Date: Mon, 20 Apr 1998 08:25:27 -0600 From: Brett Glass <brett@lariat.org> To: chat@FreeBSD.ORG Subject: Nader paper mentions FreeBSD Message-ID: <199804201425.IAA20391@lariat.lariat.org>
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>------------------------------------------------------------ >Info-Policy-Notes | News from Consumer Project on Technology >------------------------------------------------------------ >April 20, 1998 > > > Microsoft's Ambitions and Antitrust Policy > > Ralph Nader and James Love > > Remarks at the Cato Institution Policy Forum > on Antitrust and Microsoft > April 20, 1998 > (http://www.essential.org/antitrust/ms/catoapril20.html) > >1. What is at stake? > >In his day, John D. Rockefeller tried to monopolize oil production, >refining and distribution. Alcoa sought to protect its monopoly in >manufacturing aluminum. AT&T tried to monopolize local and long >distance transmission of telephone calls and the manufacturing and sale >of telephone handsets or devices that would connect to telephone lines. >For decades IBM dominated the computer mainframe software and hardware >market. Intel is trying to monopolize the manufacturing of hardware >used to run personal computers. > >Microsoft is more ambitious, and the implications of its global strategy >are far more far important. Microsoft wants to use a core monopoly in >software operating systems to dominate an enormous range of new and >important areas of electronic commerce, and Microsoft wants to >monopolize the software used to navigate the Internet and to navigate >the next generation of television and multimedia programs. > >If Microsoft were to succeed in every area it is active, it would have >the most important control over commerce and worldwide information flows >of any firm, ever. > >Increasingly, we are talking about technology that is used as a gateway >for many businesses, publishing ventures and civic communications, and >Microsoft wants to dominate, influence or control the content itself, >not just the transmission. > >This elevates the disputes over Microsoft use of its Operating System as >a matter of public policy. > >2. How is this done? > >In the software area, Microsoft engages in a very wide range of >anticompetitive acts --- many of them are very similar to techniques >used by Standard Oil, AT&T or IBM, before each of these companies faced >antitrust action. > >One strategy of a monopolist is to deter entry or investment by rivals >by engaging in predatory pricing. Standard Oil used cross subsidies to >selectively cut prices, so it could bankrupt its rivals. AT&T used >cross subsidies to selectively cut prices, and drive rivals out of >business. IBM used cross subsidies to selectively cut prices, and drive >rivals out of business. Microsoft does this too. > >Microsoft can take a rival's core product, and spend countless millions >in R&D or acquisitions, and then offer a competing product for free, or >bundle it with Windows or with Microsoft Office --- the suite of office >productivity applications which are nearly as ubiquitous as the >operating system. > >For example, faced with Microsoft's decision to spend hundreds of >millions of dollars on a free alternative, Netscape is unlikely to >justify continued R&D spending on its browser. And when Microsoft >announced that it would include copies of its Outlook product in >Microsoft Office, Netmanage announced it would discontinue further >development of Ecco Pro (http://www.netmanage.com/products/eccopro/). > >Microsoft benefits from predatory pricing in two ways: > >- once the threat of competition is less, it can later > raise prices, > >- Microsoft's tough reputation scares off other new > entrants. > >But there are also technological strategies for predation, such as those >concerned with Interoperability. These too have many parallels with >other monopolies. > >In high tech markets, it is often the case that products must >interoperate with each other. AT&T tried to limit the ability of >competitors products to interoperate with the AT&T telephone network, by >withholding technical information, using proprietary technologies, or by >changing standards to create incompatibilities of rivals products. IBM >did this. Intel is doing this now. Microsoft has done this for a long >time, going back to the days when programmers coined the phrase, "DOS >isn't done until Lotus won't run," referring to Microsoft's introduction >of minor changes in DOS that created problems with Lotus 123, the >spreadsheet program that is a competitor to Microsoft's Excel. If >Microsoft can't make its own products look better by taking advantage of >technical back doors, it can make a rivals products perform badly, or it >can make its own products technically essential, as it is trying to do >with the browser. > >When you combine both predatory pricing and technological predation, >firms and investors decide on their own to keep out of Microsoft's way. >Consider the following quote from an April 18 story by Lisa Bowen in >Ziff Davis's ZDNET web site: >(http://www.zdnet.com/zdnn/content/zdnn/0418/308142.html) > > A further challenge for the DOJ is showing that > Microsoft is actually stifling innovation because > it's hard to measure Microsoft's products against > those that never make it to market. > > There's no question that many developers are shying > away from independent projects in areas that Microsoft > might consider. At Microsoft's Windows CE development > conference, developers lined up during a > question-and-answer session to ask the software behemoth > which products it doesn't plan to develop, as if they > were looking for crumbs. > > Other software makers said they attended the conference > to check out Microsoft's plans to make sure they stay out > of the company's road. > > A new area of predation for Microsoft concerns Internet >navigation. >One of the major reasons that Microsoft wants to have a monopoly on >Internet Browsers, is so that Microsoft can design the Windows operating >system to have as much control as possible on navigation itself. There >are several aspects of this. > > Microsoft wants to write the default bookmarks and menu options >for >content based upon current and new Internet technologies. The >unsuccessful experiments with so called "push" channel technologies was >one attempt. The new Microsoft "Start" page project is a more elaborate >version. Microsoft has also designed its Browser so it can periodically >check in with Microsoft to reset bookmarks, menus and other items with >ones Microsoft's suggests, gently but ever so steadily taking consumers >"where Microsoft wants them to go today." Microsoft is developing its >own search engine, which it hopes will replace Yahoo and other popular >search sites. > > This is a "path