DISCLAIMER: this has not been thoroughly researched.
Recently there have been some significant devlopments in the ongoing antitrust lawsuit against Microsoft. The judge hearing the case has found that Microsoft has monopoly power and that it has abused such power. The judge also found that Microsoft had tried to hide its practices from the court. While this is not yet a verdict, it has significant ramifications.
Probably the most significant point above is the Microsoft was found to have monopoly power. In order to have a monopoly, one must have no significant competitors. Microsoft took the tack that Linux presented competition to them and that because of Linux’s existance, they could not possible have a monopoly. The judge decided that Linux did not constitute a “viable commercial alternative” to Windows. Basically, this means that Linux is not a viable option for those who wish to replace Windows with Linux due to the monopoly that Microsoft has on the software that is used by businesses. As a result, there is a very high barrier to surmount before it becomes a viable commercial alternative. Despite all that, it just says that Microsoft has a monopoly currently.
Now, this whole debate begs that question of whether a monopoly is such a bad thing. After all, is not a monopoly what an entrepreneur aims for in a capitalistic society? Is it not the logical outcome of “building a better mousetrap”? Indeed, are there not some products that cannot be easily provided except by a monopoly?
Monopolies themselves are not the problem, in actual fact, any more than guns are what cause violent crime. The guns to not kill the people in a crime; the person pulling the trigger kills people with the gun. It is just a tool. I contend that monopolies fall into the same category. It is what is done with a monopoly that is good or bad, not the monopoly itself. Let us consider a hypothetical example. Suppose International Widget Company makes widgets. Suppose IWC has a monopoly on the production of widgets. Suppose they still sell widgets with a reasonable markup over production costs. In that situation, the monopoly is not a bad thing, especially if IWC continues to search for ways to lower the cost of production and passes these savings on the the consumers. Now suppose widgets are important to some group of people. Suppose IWC decides that they are going to raise prices as high as they can go but that the group that needs widgets can still (barely) afford them. Since there is no competition, these people must get their widgets from IWC as IWC controls the means of production. This is clearly not a good situation as IWC essentially holds these people hostage.
There is also the problem of when a monopoly should exist to make the delivery of a service easier. Witness the telephone and cable television monopolies in the early days of both industries (and still persisting to some degree today). Intially, the market could not sustain several providers due to the cost of the infrastructure to deliver the service and the fact that if person A subscribes to telephone company B and person B to telephone company A and companies A and B do not cooperate and pass traffic between them, persons A and B cannot communicate via that service. This is less of an issue between geographically distinct areas, but suppose A and B live in the same city? This would not be convenient. With cable television and such it is less of an issue as one has only minor inconveniences with differences between the services. Now, it is possible to compete in these markets quite successfully as current trends are showing in local telephone service.
There is one case, however, where it makes absolutely no sense to compete. Sanitation and water and anything else that needs to physically transfer stuff from one place to another for a large number of people. It is much better for water for a city or area of a city to be provided by a single infrastructer and the same for a sewer system. That is not to say that this situation cannot get out of hand, but what is to stop the residents from moving to a neighboring city that does not misuse its monopoly over these services. (Okay, colonies on the moon and such notwithstanding should there ever be such colonies to worry about.)
Some people contend that Microsoft’s monopoly falles under the category of water and sanitation in a large city. They contend that it is much easier to exchange information between two people operating on the same platform; in this case, Microsoft Windows and Microsoft Word. This is, however, only a function of the fact that Microsoft refuses to release the file format they use for Word and that they continually make minor changes to it between versions. In fact, they have even broken the file format so that really old Word files cannot be read by recent versions of Word. It would be quite easy to have several operating systems and word processors if there were a single standard way of storing the information in a file. Granted this is not an easy situation to broker as there is always going to be some new feature that will be needed by one word processor or another. Well, witness Corel’s WordPerfect software. It has used exactly the same file format for three major versions. Also, if one finds the current version of the standard insufficient for one’s needs, one can present changes to the standard to allow one’s needs to be met and if said changes are deemed necessary or useful by the community at large, these changes will be adopted as a new version of the standard. If the standard has versioning in the format, then an older version of the word processor that does not understand the new format has the option of saying “I do not understand that format; you will need a version that does.” As long as the standard remains open, any vendor who feels they would benefit from supporting a later version of the standard is free to do so without paying royalties to anyone. Therefore, the contention that Microsoft’s monopoly falls into the category of a prudently necessary one fails to stand up under scrutiny.
So, what is the best solution to Microsoft’s monopoly abuse? There probably is not a best solution. There are only several possibilities all with their down sides and up sides. The solution I hope for is that Microsoft is forced to open up their file formats and protocols royalty free and allow others to handle these protocols and formats without fear of being drummed out of business. There is no reason Microsoft’s file formats and protocols cannot become a form of standard if they survive the scrutiny of the community. I also believe that anyone else who has a file format that is used for information interchange should at least publish the formats in a free forum so that others may use them freely. This however, brings up an entirely different debate; one which deserves its own discussion.
November 8, 1999 CE… UTC