“Anti-competitive behaviour.” It’s a term that we associate with abuse of someone’s position of power and unfairness. I want to show you two examples of things that have been called “anti-competitive.” One of them is deserving of these associations, and one of them is not.
Here’s the first example: Telecom New Zealand. Telecom is New Zealand’s largest telecommunications company. It owns New Zealand’s copper telephone line network, and the majority of people in New Zealand who have a landline have Telecom as their Telephone service provider. As a result of its monopoly position in physical resources, Telecom also has significant control over what other companies are able to offer when it comes to both landline and internet services. How did Telecom get to this powerful place? By competing with the other companies in the industry and successfully making its way to the top?
No. Not even close. Wikipedia overs a summary history of the company here. Telecom used to be owned by the New Zealand Government. There literally was no competition. Everyone used Telecom’s services and physical resources because this part of the market was not really a “market” at all, but something more like a government department. In the most obvious sense, this was an “anti-competitive” market, and it prevented consumers from having any choice, removing any need for Telecom to do better than any other company in order to win customers. That is how Telecom gained the position of dominance that it now has. Telecom was privatised in 1990, which immediately improved new Zealand’s telecommunications scene. Competing companies arose and prices and services improved. But when Telecom was privatised, it was sold as one massive block: One private company had a pre-made monopoly because of the immoral advantage that it had enjoyed as a state owned monopoly. Because the government had made the mess in the first place, it has since intervened numerous times to take steps to fix some of that mess. Read about it at that wiki page. In short, Telecom has unfairly (uncompetitively) gained a huge advantage over other companies who have had to work from the ground up to gain enough popularity and market share to compete with Telecom.
This type of “anti-competitive” behaviour is, in my view, the kind of thing that really deserves that name and all the innuendo that goes along with it. The next example, however, does not.
My thanks to dizzle at idrankthekoolaid for bringing this example to my attention.
I like Mozilla software. I use Firefox as my browser and Thunderbird as my email client. I had the option of using Microsoft’s Internet Explorer and Outlook Express, but I prefer not to. But it looks like Mozilla don’t think their software is really good enough to catch on. It’s amusing in a strange way that they don’t have as much faith in the merits of their own software as their users do. Here’s what I mean: have a look at this quote from computerworld:
The European Commission has granted Mozilla, the open-source collaboration behind the Firefox Web browser, the right to join the antitrust case against Microsoft, a spokesman said Monday.
The EC, Europe’s top antitrust authority, charged Microsoft last month with distorting competition in the market for Web browsers by bundling in its Internet Explorer browser with the Windows operating system.
If the charges stick, Microsoft could be forced to change the way it distributes IE, as well as pay a fine for monopoly abuse.
Mitchell Baker, Mozilla’s chairwoman, said in a blog posting that appeared over the weekend that she wanted to offer Mozilla’s expertise “as a resource to the EC as it considers what an effective remedy would entail.”
She said there isn’t “the single smallest iota of doubt” that Microsoft’s tying of IE to Windows “harms competition between Web browsers, undermines product innovation and ultimately reduces consumer choice.”
Let’s think about that: Microsoft, a private company, makes an operating system called Windows. Mozilla could make an operating system, but they don’t. They choose to make a web browser and give it away for free. Microsoft makes a web browser (Internet Explorer), which is part of Windows. The fact that they make a popular operating system means that a lot of people have internet explorer, because they buy Windows. This gives Windows a competitive edge in the market. Microsoft have – uncoerced, and enabled by the fact that they are so popular in the marketplace, given their product more exposure and availability to end users.
Does this “harm competition” between Microsoft and the makers of other browsers? No. It is competition. This is Microsoft competing. When you compete, you are trying to give yourself an advantage by getting more people to make the choice to use your products. They can make Windows however they like. They can make Internet Explorer however they like. They own them. They dragged themselves into their position of popularity and market dominance by selling more stuff. Computer makers don’t have to sell Windows with computers, but they choose to. Home users don’t have to buy computers with Windows on them, but they choose to because it’s cheaper than some other options, and customers know how to use Windows. If you want your browser to be more popular, then make it better. Firefox is better than Internet Explorer. This stupid socialist myth that Mozilla entertains, that absurd belief that they have a right for Microsoft to go easy on them and make Windows in such a way as to not tempt people to use Internet explorer is fundamentally immoral. When people compete against you, they are trying to make it harder for you to succeed. Get over it.
