay a hidden cost for something they don't even get.

Contracts aren't enforceable to any considerable extent in Russia, are they? And there are still massive problems with private property rights. You need laws and enforcement before people can trust one another and enter into contracts.

What hidden costs? You pay for a computer, you get a computer. Why should I care how the price was computed? Microsoft could simply charge more per copy and, as you say, you would have to pay it because that's what the customer wants. If your complaint is that Microsoft charges too much, then I agree with you. But so does everyone I buy anything from, except the restaurant I had lunch at this afternoon.

OJ
Calling Microsoft a criminal enterprise reminds me of the Liberal judges legislating from the bench. Not liking a situation does not make it illeal. Calling Bill Gates greedy or immoral is about all you could accuse him of. I don't think many business men would have done anything different than Bill Gates. Usually a successful business will soon have competition, but the nature of computer software has prevented this. And as long as he keeps updating his windows to new versions, I don't know how anyone will ever be able to compete with him. But I do believe that newer versions of Windows also shows that he cares about the customer. I have a larger objection to politicians & expoliticians getting paid a ridiculously high fee to speak at Universities. Now that is something that needs a law made against it.

Mr. Rowe:

There's a name for extracting money you haven't earned from someone by threatening their livelihood: extortion. Microsoft is known to use the above method and many others to boost the marketshare of products that could not win them on their own because inferior.

David:

My apologies, because I must have phrased this poorly. Let me give a concrete example:

Your company decides to buy 30 computers, twenty for offices--which use MS--ten for the IT guys which use UNIX. You pay for MS software on all of them, though ten don't have it or have it for no reason other than that MS extorts other companies.

It's neither good economics nor legal. Unfortunately, the Feds only went after them for the browser.

In My Arrogant Opinion, many of the security problems on the internet today arose because Microsoft (most likely illegally) unwisely integrated things that ought to be applications (eg, Web Servers) into the OS specifically in order to forclose competition.

And don't even get me started on monstrosities like ActiveX and Exchange.

I'm way out of my depth here, but if your market penetration is 98%, and people cheat (here I do know what I'm talking about), couldn't you make a case that you know very well that they're going to use your product on every one of their machines and so they ought to pay for it.

On the other hand, I learned this afternoon that our photographers and layout departments have to share one copy of Photoshop (which evidently is awkward at the user end), because the publisher is too cheap to buy each his own.

(I'm vague on how they share this; the less I know about software, the happier I stay.)

If you have 98% you should be broken up anyway, but you certainly shouldn't be allowed to just charge everyone on what you suppose they use.

Oligarchy, or, in some places and industries, monopoly, is the logical end result of capitalistic competition, over a long enough time.

The main disruptive forces that prevent it are innovation and shifting consumer desires.

Harry:

You could reasonably make that argument, but it's pretty clearly illegal to require that under anti-trust law if you're a monopoly.

So, we can't trust the courts to interpret the constitution, but os design is ok? Also, the root of all (computing) evil is Bill Gates' decision, in the early 80s, that no one would ever need to address more than 640k of memory.

OJ -- Price is price. If Microsoft chooses to extract price from users other than through the price tag, that's still price. The fact that they do it that way, and incur greater enforcement costs themselves, rather than just increase the nominal price of the software, indicates that there is some real issue there for them.

Believe me, I feel your pain. Microsoft's various rules and restrictions drive me up the wall. But I still go ahead and buy Wintel machines, even for my personal use where Apples would work just fine.

As I said, the real problem here is intellectual property law, the rule for which is pretty much "screw the consumer."

David:

Again, you're missing the point. If you did buy the Apple and had to pay for MS DOS anyway, do you still not see the problem?

At any rate, these comments prove my initial point--the Right is just as blind to the concentration and abuse of power, so long as it's done by business, as the Left is to similar concentration and abuse by unions or governmemt or whoever.

OJ -- I understand what you're saying. I see the problem: you would prefer that it cost less to buy Microsoft products, either in money or hassle. But as your dealings with Microsoft are still voluntary, I don't think that there is any injustice involved.

What you don't seem to get is that there is no externality here: when I buy a Microsoft product, all the costs are born by Microsoft or me. Therefore, Microsoft has to treat all of my costs as part of the price of the software. By making buying their product more burdensome to me, they either sell fewer units or collect less money per unit than they could, but between these two states of the world, I am indifferent. Price is price.

Not to be too insulting, but the mistake you're making is one of the fundamental mistakes of communism. Communists believe that there can be non-market economies. But all economies are market economies, meaning that as cost to acquire (what we call price) increases, demand decreases and as cost to make increases, supply decreases. Standing in a long line to get something is as much a cost of acquisition as paying the sticker price. That's why the free market price is called the market clearing price: it results in producers supplying only as many units as consumers want, ergo no lines. In other words, as annoying as Microsoft's policies are, the alternative is not paying the same amount with less hassle, it's paying less in hassle and more in money.

David:

No. I don't much care what MicroSoft stuff costs because I don't use it, though I do mind that their practices drive up prices of everything else.

What I do care about is that predatory criminal behavior be treated the same regardless of whether it is engaged in by Don Corleone or Bill Gates. If the cost of a "free market" is, as you suggest with things like the comment about the Courts, that business must be beyond the reach of the law then it's not worth it. I agree that MicroSoft will fall apart on its own, just as IBM hit the wall, but there's no reason to wait for the eventual logic of the market when folks are behaving criminally in order to thwart those very market forces.

