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Netscape Gets the Green

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Imagine the nerve of a company that gives away its product in an attempt to knock off the dominant firm in an industry. I have one such company in mind right now. It went all out to make it easy for consumers to have free access to its product. You couldn’t turn around without being handed, gratis, this company’s goods. When the dust settled, the new company was No. 1, the old leader relegated to also-ran status.

No, I am not thinking of Microsoft and its effort to dethrone the web browser Netscape Navigator with Internet Explorer. I’m thinking of America Online’s (AOL) move against Compuserve as an Internet service provider. It’s more than a little ironic that AOL Time Warner now owns Netscape and has just filed an antitrust suit against Microsoft for doing what AOL did to Compuserve.

AOL Time Warner Netscape should be given the Green “W,” the award I just made up for the biggest corporate whiner in the country. (The competition for that distinction is fierce.) The American business ethic today is this: Those who can do; those who can’t, cry to government.

What is Microsoft’s grave offense? Netscape says that Navigator lost favor with the market because Microsoft began to give away Internet Explorer as part of its Windows operating system. Did Microsoft blow up Netscape’s facilities? No. Did it infiltrate Netscape’s operations and sabotage them? No. Did it stop anyone from using Navigator rather than Internet Explorer. Well, no; Microsoft didn’t do that either.

All it did was make Internet Explorer a feature of Windows. That’s it. In America today, that might be an offense for which one can be assessed treble damages. At least Netscape hopes so.

What makes some people think Microsoft did something bad is that it supplies the market’s most popular operating system. That enables Microsoft to bundle Internet Explorer with Windows and gain a supposed unfair advantage over competitors.

The devastating question for Netscape: so what? Why is it unfair? To whom? Certainly not to consumers. They apparently like the convenience of having the browser integrated with the operating system. It surely reduces the hassle. Had Internet Explorer not been a good browser, Microsoft’s strategy would have counted for naught. Netscape had nearly the entire market to itself even after consumers received Internet Explorer for free. Earlier versions of Microsoft’s product were not impressive, and consumers were able to use Netscape with Windows. (They still can.) Only when a later version of Internet Explorer began to impress software reviewers did consumers give it another look and turn to it in great numbers. (In Contrast, Windows has not helped Microsoft bring its own Internet service provider, MSN, to dominance.)

Netscape lost the market on the merits, not because of any “unfair” advantage.

Think of what it would mean if Netscape gets its way: government would be the ultimate judge of what can go into a computer operating system. Where’s it written that a browser is not part of the operating system? There was a time when disk, video, and printer drivers weren’t part of the operating system either. Should we be forced to live by the standards of the early days of personal computing?

And why should the Netscape principle be limited to operating systems? The principle would give government the power to define all products. If an automobile comes with a CD player, you’re less likely to buy some other company’s player. Why isn’t that unfair? Examples could be multiplied endlessly.

It doesn’t take much imagination to see what life would be like if government had the power AOL Time Warner is asking it to assume.

The marketplace exists for the benefit of consumers, not producers. This isn’t athletic competition, where the object is to see who is best on a level playing field. This is economic competition, where consumers want producers to exploit every advantage in order to better serve them. Any peaceful act to satisfy consumers is, ipso facto, fair.

AOL Time Warner Netscape is thus revealed as an enemy of freedom and progress.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.