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Punishing Success

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Let’s cut to the chase: It’s Microsoft’s property. The company should be free to offer it on any terms it wishes. If people don’t want to buy Microsoft products, they don’t have to. As long as no law keeps other people from offering competing products, no one need fear Microsoft’s dominance of the software market.

These points seem to have gotten lost in the thicket of fallacies that constitute the federal and 20 state-government antitrust cases against Microsoft. What we have is nothing less than a hysterical free-for-all. Any charge anyone can think of is being turned into a subject for litigation against Bill Gates. For example, a new round of suits reportedly will charge the company with unfairly pricing its Microsoft Office package. In antitrust lingo, “unfair pricing” means pricing too low! I’m waiting to see the government call consumers as witnesses in that case.

The federal government is also reportedly prepared to hit Microsoft for moving into new software areas, including WebTV and “video streaming,” which permits the downloading of video from the Internet. Other “crimes” allegedly committed by Gates’s firm include its aggressive campaign in behalf of Windows for networks and for hand-held computers.

Anyone familiar with the history of antitrust litigation will see an old theme: the companies that get the government’s shaft are the ones that aggressively expand their product line in ways that please consumers. That’s a crime in the United States of America.

Microsoft’s adversaries, including the competitors it has been besting, will reply that what is really at issue is Gates’s abuse of his operating-system monopoly. Let’s look at that.

The lion’s share of personal computers sold these days indeed comes equipped with Microsoft Windows. It’s the industry standard. Guess what: computer users seem to like it that way. It is convenient having such a widely used operating system. The large Windows market encourages software developers to write all kinds of programs. Compare that with Apple’s Macintosh. The Mac is a great product, but its small user base limits software development. We consumers benefit from Microsoft’s success.

But, so goes the argument, Microsoft’s control of the operating system gives the company an unfair advantage over every software maker. The paradigm case is in World Wide Web browsers. Netscape pioneered the field with Navigator. Microsoft followed with Internet Explorer, bundled it free with Windows, cut into Netscape’s market share, and made it necessary for the company to give the product away. Is that unfair?

If we understand the purpose of the marketplace, the answer has to be No. Market competition is not a game. The object of games to determine which participant will win while abiding by arbitrary rules. The rules define the game, and there is no purpose beyond them. Economic competition is quite a different thing. Its object is to deliver goods to consumers in the most efficient way possible. Imposing a “level playing field” makes sense in games, but it makes no sense in the marketplace. We consumers don’t care who performs best under the same conditions. We care about getting the products we want as cheaply and quickly as possible!

The complaints about Microsoft’s adding features to Windows are highly arbitrary. Long before Internet Explorer was included, Windows had features that did not have to be bundled: printer drivers, audio and video software, and more. All of these could have been sold separately by other companies. I recall the time when no word processing software included a spelling checker. You had to buy a separate program, and as a result there sometimes were problems of incompatibility. When Microsoft Word and WordPerfect started integrating spelling checkers, the companies that specialized in those programs went out of business. The same is true for thesaurus and grammar programs. Little companies found their niche markets dried up. Too bad. But consumers prospered. That’s the point. They are the reason we have an economy.

Microsoft didn’t create a “monopoly” in its operating system. Consumers did. And the day Microsoft, in the eyes of consumers, abuses its position, they will take it away.

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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.