I don’t like Microsoft. They lack class and style. Their stuff is expensive when considering its quality (in my humble opinion). However, if you don’t like the fact that Microsoft includes Internet Explorer with Windows, then go and create your own operating system, and include your own browser. Do a ebtter job at what they are doing. What you don’t do is sue somebody else for selling it’s property as it sees fit. Firefox isn’t orange any more. It’s red.
Freakin’ commies. I hate them.
Dominic Bnonn Tennant
You’re right and you’re wrong. I’ve never understood why antitrust suits target Microsoft’s bundling of Internet Explorer. Surely the pertinent issue isn’t IE’s (alleged) monopoly, but the monopoly that it grants it a monopoly: namely, the monopoly of Windows on the OS market. You say,
But that just ain’t true—or at least, it wasn’t until recently. Computer vendors basically did have to sell PCs with Windows because of Microsoft’s anti-competitive contracts with said vendors. And users didn’t have any choice, because (i) choice implies reasoned deliberation and most users are incapable of that being too ignorant; and (ii) there just wasn’t anything to choose between. How recently did Linux start to become a real choice for consumers when buying a new computer? A year ago? There’s a reason for that, and it’s not because Windows was better.
Getting back on topic, though, I agree that antitrust suits against Microsoft on the basis of it bundling IE is extremely strange. Alternative browsers have practically taken over the market; IE no longer has the stranglehold that it did. Consumers have learned to try Firefox or Opera, or switch to Apple with Safari, or occasionally even Linux with Epiphany or Konqueror. Anyone who’s used any of them knows that IE, including IE7, is just not as good, and so they don’t go back. As it should be. No need to fine Microsoft; the quality of their products is all the punishment they need.
Glenn
Unless someone forced PC makers to enter a contract with Microsoft, my comment was entirely true. Those PC makers did not have to include Windows – and in fact many computer sellers made PCs available (and still do) with no OS, as they have been for many years now, and they have always been priced just as competitively as PCs that came with Windows. I’m not sure how anyone can blame Microsoft for the fact that PC makers entered into contracts with them. And if there was no other OS to choose, again, that’s not the fault of MS. Alternatives (read: Linux distros) were quite happily tailored to suit the geek market, thereby ensuring that MS could continue to dominate.
The reality is, I would have gladly paid for Linux and supported its developers in making it more end-user friendly and encouraging commercial software developers to pay it some attention.
Dominic Bnonn Tennant
Microsoft’s pre-existing monopoly forced any PC vendors who wanted to survive in the market to enter a contract with Microsoft, just Telecom’s pre-existing monopoly forced any communications vendors who wanted to survive in the market to enter a contract with Telecom.
No, but they would basically be selling a brick if they didn’t. And they couldn’t sell PCs with Windows and sell PCs with some other OS because of the contract they had to sign with Microsoft just to become a Windows vendor.
We’re not talking about no-OS minimal systems. These aren’t mainstream, and they don’t address the chief problem: Microsoft’s contract prevented vendors from supplying other OSes; it didn’t prevent them supplying no OS.
That’s a highly naive reading of history, if you’ll forgive me saying so. Of course it was the fault of Microsoft—they didn’t become a monopoly by producing a great product which was better than everyone else’s. They became a monopoly by anti-competitively forcing all the better products out of the market.
The fact that you think the “alternatives” were just Linux distros is a great illustration of how well Microsoft succeeded in crushing the real alternatives at the time. Have you heard of OS2? That was a real alternative OS. Before that, of course, there were various commandline operating platforms which Microsoft managed to kill as well. I’m working off memory here, but I’m sure you can read up on it all over the place.
