Microsoft Trial Judge Based His Break-Up "Remedy" On Flawed Theory, Not Facts

Colin A. Reed aleph at alumni.caltech.edu
Tue Feb 27 11:21:52 PST 2001


Microsoft won because of superior reviews? Come on, how stupid do you 
think we are?  So if a company pays for glowing reviews that would be 
okay?  Obviously they have never tried to sell a product.  It's very 
dificult to get consideration such that you could prove the technical 
merits when there is a large existing supplier.  It's much worse when the 
client knows that that supplier has a long history of targetting 
'upstart' companies and destroying them.  Support and upgradeability are 
important features that require a company to continue operating.  

I'll admit that the trial was fucked up from the start by the decision to 
center it around netscape rather than something more blatant like stac.  
Anyways, this has nothing to do with FC, unless you think that enterprise 
is fundamentally expressive and Microsoft's vicious suppression of 
competition has limited the ability of others to be heard.  

On Tue, 27 Feb 2001, Matthew Gaylor wrote:

> Date: Tue, 27 Feb 2001 11:31:00 -0600
> To: freematt at coil.com
> From: David Theroux <DJTheroux at independent.org>
> 
> Subject: THE LIGHTHOUSE: February 27, 2001
> 
> THE LIGHTHOUSE "Enlightening Ideas for Public Policy..."
> VOL. 3, ISSUE 8
> February 27, 2001
> 
> MICROSOFT TRIAL JUDGE BASED HIS BREAK-UP "REMEDY" ON FLAWED THEORY, NOT FACTS
> 
> As the Microsoft antitrust case moved into federal appeals court 
> Monday, the Independent Institute released an updated edition of the 
> book that The Economist magazine calls "by a long way...the best 
> single thing to read" on high-tech markets and network economics, 
> WINNERS, LOSERS & MICROSOFT: Competition and Antitrust in High 
> Technology, by Stan J. Liebowitz and Stephen E. Margolis.
> 
> The new edition includes a stinging critique of the findings and 
> break-up "remedy" proposed by Microsoft trial judge Thomas Penfield 
> Jackson.
> 
> "The government has chosen and the judge has approved a defective 
> remedy," write economists Liebowitz and Margolis, research fellows at 
> The Independent Institute. "Its key defect is its logical 
> inconsistency with the claims made in the case. It's difficult to 
> avoid concluding that the purpose of the so-called remedy is not 
> correction, but punishment."
> 
> First published in 1999, and based on peer-reviewed research going 
> back more than a decade, WINNERS, LOSERS & MICROSOFT argues that 
> high-tech markets face vigorous competition and that the "path 
> dependence" theory which claims such markets are prone to "locking 
> in" inferior products lacks empirical support and merits no place in 
> antitrust cases.
> 
> Even with the presence of so-called network effects -- the phenomenon 
> of a product becoming more useful to a consumer, the greater the 
> number of other users of the product -- markets do not "lock in" a 
> market leader and do not preclude the possibility that a better 
> product will come along and dethrone it.
> 
> As Liebowitz and Margolis show, contrary to popular myth, the market 
> success of the standard QWERTY keyboard arrangement, the VHS 
> videotape format, and various Microsoft software programs is due not 
> to "lock-in" but to the fact that these products are better than the 
> competition.
> 
> In the case of Microsoft, Liebowitz and Margolis found that when its 
> software products have dominated a market, that success can be 
> explained by the superior reviews those products received in 
> independent magazines. Further, Microsoft has not acted as a 
> monopolist but has pursued a low-price, high-volume strategy that has 
> led to prices falling more dramatically in markets where Microsoft 
> competes than in markets where it does not compete.
> 
> "When the theory of an antitrust case is based on a defective view of 
> markets," conclude Liebowitz and Margolis, "it is not surprising that 
> the findings are flawed or that the proposed remedy will do more harm 
> than good. The Microsoft case is based largely on a theory of lock-in 
> through network effects, an insecure foundation at best. Network 
> theories, we have argued, ought not be enshrined in our antitrust 
> laws. They can be so enshrined only if conjecture is elevated above 
> evidence."
> 
> For more information, see the new press release of WINNERS, LOSERS & 
> MICROSOFT: Competition and Antitrust in High Technology, by Stan 
> Liebowtiz and Stephen Margolis (The Independent Institute, 2001), at
> http://www.independent.org/tii/lighthouse/LHLink3-8-1.html.
> 
> For an updated, detailed summary of WINNERS, LOSERS & MICROSOFT, see
> http://www.independent.org/tii/lighthouse/LHLink3-8-2.html.
> 
> To order WINNERS, LOSERS & MICROSOFT, see 
> http://www.independent.org/tii/lighthouse/LHLink3-8-3.html.
> 
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