Microsoft, antitrust and innovation, by Georg Greve(Groklaw)

It is nice to see the article by George Greve get some nice play on Groklaw.

But, Microsoft's claim that somehow “innovation” is threatened by enforcing the antitrust laws is a sad one indeed. And it is not just because Microsoft was or is not innovative. That is a separate determination.

George Greve's article is correct about one thing in particular. Antitrust laws are designed in many countries to prevent a dominate player in one market from adversely affecting a nearby market. And that is why bundling of products is illegal. And it does not matter whether you commingle the source code or just take some clear sticking tape and strap them together for one price.

All you have to do is go back to some of the earlier quotes from Microsoft in regard to the browser and you realize innovation had nothing to do with it. Except perhaps to allow Microsoft to forget about any need to innovate because the market is being illegally manipulated via packaging or bundling. And indeed innovation dried up for Internet Explorer until Microsoft realized that a viable revenue model was not essential for the technology to progress on its own.

What did Gates say very early on?

If Netscape does not stay away from the Microsoft platform, Microsoft will just illegally bundle Internet Explorer? Not a direct quote but pretty close. So close in fact that Microsoft lawyers had to specifically instruct Bill Gates and other loud mouths at Microsoft to never use the “b” word in a sentence. And they stopped. Not the bundling. Just calling it what it was. And they also stopped calling IE an application because the lawyers knew that bundling a key application with the OS was illegal. So they stopped calling things applications. They just lied instead and claimed everything that was forced upon the consumer in order to manipulate and control the market was a “feature” of the OS. But, that is pure poppy cock. It is a lie used to get your money. And that is fraud. (And it is a lie put up so that they sound like they do not have an illegal intent. But, it was the illegal objective they were after.)

So now they get caught yet again engaged in illegal activity and all they can do is lie to attempt to cover up their earlier lies. Claiming that somehow complying with the antitrust laws is going to adversely affect innovation. The truth is that violating the antitrust laws adversely affected innovation coming from Microsoft simply because they did not have to compete on a technical basis. What did some of those early emails say? If they do not bundled IE they will lose against Netscape? They had to “leverage” the OS in order to win against Netscape. Leveraging is illegal if it is bundling. Why didn't they just say we are going to have to pick up our “innovation”? Actually, they concluded that even their innovation would not be successful.

Microsoft Corporation fits the profile of a pathological liar. And that is one who lies to cover up a previous lie. Or, even lies when telling the truth would do just fine. You see, a pathological liar always thinks that if saying something that might actually be true helps them out, embellishing the statement to the point of being false will help them even more. These kinds of people, almost never tell the truth. Even when the truth could be used. They always conclude that stretching the truth will help them even more. So they do that instead. And that is typical Microsoft. And that is why even their “get out the facts champaign” almost always made reference to studies and reviews that stretched either the truth of the study or the implications that might be rightfully drawn from it.

pathological liars always conclude that telling a lie is going to help them more than the truth might. Watch for it in people. Sometimes people are so bad that when you reflect upon what they have said over the past month or so you can not recall one thing they ever said that was true. Not one. Everything they have said was false. Amazing but true. Some people have that problem. And some corporations have that problem too. And key people in some corporations have that problem. They just can not restrict themselves to the truth even when it might actually help them in some way. Small perhaps. But, the truth might actually help.

But, what about the sharing of information?

Any one who has read this site for some time knows I do not favor the forced sharing of information as an antitrust remedy. It is just too weak a remedy. And at best it leaves everyone following the monopolist. And that restricts innovation from competitors. It is much much better to make certain that products can be complete substitutes for one another. And that necessitates unbundling. Being interoperable with other products may have limited advantages. But, you can not replace that other technology if all you do is interoperate with it and have to follow its lead in technology. That suppresses innovation by competitors. And that plays right into the hands of a monopolist. No doubt this is the policy behind the fraudulent XML format Microsoft wants to get approved by ISO. Forcing everyone to follow a defective specification when they themselves will never do so, only limits what alternative technology can do. And any defective specification will just absorb all the R&D you can muster up again making it very difficult for alternative technology to compete much less exceed. Microsoft wants others to spin their wheels failing to follow the defective spec and not having the time or energy to compete with a truly open format.

There is a parallel between what Microsoft is doing with the interoperable information required by the EU and what Microsoft is doing with its fraudulent XML specifications. Both policies are designed to prevent comparable products initially and to prevent superior products eventually. Even if Microsoft has to cough up the stuff, it will play its advantages by collecting royalties and forcing everyone to follow.

Unbundling products is the key. And it is the only remedy that will ever provide the kind of necessary opportunities that characterize open, fair and viable markets. You can split the company up which may also cause an unbundling. But, the benefit of unbundling can be realize if you just do it. (Not the fake unbundling that the EU tried with the media player while allowing Microsoft to just price the with and without products the same. Real unbundling.)