Well, you still can. Go and buy a Linux CD from Dick Smith. Or send Dell an email and ask them when Ubuntu-loaded computers will be available in New Zealand. Notice how you can only buy them with Windows still? How about HP machines? Windows again eh? Have you tried to customize them to just get a PC without an operating system? I just checked HP’s website, and here are the options I get for customizing the OS of a Pavilion (not that I’d want one, but HP is probably the largest vendor in New Zealand, along with Dell, whose options are the same):
Genuine Windows Vista Home Basic with Service Pack 1 (32-bit)
Genuine Windows Vista Home Premium with Service Pack 1 (64-bit)
Genuine Windows Vista Home Premium with Service Pack 1 (32-bit)
Upgrade to Genuine Windows Vista Business with Service Pack 1 (64-bit)
Upgrade to Genuine Windows Vista Ultimate (64-bit)
Combine the entertainment, security and networking of Vista Home Premium and Home Business
No options for “No OS ($0)”. Why? Because Microsoft still has a monopoly.
dizzle
Oh come on Dominic. I really love this comment.
>> (i) choice implies reasoned deliberation and most users are incapable of that being too ignorant;>>
I love your high view of people. So we need Pappa State to protect us from ourselves. Give me a freakin’ break. Microsoft earned what they got.
How is it now that there is competition in the US? Because Apple is better (I am speaking of the paid version market). As far as I know Apple never crybabied to the US Courts that big mean Microsoft was stopping them from competing. They made a better product and ruthlessly pointed it out.
Maybe us users aren’t as stupid as you think we are. I am soooo glad you are so much smarter. Should I bow now or later?
dizzle
Oh and at least in non-socialist countries, monopolies aren’t per se illegal. I would tell someone where they could put it before they forced me to help my competition who couldn’t make it without crippling me.
Take a look at the crybaby motions in the Psystar case. They make me want to retch. One of their “complaints” actually boils down to this:
It is too hard for us to make a competing OS so Apple must be forced to allow us to sell theirs.
I wish they would move to China.
Glenn
Dominic –
I see no reason to forgive anyone for saying this. How is dominating the market an anti-competitive thing to do?
OS free PCs were only not “mainstream” because there were fewer of them, because everyone was using Windows. Nobody has ever forced a company to use Windows on the PCs. Nobody. Ever. If there wasn’t another option because Windows was so prevalent, then well done Microsoft. You do not encourage competition by attacking anyone who actually wins the competition.
Glenn
Oh, and Dom, if you’d like a list of dozens of PC sellers who will happily sell you a PC with no OS, drop me a line and I’ll forward it to you. They all have excellent web based stores as well as retail outlets.
Dominic Bnonn Tennant
Er, Glen, the issue isn’t dominating the market. The issue is how. Are you aware of the means by which Microsoft dominated the market? As I said, it wasn’t through producing a good product and competing honestly. It was through underhanded and immoral practices. To the best of my knowledge, that’s the definition of “anti-competitive”.
Let’s say there are some neighborhood kids who want to sell drinks outside their houses. It’s really hot; they figure they’ll get a bit of pocket money that way. Some kids have paper cups; one kid has an orange tree, a couple have lemon tree, one has an apple tree. So the kids with the paper cups ask the kids with the fruit to sell them juice, and then they’ll resell it to the neighbors in cups, and everyone wins. Well, the one kid with the lemon tree, whose name is Michael Scott, he’s really bad at making juice. His lemonade comes out bitter and nasty. So at first no one wants it. But this doesn’t deter him. He goes next door to Freida’s house (Freida also has lemons), and steals all the lemonade she’s made, along with her recipe. Then he passes it off as his own. Freida’s lemonade isn’t bad, so the paper cup kids buy it from him. He’s doing pretty well. But the orange and apple juice are also proving quite popular in the neighborhood, and the kids making it are stealing his profits. So he sneaks over to Ingrid and Betty-May’s house (they sell the orange juice) and puts something on their tree so that the fruit tastes funny. So people stop buying their juice when they hear that it tastes a bit weird, and they buy the lemonade instead. After all, it’s pretty similar, so it’s no big deal. By this stage, Michael Scott Lemonade is getting really popular—but he’s run out of the original batch he stole from Freida, and has had to start making his own again, using her stolen recipe. Unfortunately he just isn’t as good as she is, and it always comes out tasting sour. Fortunately (from his point of view) Freida, fed up, has gone back to playing with her dolls rather than trying to compete with