Microsoft Faces $618m Fine In Eu Case

I'll make the broad assumption those posting in this thread don't mind a good read, especially when it is on point.

Herewith please find two columns having to do with the Microsoft/Anti-trust issue here in the U.S., written by one of the smartest fellows on the planet, a certain Dr. Thomas Sowell.

I do not intend that these counter the situation with the E.U., merely to enlighten as to what went on in the U.S. at the time the case was meandering through our court system; a careful read might lend some clarity.

Enjoy!

Microsoft and Anti-"Trust"

The biggest question about anti-trust law is whether there really is any such thing. There are anti-trust theories and anti-trust rhetoric, as well as judicial pronouncements on anti-trust. But there is very little that could be called law in the full sense of rules known in advance and applied consistently.

Federal judge John Penfield Jackson's November 1999 ruling in the anti-trust case against Microsoft is a classic example of lawless "law." Just what specific law did Microsoft violate and how did they violate it?

While Judge Jackson's long pronouncement opens with a brief reference to sections 1 and 2 of the Sherman anti-trust act, this is little more than a passing formality. What follows is a lengthy exposition of theoretical conclusions about the economic meaning of Microsoft's actions. Is Microsoft supposed to have violated a theory or to have violated a law? What was it that they should have known in advance not to do?

Courts have declared laws against vagrancy to be void because of their vagueness, which gives the individual no clear understanding of just what they are supposed to do or not do. But vagrancy laws are a model of clarity compared to Sections 1 and 2 of the Sherman Act, which forbid conspiracies "in restraint of trade" or any "attempt to monopolize."

Just what does that mean? It means whatever Judge Thomas Penfield Jackson or any other federal judge says it means -- at least until they are reversed on appeal.

But what does it mean to a company that is supposed to obey this law? It means that there is no law, just a cloud of legal uncertainties, from which lightning can strike at any time.

In economics, "monopoly" means simply one seller. If you could invoke this provision of the Sherman Act only when there was just one seller, lots of Justice Department lawyers would be out of work, because there are very few products sold by only one company.

The ploy that prevents unemployment among anti-trust lawyers is to claim that some company sells a high percentage of some product -- or, in the rhetoric of anti-trust, "controls" a large share of the market. And the way to produce statistics showing large shares is to define the market as narrowly as possible.

Judge Jackson does this by defining the market for operating systems like Microsoft's Windows as being only those operating systems using Intel's processors and their clones. That means we don't count Apple computers or computer systems relying on the Linux computer language.

These kinds of definitional games have been played throughout the history of anti-trust "law." The net result is that there are statistics showing many more "dominant" companies with "market power" in these narrowly defined industries than there would be if industries were defined in some economically meaningful way. Judge Jackson's pronouncements are larded with such ominous rhetoric.

What also runs through Judge Jackson's statements -- and through the whole anti-trust tradition -- is a confusion between competitors and competition. Harm to Microsoft's competitors is equated with harm to competition in the software industry. But nothing harms particular competitors like competition.

When Microsoft spent $100 million to develop its Internet browser and included it in Windows free of charge, to Judge Jackson that showed monopoly power and hurt competition. But why would a monopoly have to blow $100 million to improve its product?

It was precisely because Microsoft was not as optimistic as Judge Jackson about a lack of competition that they spent the money to keep their customers. Is it a violation of law to operate on a different economic theory than the one a judge believes in?

But suppose, for the sake of argument, that Microsoft was guilty of every terrible thing the Judge came up with. All the contract provisions he doesn't like can be forbidden and all the competitors who were supposed to have been harmed can be compensated to the tune of millions of dollars.

Why then is the Justice Department involved? Because they want the power to oversee and second-guess the computer software industry. Microsoft's competitors in Silicon Valley may rejoice at its legal misfortunes, but once Washington bureaucrats start calling the shots in the computer industry, their joy may be very short-lived. Silicon Valley rivals of Microsoft could turn out to be like those Democrats of a few years ago, who voted for special prosecutors as if they were only going to prosecute Republicans.

Here is column 2.

Fast computers and slow antitrust

FEW THINGS DEVELOP AS FAST as technological change in the computer industry. And few things are as slow as antitrust cases. So an antitrust case against a computer software company like Microsoft is about as big a combination of opposites as you can find.

Five years is breakneck speed for completion of a major antitrust case and it is not unknown for a decade or more to elapse before the appellate courts say the last word on one of these cases. Five years is at least two generations when it comes to computers. A decade ago, laptops were a novelty of the rich.