No one should be above the law. It would be nice, however, if the law made some sense. Oh, and that Microsoft/Mafia analogy: Seamless.

Is it not your position that just as protection money is simply the price of doing business in mob territory, so paying for stuff you don't get is simply the cost of dealing with MicroSoft? One needn't open a restaurant in Little Italy nor own a PC company in America.

No, that's not my position. You're not paying enough attention to both price theory and property rights. You should go read Coase.

On the other hand, it's nice to find a issue on which you are so wrong. It was getting a little spooky there for a while.

"as your dealings with Microsoft are still voluntary, I don't think that there is any injustice involved."

David:

Two economists are stranded in the Sahara. One turns to the other:

"Not to worry. Once we get thirsty enough to pay the market clearing price, there'll be plenty of water for sale here."

You've got this backwards. Microsoft owns Windows. People want to buy Windows, but would rather do so on their own terms, not Microsoft's. You want to force Microsoft to abide by those terms. You're the Godfather here, not Bill Gates.

Mike -- The economist is exactly right, ignoring transaction costs.

David:

People who didn't want Windows were being forced to buy it because MS's market share gave them market warping power. If the free market leads to monopolies where some are so powerful that market forces no longer function efficiently then anyone but an ideologue can see there's a problem with the system. Even a free market requires basic rules of the game.

mike:

Bingo!

Mr. Judd;

Not one person has ever been "forced" to buy Windows. Every single person who ever paid for Microsoft software did so voluntarily. For instance, in the case you cite, you could have just purchased the Microsoft software retail and not entered in to the agreement you did. Or your customers could have purchased the non-Microsoft OS machines from another company that didn't sell any Microsoft products (of which plenty existed). Nowhere in any of this was any one forced to do anything. You entire argument is that, from your and the customer's point of view, the situation was not optimal. Well, bummer. However, unless you and your customers were idiots, you were still better off paying the price you did than not buying at all.

That last is Mr. Cohen's point. As a customer, it doesn't matter what amount of the purchase price goes to Microsoft. The customer pays $X for a computer that performs task Y. Either that's worth it or it's not. Microsoft's profit level is irrelevant.

Chris;

You're quite wrong about the early days of operating system. I was there. Microsoft won because they supported clone hardware. In the other cases you cite, a customer had to buy the hardware to get the software.

AOG:

As I said, the willingness of the libertarian/pro-business Right to see corporations aggrandize power over the rest of us in ways that they shriek about when government, unions, special interest groups do the same thing is a very big ideological blind spot.

MicroSoft essentially had the power to determine whether one could manufacture and sell PCs. That's no different than the government or the mob doing the same thing in my book.

Concentration of power in the hands of plutocrats is antidemocratic, anti-capitalistic, and anti-American, even if you love businessmen.

Why, yes, I am an idealogue, thanks for noticing. I am not particularly idealogical about Microsoft. Still, your just dead wrong.

First, you seem confused about what it is consumers are buying. They are not buying hardware and software as seperate products, they are buying an entire computer. The reason that pc manufacturers don't have any power over Microsoft is that hardware is a commodity. Microsoft controls Windows because Microsoft wrote Windows and owns Windows. When in the course of its history should the government have declared it a public good?

Second, Microsoft is not a monopoly. There are at least two commercial competing OS' available and another perfectly good OS available for free, along with the source code. As you say, you don't like Microsoft, so you don't buy Microsoft.

David:

They should have declared it a public good and terminated the company, as an example to other lawbreakers. Just cause a guy where's a suit doesn't mean he should be able to do stuff that's illegal in the 'hood.

You stumbled somewhere near the truth there. A customer wishes to buy hardware and then software of their choice. MicroSoft forclosed that opportunity by requiring PC manufacturers to pay for the MS OS for every computer they sold, regardless of whether it had the OS loaded or not. That type of behavior is made possible only by a significant enough monopoly that the forces of the market cease to function properly. Granted, the monopolist eventually tripsa over his own johnson in such cases, but in the meantime all consumers are penalized. A system which refuses to act against such concentrations of power, even when they are used criminally, is not worth defending, no matter how ideologically wedded you are to the initial utopian scheme where such things wouldn't happen.

You mistake me. I'm not defending it because I'm wedded to some utopian scheme where such things wouldn't happen; I'm defending it because I have no problem with what happened. I think it's fine. I think it's dandy. Given that this is not a world without transactions costs, the economy throws up lots of bad results. This just isn't one of them.

Lots of places sell computers without operating systems. Lots of people make their own computers out of parts. But most people choose otherwise. You apparently think that the purchase of computers drives the purchase of operating systems. I think you're mistaken. People buy operating systems and mostly get the hardware at the same time because what they really want is to surf the internet, or run spreadsheets, or process words, or print digital photos.

In any event, your side won this one. Microsoft agreed to stop this form of licensure as part of its settlement of the antitrust case. This is your utopia. We can now get Linux on our Dell. Happy?

Partly. It was a criminal enterprise and should have been treated far more harshly.

So why is monopoly in business bad and in religion good?

Harry:

What monopoly?

The moral monopoly you keep defending.

That's not a monopoly in religion, but a feature of the Universe.

Who knows what goes on in the rest of the universe? But we're certain it isn't even a monopoly in the part we do know about.