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Accelerate Your Mac!
Cats-n-Dogs Living Together
by Alex Koyshman
4/1/99

Readers Comments on Government Regulation

In my last article, I discussed the role of government in regulating high technology- computers, software, etc (sorry it took this long for a new article- I'll spare the excuses, but I've been rather indisposedÖ) While the response sampling has not been very big, the respondents were very succinct and offered very useful viewpoints. By and large, the respondents fall into one of two categories:

Jim Bryson wrote:

"it is time for the computer industry to join the civilized society and agree to police itself."
The libertarian in many of us simply demands the government to not intervene in what is, essentially, a market issue. There is an understanding that the successful companies must relent control to allow the free market to function, but the its not in government's charter to enforce it- as Slava Serota wrote:

"Government's role should be at absolute minimum: to ensure that the most basic and fundamental laws are enforced. it should have no role in economic domain. Government bureaucrats are clueless when it comes to economy - only free market can work out the kinks (the freer - the better)."

The counterpoint is that unchecked business will in its nature tend to monopoly. Cameron Reddy wrote:

"Breaking up a monopoly is not stifling to competition or start-up companies. Enforcement of the Sherman Antitrust Act is the last thing about which a growing business is concerned."

Others offered into evidence Microsoft as an example, who forced "inferior" or "poorly implemented" products on customers and quashed competing products regardless of their comparative quality. Ultimately, There doesn't really seem to be a logical high ground as to government rights and responsibilities in this matter.

Consequently, there were only very few individuals who broached the issue of control remedies. Wyatt Earp offered this:

"I think the Federal Government should break MS up like they broke Standard Oil up...that didn't limit the expansion of the oil industry, and it did no harm to the United States."

As the righteousness of government is unclear, the remedies are doubly so. One thing became clear: no one really believes that Microsoft is acting in the best interests of the public or the industry.

So what is to be done? So far, none of the big players in the industry have shown that they are capable of self-regulation. The profits are just too lucrative, and the pride of success is not easily swallowed. History tells us that in the absence of regulating power, every free market degenerates to an oppressive oligarchy of the most powerful, which is nearly as destructive as a Soviet style command economy, and it is the responsibility of our government to ensure that this doesn't happen. Since the public interest spotlight is currently pointed squarely at Microsoft, I'm going to use them in the context of this study.

Microsoft rose to prominence by realizing the potential of various concepts in the computer industry and presenting them to a greater population of customers than the originators. Apple popularized the GUI- Microsoft sold it on open hardware. Lotus popularized the spreadsheet- Microsoft made it GUI. The examples are numerous. But then came a point when Microsoft eclipsed all of their competition, and for one reason or another Microsoft's products became synonymous with inefficient, buggy bloatware- while no competitor managed to enter the market. Microsoft's tactics shifted from cutting deals to ensure the best distribution for their products to forcing vendors to cut the deals to assure Microsoft will even allow them the product to begin with. Windows became such a de-facto part of the modern PC that no vendor DARES to mess with Microsoft, effectively locking out any viable OS alternative. With this club at hand, Microsoft can force vendors into selling their other products, or shutting out competitors in other fields, etc. Long story short- Windows IS the crowbar, and Microsoft has no moral or ethical qualms about using it.

The government can't and shouldn't punish the success Microsoft enjoyed that brought them here. But- the government MUST act to stop the outcome. There really is only one way to affect this, and it is by taking the crowbar away. What if someone else could sell Windows? The whole monopoly goes away. Microsoft no longer can demand bundling, nor can it withhold licenses from resellers, nor can it withhold OS support from third party ISVs. What if Microsoft is forced to offer the base source code of Windows 95 to the public domain, but remains entitled for a royalty fee for every copy of a derivative product commercially sold? They can continue to sell the Microsoft branded Windows 95, Windows 98, Windows NT, 2000- whatever- But a competitor can take the source code and compile a different- maybe even better- Windows version and sell it as well! If Microsoft's arguments are true, that they are providing the best product for the customer, then the market will back them up, and will shut up all the critics that are complaining about what a terrible product Windows is. But, If Red Hat Windowsô sells crashes less and sells twice as many copies- Microsoft is forced to put its money where its mouth is or lose sales. Either way, Microsoft is not penalized for its previous success- Red Hat will pay Microsoft some royalty ($20 per commercial sales? Just a thought.)

What do you think?


I welcome all questions and comments at akoyshman@jps.net or designamics@jps.net
Or visit my web site at: http://www.designamics.com

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