The idea of slowing down innovation in the computer industry to the glacial pace of the legal system is grotesque. Yet that is what the Justice Department's Antitrust Division tried to do when it asked the courts to stop the recent introduction of Microsoft's new Windows 98 operating system until the legal fine points could be argued out.

Antitrust law is so full of ambiguous phrases, mushy concepts and elusive definitions that it cannot really be considered law. Laws are supposed to tell you in advance what you can and cannot do, not just allow government officials to nail you when they don't like what you are doing or want you to do it their way.

Antitrust cases can involve years of wrangling in the courts and many millions of dollars in legal fees, even when the plain facts of the case are not in serious dispute. That is because the terms used have no clear and consistent meaning. Microsoft is accused of being a "monopoly" that uses its "power" to prevent rival software producers from being able to compete. The Justice Department claims to be trying to protect "competition" by reining in Microsoft's ability to exclude other companies' software from its Windows operating system.

Let's begin at square one: Is Microsoft a "monopoly"? By the plain dictionary definition -- one seller -- it is not. Apple computers have a different operating system, for example. By an economic concept of monopoly -- a firm able to prevent other firms from engaging in the same activity -- it is likewise not a monopoly.

In antitrust law, however, numbers and percentages can be used to claim that a particular company "controls" a certain share of the existing market. If that share is very high, then the firm may be considered to be a rough equivalent of a monopoly.

Slippery words like "controls" insinuate what can seldom be plainly stated and proved. If a high percentage of the customers buy your product, that statistic after the fact does not prove that you controlled anything before the fact.

Those same customers can change their minds tomorrow and you will be history. That is why Microsoft keeps updating its operating system and adding new features. If it really controlled its market, it could relax and let the good times roll, instead of constantly scrambling to stay ahead of its rivals and potential rivals.

While the Justice Department's Antitrust Division claims to be trying to protect "competition," it is in fact trying to protect competitors. Competition, like monopoly, is a set of conditions in the market. It cannot be reduced to an outcome like percentages of sales.

There is competition in boxing when the champion agrees to fight the leading challenger -- even if the champ knocks him out in the first round. Competition is about a set of initial conditions, not about outcomes.

The Antitrust Division wants to prescribe outcomes by asking the courts to force Microsoft to include rival Netscape's Internet software in its own Windows system. Some in the media have spread the disinformation that Microsoft makes it impossible to put non-Microsoft software in its system or on the Windows screen.

My own computer came with non-Microsoft software, including Netscape, on the Windows 95 screen -- and I didn't even order Netscape. The computer manufacturer put it there. Moreover, Windows is set up so that the consumer can easily install all sorts of other software. Why some media people don't bother to check out the simplest facts is beyond me.

Some media pundits have been calling Microsoft founder Bill Gates "arrogant" for dismissing the Justice Department's arguments as nonsense. But Gates' real problem may be that he is not a lawyer, and so does not realize that much nonsense is already an established part of antitrust law and precedents.

The Anti-Dumping Laws of the EU, if im thinking of the same thing; prohibit the import of products that are then sold on at a price less than they are in the domestic market of the exporting country.

Its therefore illegal to import and sell a photocopier here that was made in Korea for a price less than that product would be sold for in Korea.

It doesnt stop that photocopier being sold at a price less than the EU community industries can sell them for.... just look at KIA cars as an example.


As a contrast, the US anti-dumping Law is such that a product cannot be sold at less than the US companies can charge.... ie below their cost price.


In the case of Steel.. The workforce get paid more in the UK i believe, the Property Prices are higher, the raw materials cost more. The cost of British Steel was cheaper in the UK than it was in the US.

The only reason they could undercut the US steel companies was due to them being more efficient. That only happened in the last 20 years... and if you remember, getting British Steel into an efficient company was a painful process.


I believe the WTO has recently given the EU permission to enact Trade Sanctions on the US as it was found to be breaking International Law in this area, and that of the Steel Imports...

Lefty,

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Because...  Netscape didn't die out due to it's quality. It died because people just accepted IE because it came with Windows. This is the crux of the matter. I thought everyone involved in this debate understood this.

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So let's see...people decided to use IE, not because of any presumed superiority, simply because they are stupid and lazy and MS gave it to them.
So we need the government to step in and protect us from our cupidity and sloth.

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You asked twice why we should have a Windows without all the goodies. Twice I had to tell you that the EU is asking for M$ to produce 2 versions. Not get rid of Windows as we know it.