of least resistance" strategy, based upon the >idea that >time and attention are the ultimate scarce resource in the information >age. > > Will it work? Consider commercial airline reservation systems. >One >study indicated that professional air travel agents using online >reservation systems would pick the first fare they saw 53 percent of the >time, and a fare from the 1st screen 93 percent of the time. > > When Microsoft bought Web TV, it changed the travel menu so that >Expedia, the Microsoft travel service, appeared first in the travel >menu. Sabre told us their Travelocity web site lost is prominent menu >location, and was moved to page 6, next to Tom's Travel, in an >alphabetical listing. How many people in the audience ever look at page >6 when you use an Internet search engine? > >What will happen if Microsoft succeeds in its wildest dreams and >determines which flower shop, which citizen group, and which car dealer >appears on page 1 and which one appears on page 6? What if Microsoft >could determine what information appears on page 1 when a person >searches for information about Representative Rick White or legislation >concerning digital copyright? > >3. What Should Be Done. > > In 1997, we organized a conference to Appraise Microsoft's >Global >Strategy. I believe we now have a fairly good idea of where some of the >problems are. It is time to shift the debate to the issue of remedies. >What can and what should be done about the Microsoft Monopoly? This >will be the focus of our next Microsoft conference. > > The current DOJ litigation deals with narrow issues concerning >restrictive contracts and product bundling. The easiest remedies would >limit the use of restrictive contracts, such as contracts that prevent >Internet Service Providers or OEMs from giving consumers the opportunity >to choose non-Microsoft products. Practical rules regarding product >bundling are more difficult, as is the issue of predatory pricing, which >DOJ and the EC have ignored. But there are several other types of >remedies which may be more useful. > >Issues regarding interoperability are very important. The European >Community's 1984 undertaking with IBM was mostly about interoperability >issues. (http://www.essential.org/antitrust/ms/1984ibmeu.html). There >has been much antitrust work on interoperability that relates to >telephone monopolies. In recent years, the Federal Trade Commission has >negotiated agreements with several other software companies to open user >interfaces, such as the FTC's 1995 agreement with Silicon Graphics, Inc >(Docket No. C-3626), which required SGI to "establish and maintain an >open architecture, and publish Application Program Interfaces ("APIs"), >for . . . computers and operating systems in such manner that [third >party] software developers and producers may develop and sell . . . >software, for use on [SGIs] computers, in competition with [SGI]." > > More relevant is last week's landmark ruling in the Intergraph >v. Intel >case, where a federal judge ruled that Intel's CPU platform is an >essential facility - and ordered Intel to provide non-discriminatory >access to technical data needed to develop products which interoperate >with the Intel CPU. (http://www.intergraph.com/intel/highlights.stm ). >Now that the "tel" half of Wintel is considered an essential facility, >what about the "Win" half? Biases of Internet navigation and related >areas are very important, particularly if Microsoft succeeds in >monopolizing the browser market, dominating the search engine market, >and becoming the front end for new video set top boxes. Policy makers >and the public need to debate conduct rules which would prevent a >dominant OS vendor, like Microsoft, from exercising undue influence over >Internet information searching and navigation technologies. > > There are also other remedies that challenge Microsoft on a more >basic >level. We are asking OEMs to offer consumers the opportunity to >purchase alternative operating systems, not owned by Microsoft. >(http://www.essential.org/antitrust/ms/ipnmarch91998.html) These include >both commercial competitors, like Rhapsody, BeOS or OS2, and a new >generation of powerful free operating systems, such as Linux or FreeBSD, >which are rapidity maturing as alternatives. > > We believe there are factors which make it more feasible for a >new OS >to succeed. Larger and cheaper hard disks and computer memory make it >possible to run multiple operating systems on the same computer. We do >this now at our offices. Secondly, the Internet and new Internet >standards bodies make it easier to share data across OS platforms. >Third, new software development tools make it easier to port software >applications across platforms. > > There remain barriers for new OS platforms, however. The most >important >of which concern device drivers, which are still scarce for Windows >alternatives. Making matters more difficult would be efforts by >Microsoft and Intel to control the architecture of a new generation of >high performance device drivers. > > Leading Original Equipment Manufactures (OEMs) for personal >computers, >like Dell, Micron, Gateway 2000, Packard Bell, Compaq and others need to >be free from retaliation by Microsoft if the OEMs offer non-Microsoft >products, including choices of software operating systems. This may be >difficult in practice if Microsoft can discriminate in its pricing of >the software OEMs need for the current corporate and consumer market. >If Microsoft were required to use non-discriminatory licensing of >Windows and Microsoft Office, OEMs would be free to offer consumers >additional choices. > > Essential Information has created an Internet email list to >discuss these issues. You can participate by sending a note to >listproc@essential.org with the message "sub am-info yourfirstname >yourlastname." Archives of this list are available on the Internet at >http://www.essential.org/listproc/am-info/ (no period). The Consumer >Project on Technology also maintains a web page on Microsoft antitrust >issues at http://www.essential.org/antitrust/microsoft/microsoft.html >(no period). > >------------------------------------------------------------------ >INFORMATION POLICY NOTES is a newsletter sponsored by the Consumer >Project on Technology (http://www.cptech.org, 202.387.8030, fax >202.234.5127). Archives of Info-Policy-Notes are available from >http://www.essential.org/listproc/info-policy-notes/ >Subscription requests to "listproc@cptech.org" with the message >"subscribe info-policy-notes Jane Doe" >------------------------------------------------------------------ > To Unsubscribe: send mail to majordomo@FreeBSD.org with "unsubscribe freebsd-chat" in the body of the message
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