It is not possible to claim that browsers, networking technology or even media players exist in a healthy, viable, open and fair marketplace today. Microsoft just paid money to have those players go away: Novell, AOL (Netscape) and RealNetworks?. As well as SUN, IBM, Burst, BEOS and others.

Microsoft has paid almost $7 billion in fees, penalties, settlements and other payments to make competitors go away. That has nothing to do with innovation unless it reduces the need on Microsoft's part to be innovative. And it does do that. But, I see nothing that has restricted Microsoft's innovation save for the lack of any need to do R&D because of the illegal practices. All of the suppression of innovation has been applied against competitors. As Microsoft said, “eliminate the air supply”.

The need for innovation increases dramatically if the products are separated.

Illegal antitrust activity clearly suppresses innovation. Only the liars claim otherwise. And they do not even believe themselves. Antitrust enforcement does (or at least it is supposed to) restrict the violator. But, not their innovation. And selling products like everyone else does simply does not restrict the need for innovation. The opposite is true.

What is the other reason why antitrust enforcement does not restrict innovation?

It is rather simple when you think about it.

Being required to sell separate products separately has absolutely no adverse impact upon innovation.

Do you really think that if Microsoft were required to sell IE separately from the OS or be restricted in its distribution to means equally available to competitors, that they would choose not to innovate? Hog wash. They would have to innovate or lose.

Do you really think that if Microsoft can not illegally bundle key products that they would not development them at all?

Remember that the big jerk himself lied under oath in the DOJ v Microsoft antitrust trial suggesting that if his company could not illegally bundling IE, he would leave the industry or something to that affect? The jerk actually threatened the judge. What an outright lie. The suggestion was clear. If Microsoft can not engage in illegal conduct it would not participate at all. I wish that were true. It would be the easiest way to get rid of those people. The entire industry can only improve if they leave. But, it was just a lie. Microsoft is not going to just quit. Under oath in federal court. But, a lie just the same. Bill Gates is a pathological liar. So to is Steve Ballmer. Both will escalate a comment into a false statement thinking that a lie is going to do them better even if the truth might be to their advantage.

Selling products separately is absolutely NOT going to discourage innovation or even the development of better products. It has precisely the opposite affect because products then have to compete on price, performance, quality, security or features just like they are suppose to. Illegal bundling suppresses innovation coming from Microsoft and other potential competitors. And you will never find an honest economist to say otherwise. You will never find an honest engineer to say otherwise either. And you will never find an honest lawyers suggesting otherwise.

Readers of this site are pretty intelligent. There is no question about that. But, it does not take a high level of intelligence to figure out that anyone or any company is going to do their best work when they have the highest degree of competition. Only idiots and fools would expect anyone to think otherwise. So whether it is sports or technology, innovation is driven by fair, open and viable competition. And it is suppressed when that is not the case. Do you run fast or slow when the other guy is overweight and out of shape? Microsoft lies and claims they will run faster if the other guy is on crutches.

Anyone who suggests that is lying through their teeth. And they do not even believe it themselves.

In Microsoft's case, which products do you think they are trying their hardest at? Would it be Internet search (where they are down on the list), gaming consoles (where they are down on the list), cable TV (where they hardly show up) or their monopoly products? Vista is trash as admitted by Microsoft when they have to go back and try to sell XP to dissatisfied customers. IE took a technical dive until Microsoft figured out that all browser technology did not rely upon a revenue base to continue. And, what about Office? It avoids ODF which would greatly enhance the value to users. Instead it is designed to frustrate and incapacitate users unless they restrict their choices to Microsoft only branded products. That is not innovation. It is simply designed restrictions.

Placing restrictions upon customers does not qualify as innovation. Refusing to support ODF is not innovation. And likewise removing restrictions on customers does not suppress innovation either. Rather it greatly increases the need for innovation.

Antitrust violations do in fact suppress innovation not only coming from the violator but competitors as well. In fact they are designed and selected by monopolist based upon their ability to suppress innovation coming from competitors. That is their purpose. But, they also give breathing room to the monopolist so they too can cut back on technology. And Microsoft has done precisely that. Witness Vista and IE.

Talk about a fat lie.

Microsoft can not find anyone who believes that one. Not even among their own employees. And not even the jerks in management. They have to lie about their own beliefs. Otherwise they can not say anything that sounds like it supports Microsoft. And they think they have to say something that sounds like it supports Microsoft, so they just lie.

Talk about a pathological liar.

Update:

A reader suggested I meant to use pathological liar rather than pathetic. I think both apply at times. But, for this instance pathological is the better term.