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No I didn't.
I asked that you demonstrate how you are being harmed by MS's inclusion of the extras.
So far I haven't seen any proof that you have suffered at all.
You have free and easy access to any browser, media player, etc. that you choose and Windows will allow you to install it and use it.
You simply assume that if MS stops giving these things away then magically, better and more useful versions will appear.
So what?
Who is stopping their development now?
If you don't want to play with the big boys, then don't enter the arena.

All I see is MS being fined because it's big and successful, they dominate a market that they basically invented.
I'd sure hate to start a business knowing that at some nebulous point, after I became a success, that the government was going to step in and fine me because I was too good at what I do.
Kinda puts a damper on the ole entepeneurial spirit.
"You can be just so good at what you do, then we whack you off at the knees.
But God forbid that we actually define where that point may be...
Have a nice day."

I feel your pain, Lefty.

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When Microsoft spent $100 million to develop its Internet browser and included it in Windows free of charge, to Judge Jackson that showed monopoly power and hurt competition. But why would a monopoly have to blow $100 million to improve its product?

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I rather think the author has missed (or is it sidestepped) the point, I always thought the problem was that microsoft used their monopoly in one area to create a monopoly in another area. The inclusion of IE in windows was not to increase the windows share o fthe market, but rather to increase its share of the browser market. Microsoft gains the money of selling a browser automatically with sales of its other product by slipstreaming one into the other and also wiped out netscape which was its only real competition in the browser market. Just for the record i always thought navigator was way better than IE back in the day, though at the time i was a total internet noob. :D

The browser wars are imo a perfect case in point of why antitrust law does sometimes work(if only too slowly), when IE and navigator were on an equal footing, there was the constant competition and technological improvement, but IE took over and development stopped almost completely. Its only these days that competition and development in browsers has really picked up again, and even now its seems like its just opera and mozilla scrapping over the 5% or so of more software savvy internet users.

If anyone needs a bit of a refresher on hte browser wars (I did) I went looking and i found this:

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By mid-1995, popular culture had begun to notice the World Wide Web. Netscape Navigator was the de facto standard for web browsing at that time; its competition consisted only of a few browsers such as Mosaic and Lynx which were being developed on university campuses. Microsoft saw the success of Netscape and recognized the potential of the web, and licensed Mosaic as the basis of Internet Explorer 1.0 which it released as part of the Microsoft Windows 95 Plus Pack in August 1995. Internet Explorer 2.0 was released three months later, and by then the race was on.

New versions of Netscape Navigator (later Netscape Communicator) and Internet Explorer were released at a rapid pace over the following few years. Features often took priority over bug fixes, and therefore the browser wars were a time of unstable browsers, frequent crashes, security holes, and lots of user headaches. Internet Explorer only began to approach its competition with version 3.0 (1996), which offered scripting support and the market's first commercial cascading style sheets implementation.
...
Microsoft had two strong advantages in the browser wars. One was simply an issue of resources: Netscape began with near-90% market share and a good deal of public goodwill, but as a relatively small company deriving the great bulk of its income from what was essentially a single product (Navigator and its derivatives), it was financially vulnerable. Netscape's total revenue never exceeded the interest income generated by Microsoft's cash on hand.

The other, more important, advantage was that Microsoft Windows had a monopoly in the operating system marketplace and could be used to leverage IE to a dominant position. IE was bundled with every copy of Windows; therefore, even though early versions of IE were markedly inferior to Netscape's browser, Microsoft was still able to grow its market share. And IE remained free while the enormous revenues from Windows were used to fund its development and marketing, resulting in rapid improvements until it was so similar to Netscape that users had no desire to download and install Netscape.

Other Microsoft actions also hurt Netscape, such as:

Netscape's business model was to give away its browser but sell server software. Microsoft understood this and attacked Netscape's revenue sources, bundling Microsoft's Internet Information Server web server "free" with server versions of Windows, and offering Microsoft customers workalike clones of Netscape's proxy server, mail server, news server, and other software free or at steep discounts. This didn't have much effect at first, as much of Netscape's revenues came from customers using Sun Microsystems servers, but the gradual result was to make Windows NT more popular as a server for Internet and intranet while cutting off Netscape's income.
Microsoft created licensing agreements with computer manufacturers requiring them to provide desktop icons for IE, while penalizing them for shipping Netscape on their computers.
Microsoft made it very easy for small and medium ISPs to release branded versions of Internet Explorer, and with few exceptions they did, meaning that users of many ISPs were encouraged to use Internet Explorer and not Netscape.
Microsoft created a licensing agreement with AOL to base AOL's primary interface on IE rather than Netscape.
Microsoft purchased and released a web authoring tool, FrontPage, that tended to create pages that looked better in IE.
Microsoft included support for CSS in IE and made IE more tolerant than Netscape of poorly-constructed HTML (such as generated by some web authoring tools). Some web designers found it easier to write their pages for IE only than to fix bad HTML or to support Netscape's LAYER extensions.