a thief, so Michael’s second-grade lemonade is all there is. Since everyone now wants lemonade, he’s cornered the market fairly well. It strikes him as a great time to make some exclusive contracts with the paper cup kids. So he goes to one and says, “Look here, my lemonade is really popular. I’m doing you a big favor selling it to you for such a low price considering the tidy profit you’re making off it. It’s only fair that you do something for me as well. I want you to stop selling that apple juice. No one wants it anyway, and the kid who makes it is a nancy-boy weirdo who’s probably going to grow up and be an artist or a musician or an emo or something. So either stop selling his juice alongside mine, or I’ll double my prices. Or, you know, you could sell empty cups—hahaha.” So the poor paper cup kid doesn’t know what to do. The apple juice is good, and the lemonade is lousy, but people are mostly buying the lemonade because that’s just what they’re used to drinking when it’s hot, and the orangeade kid is out of business. So he goes to the apple juice kid and says, “Look, really sorry old chap but I can’t sell your apple juice any more. Good luck and all that.” The next day, the apple juice kid gets a similar phonecall from the other paper cup kid. He knows what’s going on, but what’s he gonna do? Go beat up Michael Scott? The guy is twice his weight and a dirty fighter to boot. His parents don’t care because it’s just kids selling juice. So he has to go to the next neighborhood and sell his apple juice there, to a bunch of artsy pro-choice secular libertarians.
Now Glen, should Michael Scott get a spanking, or should his parents praise him for so cleverly dominating the market?
dizzle
Dom, please. The other kid could create a superior product.
Gates wasn’t handed a company. He built it with his own ability. No one coerced to use Windows. Linux is proof that someone could simply come and make another product. This seems to be thinly veiled envy and not so thinly veiled arrogance.
Today “anti-competitive” is synonymous with “successful.”
Let me quote you what I wrote today about Psystar’s whiny little pleading – well “bleating” would be more appropriate:
http://news.worldofapple.com/archives/2009/02/13/as-per-the-courts-order-psystar-files-its-first-amended-counterclaims/
Poor babies.
Glenn
Dom, so your claim is that Microsoft engaged in theft and it sabotaged other people’s software by putting bugs into it?
Come on, this is just nuts. Your example is so silly it’s pointless. Only one person can sell cups? Really? You’re presupposing all of your conclusions here: That there was literally no ability to make alternatives to Windows. But people could have imported or made their own cups and sold better juice. If you say they couldn’t have, then you’d have to ask why. Does their juice suck? Is nobody willing to compete with the cup sellers?
Your issue is that you think that companies have an obligation to create an environment that makes it as easy as possible for other companies to be as successful as they are. This crybaby notion of rights has more to do with Marx than with fairness.
Oh, and by the way, it’s “Glenn.”
Dominic Bnonn Tennant
Sorry Glenn; didn’t mean to spell your name wrong.
My analogy is based loosely around Microsoft’s actual history. If you’re unfamiliar with it, I’m sure googling for critical summaries will be informative. There’s also a good documentary movie called Pirates of Silicon Valley which you might enjoy.
I’m not sure that you understood how the cups fit in; I never intended to suggest that only one person can sell them. The cups are computers; there are several people selling them in my analogy. The problem is what they’re able to put in the cups.
I didn’t ever claim that there was no ability to make alternatives. In fact, my analogy explicitly involved alternatives. My claim is that Microsoft anti-competitively stifled those alternatives, which is the basis for my objection to their market dominance.
Indeed, and they did; but that is no positive reflection on Microsoft’s best efforts to prevent it.
Maybe it does. What do you think? Did OS/2 Warp suck more than Windows NT? Did MacOS suck more than Windows? Does it still? Does Linux? Do you think that Microsoft gained a position of market dominance by producing good products? I ask semi-seriously, because I mean, have you used them? Maybe I’m just more aware of their problems because I work in IT; maybe it’s more obvious to me because I’m sympathetic to the free software movement (not communism; there’s no need to poison the well by associating me with Marx, Glenn). Maybe other people just take the quality of their software, whatever it may be, for granted. I don’t. I use Windows at work, and Linux at home. I have for many years. I think I’m on safe ground in saying that quality is not the reason for their market dominance. Both personal experience, and my knowledge of the computing industry, and my knowledge of history inform me of that.
