Guest column: How to be completely wrong

Mind game time! Here's the scenario: Let's pretend you play basketball. You are so good at basketball that you can force any play on the court. Even better, your team wins all the time and you make a gazillion dollars per year. Your name might be, oh, say, Michael Jordan.

Question: Should you be penalised for this success? Are you unethical for using your skills? Should we put weights on your feet to "level the playing field"? (And yes, I do know Kurt Vonnegut's short story "Welcome to the Monkey House.") Most right-minded people would say, "No, that wouldn't be reasonable -- it wouldn't be ethical."

But it seems this is exactly what many people want to see happen to Microsoft. The situation has become very emotional, and you can hear the choruses of "Hobble 'em," "Break 'em up" and "Put Mark Gibbs in charge."

And as if to satisfy the ravening hordes, the federal judge in the Microsoft antitrust case recently held that Microsoft is, indeed, a monopoly. That decision paves the way, potentially, for breaking up the company.

I would suggest that the finding is completely wrong. I don't mean legally wrong -- the finding may, indeed, be completely defensible from the point of precedent. However, the key question is, does the finding make sense?

In my previous column on this topic, I argued that antitrust laws have never been in the public interest. They were concocted to clip Rockefeller's wings when his company, Standard Oil, became unacceptably rich and powerful.

Now there is an interesting parallel here: Rockefeller was accused, quite accurately, of what he himself referred to as "predatory competition." This was the practice of selling under cost to drive a competitor out of the market. It was a tactic the Standard Oil Company employed to great effect.

I think there's little doubt that Microsoft has been equally guilty of predatory competition, particularly in the area of forcing deals by financial muscle and implied threat, as well as duplicating technologies and bundling them with product so smaller companies have to secede their markets. Sure, such behavior isn't nice, but who is in it to be nice at the expense of their business? Now is this behavior unethical and, more crucially, is Microsoft a monopoly? I don't think so on either account.

What we have here is Microsoft being simply a better (and luckier) player. They are good businessmen, and they are operating in accordance with the rules of the free market. Note that idea: a free market. Not a planned political economy. Not a communist state. A market in which innovation and competition are to be fostered and applauded, and where the market gets to vote -- with its dollars -- who is the best. Where being nice is an option.

The issue of whether Microsoft is a monopoly is crucial. Standard Oil was dealing with real, physical products: oil and kerosene. That is remarkably different from dealing with ideas -- which are the essence of software and the foundation of Microsoft's business.

Here then is the issue: A business founded on ideas can't be treated like one founded on "stuff." Businesses in the ideas world move too quickly. Their markets are too fluid for legislation to keep track of, let alone control.

And if the courts force Microsoft to break up, it won't change anything. Microsoft in two, three or four divisions will be just as powerful as when they were together. The essence of Microsoft lies in the people and their ideas, not in manufacturing stuff.

Worse still, the issues that define the case today will be ancient history by the time a full judgment is handed down, and Microsoft will be a different company. The judgment will be wrong. You want to see how wrong? Just wait. Whatever we do to Microsoft won't matter a damn within the next couple of years.

Break it up to nwcolumn@ gibbs.com.

Join the newsletter!

Error: Please check your email address.

More about Microsoft

Show Comments

Market Place