The effect of these actions were to "cut off Netscape's air supply," as stated by a Microsoft executive during the Microsoft antitrust case, and this (together with several bad business decisions on Netscape's part) led to Netscape's defeat by the end of 1998, after which the company was acquired by America Online for USD $4.2 billion. Internet Explorer became the new dominant browser, and has since attained 96% of the web browser market share, more than Netscape ever had at its peak.

Microsoft's actions also earned it two prosecutions for antitrust violations, both of them involving Microsoft's use of its monopoly status to manipulate the market.

The browser wars ended when Internet Explorer ceased to have any serious competition for its market share. This also brought an end to the rapid innovation in web browsers; there have been no new versions of Internet Explorer since version 6.0, released in 2001 (which itself was little different from version 5.5, as the main purpose of version 6.0 was to bundle it with Windows XP).

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......and this harmed me the user how?

America Online seemed powerful enough to continue development. They have the largest base of internet users in America. <_<

I have no problem with IE personally and have used other browsers.
(I do use Webtabs with it though)

It seems to me, according to arguments of some of you, that MS should not include any features whatsoever. Operating systems should only be shells..oops...I mean only Windows.

What if IE includes a tabbed interface. I would stop using the Webtabs add-on.

They therefore crushed Webtabs.

The first step for a competitor is to make their product better......

....but second step is to market it so everyone knows about it.

Real Player does not kick WMP in the ass.
Others may be better but there&#39;s no marketing.

Even on the OS front, Linux sucks right now. An example of this is to put Linux on the store shelves and see how many people buy it. It&#39;s too buggy right now.

btw no one here has demonstrated how you the consumer has been harmed.
Especially as you sit on your Windows computer and are using products like Firebird and BSPlayer. :lol: :lol: :lol:

NO ONE.

So far the main complaint against Microsoft is because of certain inclusions of features, it leaves security holes.

It&#39;s the main target of viruses and worms. Well I guess it would be since has most of the market.

Use the logic.

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Originally posted by clocker+--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (clocker)</td></tr><tr><td id='QUOTE'>Lefty,

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Originally posted by leftism+--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (leftism)</td></tr><tr><td id='QUOTE'>
Because... Netscape didn&#39;t die out due to it&#39;s quality. It died because people just accepted IE because it came with Windows. This is the crux of the matter. I thought everyone involved in this debate understood this.
[/b]

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So let&#39;s see...people decided to use IE, not because of any presumed superiority, simply because they are stupid and lazy and MS gave it to them.
So we need the government to step in and protect us from our cupidity and sloth.
[/b]

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It would be more accurate and less emotive to say "not very computer literate and unaware of the alternatives" as opposed to "stupid and lazy" but on the whole.. yes that is correct.

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Originally posted by clocker

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Originally posted by leftism

You asked twice why we should have a Windows without all the goodies. Twice I had to tell you that the EU is asking for M&#036; to produce 2 versions. Not get rid of Windows as we know it.

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No I didn&#39;t.

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Excellent&#33; You know your lying about this area of our discussion, you know that this can be checked by reading back through this thread. Your banking on the fact that I won&#39;t go through the tedious process of backtracing our conversation to prove your being deceitful.

Bad luck old chap, I&#39;ve got plenty of time on my hands today and I&#39;m going to waste some of it by showing your deceit. :)

The exchange I&#39;ve just posted followed on from this....

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Originally posted by clocker

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Originally posted by leftism

You brought up the same argument twice and I had to provide you with the same factual answer twice. (and you accuse me of not reading posts&#33;) What kind of response did you expect?

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Lefty, at some point in the future you will realize that simply because you post an answer it does not automatically become " factual".
You have, as have I, been posting opinions.

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we back track further....

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Originally posted by clocker

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Originally posted by leftism

We&#39;ve already been through this clocker. I dont want to be rude but please pay attention.

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I just love being patronized.
Please keep it up.

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So whats this all about? is it due to "I asked that you demonstrate how you are being harmed by MS&#39;s inclusion of the extras."

Let&#39;s see.....

