5 ms·

That was the straw that broke the camel's back. Back then Microsoft was an abusive monopoly in many more ways than that (e.g. punishing their OEM customers by

by badsock 10y ago

That was the straw that broke the camel's back. Back then Microsoft was an abusive monopoly in many more ways than that (e.g. punishing their OEM customers by refusing to sell them Windows if they offered any other OS as an option).

mwfunk 10y ago
This is the truth. The late '90s antitrust case arose after many, many years of what many would consider anticompetitive abuse of market dominance. One example: there were various competitors to MS-DOS and Windows throughout the '80s and '90s. However, due to their relationship with IBM, MS had a huge natural advantage in the PC OS market in the early- to mid-'80s. They pressed this advantage to enforce licensing fees on computer makers. If a company wanted to sell an MS OS on any of their computers, they had to pay MS for a license for every computer, regardless of which OS was sold on it. This guaranteed that any system sold without an MS OS would cost more, because the customer had to buy the computer + the MS OS + OtherOS even if the MS OS wasn't installed on the purchased system. This created a huge barrier to entry for any MS competitor in the OS market. Software vendors are within their rights to make such deals, of course. It's only a problem if the vendor has so much of a market presence that it would be suicide for a system vendor to decline from being an MS reseller altogether. In this case, it was a problem. This illustrates some aspects of antitrust law that a lot of people misunderstand: (1) Being a monopoly doesn't mean having 100% market share, it only means having overwhelmingly dominant market share, which in some industries could be as small as 30%. It's a somewhat arbitrary number that might be very different from one industry to the next. (2) Being a monopoly is not a bad thing in and of itself. There is a concept of some industries being skewed towards natural monopolies. Natural monopolies aren't inherently bad things either. (3) Antitrust action is only taken when someone abuses their monopoly to alter the very market that they compete in. This is using your strength in the market to bias the market itself in favor of you, thus undermining free market dynamics. Of course no market is 100% free, or rational, or efficient, but that doesn't matter. What matters is that the monopolist is taking steps to make it tangibly less free. Unfortunately the nature of antitrust law is such that it is ripe for abuse by bad actors or (legitimately) vanquished competitors. As a result even seemingly clearcut situations like the MS OEM deals go on for years without anything being done about it, because there are inherently so many legal gray areas surrounding antitrust. But it did establish a record of patterns of behavior that could be referenced in the eventual late '90s antitrust case. IANAL so this should be taken with many grains of salt and I would love to hear from actual L's if any of this is wrong or oversimplified.

by badsock 10y ago

mwfunk 10y ago

This is the truth. The late '90s antitrust case arose after many, many years of what many would consider anticompetitive abuse of market dominance. One example: there were various competitors to MS-DOS and Windows throughout the '80s and '90s. However, due to their relationship with IBM, MS had a huge natural advantage in the PC OS market in the early- to mid-'80s. They pressed this advantage to enforce licensing fees on computer makers. If a company wanted to sell an MS OS on any of their computers, they had to pay MS for a license for every computer, regardless of which OS was sold on it. This guaranteed that any system sold without an MS OS would cost more, because the customer had to buy the computer + the MS OS + OtherOS even if the MS OS wasn't installed on the purchased system. This created a huge barrier to entry for any MS competitor in the OS market. Software vendors are within their rights to make such deals, of course. It's only a problem if the vendor has so much of a market presence that it would be suicide for a system vendor to decline from being an MS reseller altogether. In this case, it was a problem. This illustrates some aspects of antitrust law that a lot of people misunderstand: (1) Being a monopoly doesn't mean having 100% market share, it only means having overwhelmingly dominant market share, which in some industries could be as small as 30%. It's a somewhat arbitrary number that might be very different from one industry to the next. (2) Being a monopoly is not a bad thing in and of itself. There is a concept of some industries being skewed towards natural monopolies. Natural monopolies aren't inherently bad things either. (3) Antitrust action is only taken when someone abuses their monopoly to alter the very market that they compete in. This is using your strength in the market to bias the market itself in favor of you, thus undermining free market dynamics. Of course no market is 100% free, or rational, or efficient, but that doesn't matter. What matters is that the monopolist is taking steps to make it tangibly less free. Unfortunately the nature of antitrust law is such that it is ripe for abuse by bad actors or (legitimately) vanquished competitors. As a result even seemingly clearcut situations like the MS OEM deals go on for years without anything being done about it, because there are inherently so many legal gray areas surrounding antitrust. But it did establish a record of patterns of behavior that could be referenced in the eventual late '90s antitrust case. IANAL so this should be taken with many grains of salt and I would love to hear from actual L's if any of this is wrong or oversimplified.