Just to be sure we’re clear, cup sellers are computer vendors. In my analogy, it’s obvious that most people don’t just want to buy the cups. They want the juice that comes in the cups. My analogy tries to illustrate that more variety of juice is better, and that no juice is pointless to most people.
Is this what I said? Where; I certainly didn’t mean to even imply it. If I may say, Glenn, you need to go back and read what I’ve said again. I’m not some bleeding-heart leftist here to pick a fight with your Christian values, so interpreting my comments in that light is neither charitable nor rigorous. You know me (or at least you know of me)—why would you think I hold to such an extreme position? I stated from the outset that I think it’s absurd that Microsoft faces litigation for bundling Internet Explorer; so plainly I cannot believe that companies are somehow obligated to assist their competitors. My concern has been purely with regard to the manner in which Microsoft achieved dominance—not the fact that they have dominance. Incidentally, that in turn is more a concern of principle than of practice; it’s not as if I’m forced by their dominance to use their products. As long as I remain free to avoid Windows, I remain largely happy q; So I wouldn’t want this debate to get out of hand. It’s a storm in a teacup.
Regards,
Bnonn
Glenn
The reason I think you hold such an extreme position, Dom, is that you seem think that it’s actually immoral for Microsoft to get PC makers to agree with them to only sell Microsoft software. That totally disadvantaged any alternative (like OS2).
You can dislike the leftist comparisons, but the above just is an anti-market stance to take. I see no way around it. I absolutely fail to see how it is underhanded or anti-competitive.
Mac-OS does not suck. it is superior to Windows, but Apple has intentionally prohibited PC makers from using its software. That was their choice to make, and they have every right to do it. Linux does not suck either, but again, PC makers had that option and freely chose not to take it because they believed that Windows was a better choice – and from a home user choice in the 1990s, it was. As a Linux user this is obvious to me. As for why PC makers agreed to do what Microsoft asked them to do – pick a reason. It really doesn’t matter what the reason is, although I’m picking that it was the popularity of Windows. In any case, it was a very savvy thing of Microsoft to do. Their history of having done that has firmly established their place as the market leader with the likes of Dell, HP etc. There are now, as there have been for a while, more than enough PC sellers (like cup sellers) that do not bundle Windows that if any home user wants to not buy Windows, it is easy for them to take that option.
I can see no moral objection in your posts (aside from accusations of actual crimes like theft and sabotage) that amounts to anything other than a complaint that Microsoft have managed to get people agree to work with them in a way that makes it really hard for their competitors. I think that’s a very common stance for people to take against Microsoft, and I think it’s wrong. If that is not an objection you have, then I do not see what your problem with Microsoft is, other than the fact that its software isn’t all that good.
Dominic Bnonn Tennant
Hi Glenn.
I don’t think it’s immoral per se. But maybe it would help if I came at this from another angle. It seems to me that the means by which Microsoft managed to persuade PC vendors to supply only Windows machines is rather akin to blackmail. They used their monopoly position as a lever, knowing that vendors had to sell their products to survive, and would therefore capitulate even against their own other interests or ideals. That seems very similar to blackmail, or at least strong-arming. Don’t you agree? I expect you’d think that a person, in an analogous situation, who abused his power in a similar way was wrong to do so. That was the point of my cups-and-juice analogy. And surely you don’t think that companies are excluded from the laws of moral conduct?
It is the actual crimes which mostly concern me, in a manner of speaking. More accurately, though, my argument stands on whether or not Microsoft has acted immorally. I’m sure you’ll agree that what is legal and what is moral don’t always coincide. It’s entirely unclear to me that Microsoft’s success in getting people to work with them in a way which makes it really hard for their competitors was not, itself, achieved by means of immorally—and criminally—levering their monopoly position. However, if it wasn’t criminal, that doesn’t really affect my argument, unless you wish to assert that companies are under no obligation to act morally. If I am seeming to tread close to the leftist line, you seem to be treading close to the capitalist line where it’s okay for a company to do anything, provided it’s not illegal (or, more pertinently, provided they aren’t caught). You seem almost to be applauding Microsoft’s business acumen, as if you admire their ruthlessness rather than finding it morally objectionable. Now, I’m not sure that’s what you intend to present—but it is sort of how you’re coming across to me. I think it’s possible to recognize and punish companies for acting immorally, without punishing them for making life hard for their competitors per se. On the other hand, sometimes there is coincidence between these. Sometimes it’s possible to recognize and punish a company for making life hard for its competitors when the means of its doing so were clearly immoral. I for one am not confused about what Microsoft should be punished for. Making life hard for its competitors is not wrong in and of itself. But acting immorally to make life hard for its competitors, by definition, is wrong.
Regards,
Bnonn
Glenn
“They used their monopoly position as a lever,”
Yes, and that seems to be the correct thing to do. What’s immoral about it? Other than your allegations of committing crimes, you say that this is immoral, and so I should oppose it.
How is it immoral? What moral obligation is being undermined here? Surely not some obligation to conduct business in a way that never uses leverage and never makes it hard for competition. That’s the difficulty I’m having, Dom. You say that’s not your angle, and then you appear to describe your angle as being just that.
Dominic Bnonn Tennant
Well, I’ve already stated what I think is immoral about it: it is analogous either to strong-arming or to blackmail. You haven’t really addressed this; you’ve just deflected the allegation by saying that you think it’s the correct thing to do. That seems to imply that you either think that strong-arming or blackmail aren’t immoral per se, or that companies have different moral obligations or social responsibilities than individuals, so that it’s possible for them to do things morally (or perhaps amorally) which would be immoral for a person to do. In that case, I’d ask what your grounds are for holding this view.
Regards,
Bnonn
Glenn
If that’s blackmail, then blackmail is not wrong, and given the silliness of that position, this cannot possibly be blackmail. It’s not blackmail just because it’s an agreement that a) works to my advantage, b) works in the advantage of the person I am entering an agreement with, and c) works against my competition.
If this is blackmail, then I love blackmail and engage in it when I can. But I don’t love blackmail, and I don’t engage in it when I can. Calling it blackmail doesn’t make it so, it merely poisons the well.
What’s genuinely immoral is to be anti-competitive by crying to the courts and trying to have an umpire step in and break your opponent’s leg so that you have a better chance of winning the race. THAT is strongarming, and it is THIS that people who love freedom should be worried about.
Dominic Bnonn Tennant
Glenn, we don’t seem to be getting anywhere. I’ve offered my own reasons for finding Microsoft tax objectionable, and tried to explain why I see it as similar to blackmail or strong-arming. You are simply disagreeing, and rather more vehemently than seems necessary. You aren’t really giving reasons; you’re just saying that you think what Microsoft did here is good. Of course, even if it is, that doesn’t really mitigate any of their other immoral behavior. But since you clearly have very strong opinions in this matter, and since you aren’t really engaging with any of my actual questions or arguments, I don’t think it will be very fruitful to continue this exchange. We’re just going to end up angry at each other this way.
Regards,
Bnonn
Glenn
Dom, you are asserting a position (a moral one), and I see no reason to embrace it as true because I haven’t seen any reasons to do so. It is true, we are getting nowhere, because this method of argument always goes nowhere. Any unwillingness to accept your assertions is labeled a failure to engage. (Hey, you characterised it the way you saw it, this is how I see it).
There is nothing hostile about calling poor reasons and false accusations (nor should my doing so imply anger on my part), but it’s clear it is not well received. I’ll drop it.
dizzle
I am re-reading this post and thread for the sheer enjoyment of it. Safari has gotten worse in the latest incarnation. I still avoid Firefox despite the suckage of Safari. I find it ironic that Bnonn never addressed the immorality of Firefox in his comments (i.e. Mozilla).
Anyways, I wish Apple could make a good browser. Safari is better than IE but that’s like saying dog crap smells slightly better than cat crap.
dizzle
(this post was made on firefox because Safari, once again, is frozen)