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Originally posted by leftism

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Originally posted by clocker

Who is forcing MS to lower their price?
There is no significant competitor to Windows, so now you just the OS stripped of some of the goodies that used to be included.

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We&#39;ve already been through this clocker. I dont want to be rude but please pay attention. If the EU get their way you will still be able to buy the standard version of Windows with all the "goodies" it currently has.

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Have we already "been through this"?

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Originally posted by leftism

The EU isn&#39;t demanding M&#036; remove WMP from all versions of Windows, they just want them to offer a version that doesn&#39;t include WMP.

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Ah yes.. see you were lying :)

Finally after dealing with your delaying tactic lets get back to the point.

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Originally posted by clocker
I asked that you demonstrate how you are being harmed by MS&#39;s inclusion of the extras.
So far I haven&#39;t seen any proof that you have suffered at all.

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We&#39;ve been through this <_< .

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Originally posted by leftism

I&#39;m also a little more tech savvy than your average middle aged "just bought a stupidly overpriced PC from PC World for the family" user. Just because it doesn&#39;t affect me personally, it doesn&#39;t mean the point is invalid.

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Yet another area needlessly re-addressed due to your deficiencies...

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Originally posted by clocker
You simply assume that if MS stops giving these things away then magically, better and more useful versions will appear.
So what?
Who is stopping their development now?

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Missed the point again. There are better versions available but people are not using them. This is due to the M&#036; monopoly not quality issues.

<!--QuoteBegin-clocker@
All I see is MS being fined because it&#39;s big and successful, they dominate a market that they basically invented.
I&#39;d sure hate to start a business knowing that at some nebulous point, after I became a success, that the government was going to step in and fine me because I was too good at what I do.
Kinda puts a damper on the ole entepeneurial spirit.
"You can be just so good at what you do, then we whack you off at the knees.
But God forbid that we actually define where that point may be...
Have a nice day."

I feel your pain, Lefty[/quote]

Due to some worsening medical condition that seems similar to Alzheimers I doubt you can feel anything at all.

Just keep on repeating this to yourself till you remember it and understand it.

"Using a monopoly in one area to create a monopoly in another area"

Perhaps when that oh so simple concept has been grasped we can return to the issue.

imo this is all a bunch of anti-European crap. Some US citizens appear to be in shock and awe of the fact that a European organisation can tell one of the US&#39;s biggest companies what they can and can&#39;t do in the European continent. "Such audacity&#33; We&#39;re a super power God dang it&#33;"

I guess the fact that the US Department of Justice failed so miserably in the same area just adds to the humiliation.

<!--QuoteBegin-Busyman
btw no one here has demonstrated how you the consumer has been harmed.
Especially as you sit on your Windows computer and are using products like Firebird and BSPlayer.

NO ONE.
[/quote]

Well I suppose if you stick your head in the sand and ignore the fact that most users arent as computer literate as the people here. (how many people here know about klite compared to the numbr of people who use Kazaa?) then... yeah you might have a point.

If you also ignore the Netscape fiasco you might have a point.

If you also ignore the fact that this point has been addressed time and time again you might have a point.

Oh wait...... no.. Ive just checked, and you definitely don&#39;t have a point.

Hmmm....apparently this has gone on for too long.
Lefty, your reversion to silly personal insults and your insistence on politicising this little debate with your favorite "American jingoism" rants has finally lead me to withdraw.
I have nothing to learn from you.

Bye.

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Originally posted by clocker@14 May 2004 - 15:10
Hmmm....apparently this has gone on for too long.
Lefty, your reversion to silly personal insults and your insistence on politicising this little debate with your favorite "American jingoism" rants has finally lead me to withdraw.
I have nothing to learn from you.

Bye.

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I keep telling you guys this but you get sucked in everytime. :lol: :lol: :lol:
It&#39;s funny watching it unfold.

IGNORE HER. <_<

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Originally posted by clocker+--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (clocker)</td></tr><tr><td id='QUOTE'>Hmmm....apparently this has gone on for too long.
Lefty, your reversion to silly personal insults and your insistence on politicising this little debate with your favorite "American jingoism" rants has finally lead me to withdraw.
I have nothing to learn from you.

Bye.
[/b]

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And with that we depart from the topic.... :rolleyes:

<!--QuoteBegin-Busyman
I keep telling you guys this but you get sucked in everytime.&nbsp; &nbsp;
It&#39;s funny watching it unfold.

IGNORE HER. [/quote]

:lol: :lol: :lol: :lol: :lol: