Judicial injustice One judge flays Microsoft's Bill Gates, who's helped millions
November 10, 1999
The Microsoft case is not hard to understand. All it takes is a little basic economics and a sense of justice. Because last week's decision is one of the greatest injustices in modern times.
First the economics.
One of the most basic ideas of economics is that people work to get things, they don't just work in order to work. Adam Smith put it this way in The Wealth of Nations: "Consumption is the end of production."
There's a story about a famous economist visiting China, who came across some workers with shovels.
"What are you doing?" he asked the foreman.
"They're making a dam," the foreman replied.
"Why don't you get a steam shovel?" asked the economist.
"Well that would put these men out of job," came the answer.
"Oh," replied the economist. "I thought you wanted a dam. If it's a job you want, why not get them spoons?"
What we consumers want is software. If we could get it for free, we would, and we'd put the entire computer industry out of jobs.
As it is, we get it as cheaply as possible, as long as it's a good product. What Microsoft did was to provide precisely that.
But because other companies couldn't compete, they turned to the government to protect their jobs. That's where antitrust laws come in.
Under antitrust law, it's illegal for Bill Gates to charge too little for his products, because then others can't compete.
In other words, the government thinks we were paying too little for good software, and we must be forced to pay more for bad software.
If we want software, we should keep Microsoft. If we want to protect jobs, we should get spoons.
According to Judge Thomas Penfield Jackson's ruling, "Three main facts indicate that Microsoft enjoys monopoly power. First, Microsoft's share of the market..is extremely large and stable. Second, Microsoft's dominant market share is protected by a high barrier to entry. Third, and largely as a result of that barrier, Microsoft's customers lack a commercially viable alternative to Windows...."
What this means is that a lot of people choose to buy the products Microsoft produces and other products just aren't as good.
Another important economic fact to remember is that all new industries have to be monopolies.
In the early days of movies, the theaters were owned by the companies that made the movies. Why? Because without movies, who was going to open a theater? To make money, a company had to make the movie and also be able to show it.
In the same way, the first television networks were owned by the companies that built television sets because nobody was broadcasting before people had TVs. But subsequent antitrust decisions have made these things illegal.
But -- and here's where our sense of justice should come in -- imagine for a second that Gates had called his executives together and said, "We are charging so little for our good software, we should charge more and provide bad software, and that will let others compete. That way we won't get prosecuted as a monopoly."
If he did that, he could be prosecuted for price fixing.
Bill Gates was damned if he did, damned if he didn't.
According to the government, Bill Gates was greedy -- because he gave away his software for free.
Microsoft has created dozens of millionaires and changed the lives of millions of Americans, who now shop and learn and communicate over their computers.
Bill Gates has never hurt anyone; he is an American hero. If the government wants to cut down on monopolies, why doesn't it get rid of its own Postal Service? If you compete with the post office -- if you send a letter by UPS or FedEx or if you try to set up your own mail delivery service -- you can be fined or thrown in jail.
Bill Gates couldn't fine or jail his competitors. He couldn't force us to buy his products, the way the government forces us to buy stamps. He gave software away for free; when was the last time we got anything free from the post office? They don't even give me change when I use a 33-cent stamp to send a postcard.
The fact is that Microsoft is not a monopoly. A real monopoly is a government protected entity, like the Postal Service or cable companies.
The Founding Fathers hated monopolies because they were unfair; they didn't give a chance to people who really could compete. But persecuting Microsoft doesn't help those people: it just makes the marketplace easier for those who can't compete.
Good companies, like Aol.com or stores like Wal-Mart, should be very afraid. The government is coming for them next.
The question that truly fair-minded people should ask is, "Who speaks for the big guy?"
