3 ms·

I'd be interested in how that law works! I'm pretty sure lots of companies do this kind of thing, all the time. Apple, for example, likes to sell hardware and s

I'd be interested in how that law works! I'm pretty sure lots of companies do this kind of thing, all the time. Apple, for example, likes to sell hardware and software that only works with their proprietary operating system. Lego likes to sell bricks that fit into Legos rather than other toys. Etc. It would be pretty hard to create a law that bans what Microsoft did, without banning what lots of other people do, too.

robin_reala 17y ago
There’s nothing illegal about keeping things proprietary, but as I understand it (and I am most certainly not a lawyer) it becomes a monopolistic practise to do that when you already have a monopoly in the market. That is, it’s not having a monopoly that’s bad, it’s leveraging it to keep you in a monopoly that’s the issue.
abrahamsen 17y ago
Anti-trust laws basically says that if you have a practical monopoly on one area, you are not allowed to tie your products in that area with products in other areas. This is how Microsoft can violate anti-trust laws despite usually being more open than their competitors. Lego has nowhere near a monopoly on toys (or even on building bricks), and Apple is not in a monopoly situation on computers or operating systems. However, Apple's traditional closedness do bring them in trouble with regard to music distribution, where the iTunes store is in such a dominating position that tying it too closely to the iPod has brought Apple in the spotlight of EU anti-trust control.
- qeorge 17y ago
  Anti-trust laws basically says that if you have a practical monopoly on one area, you are not allowed to tie your products in that area with products in other areas. Its not that simple. Monopolies are not inherently illegal, they only become illegal when they are maintained artificially. Also, the Sherman Antitrust act is usually applied more subjectively than most statutes, with the final decision turning on whether or not the alleged violation is "harmful" (to the consumer or the market as a whole). In other words: if your product is simply better and you have a de facto monopoly as a result, that's legal. If you protect your monopoly by making competition itself impossible, that's illegal (but hard to prove).
- byrneseyeview 17y ago
  Anti-trust laws basically says that if you have a practical monopoly on one area, you are not allowed to tie your products in that area with products in other areas. And I suppose we can all agree that Microsoft has a monopoly on -- what, exactly? The idea of a monopoly is inherently slippery. I could write a memo in word, or I could write it in Emacs, or I could send it via Skype, or I could use any of a basically infinite variety of methods to communicate. Lego has a monopoly on their exact product set, a dominant mind-share in their general category, and an extremely valuable brand name -- if you define toys as narrowly as you define office software, it's easy to claim that they have a monopoly. But even if they do, the worst you can say about them is that they're keeping a large fraction of the economic value they produce. The most harm a monopolist can cause is for their product to be as good a value as the next-best product, and to extract excess profits to the extent that it's a more valuable product for which they can charge a higher price. Which doesn't sound especially worrisome (especially since they invest the extra profits in things that ought to make us happy -- I heard a talk by a Microsoft employee who was willing to claim, in front of journalists, lawyers, and two Google employees, that Microsoft was responsible for 2-3% of all US R&D spending).
  - ZeroGravitas 17y ago
    The worst I can say about monopolies is that they destroy economic value. http://en.wikipedia.org/wiki/Monopoly#Monopoly_and_efficiency http://en.wikipedia.org/wiki/Monopoly#Monopoly_and_efficienc... Microsoft has removed Billions from the economy, even above the Billions they transferred from others to themselves. In more prosaic terms, monopolies "make articles scarce, make them dear and make them bad". All in all, not good and while it is generally recognized that Microsoft makes things shoddy and expensive compared with a free market, I find it a shame that it's not better recognised that they have limited the spread of computing technology.
    - barry-cotter 17y ago
      Microsoft has removed Billions from the economy, even above the Billions they transferred from others to themselves. I think this is incoherent, and I'm certain it's wrong. A monopoly has no incentive to "remove" money from the economy. A profit maximising monopolist in the practically impossible position of being able to price discriminate perfectly such that every customer willing to buy its product at a price above the marginal cost of selling it to them will capture all value created by its product/service, but that just means there's no consumer surplus. Value is still created, it just accrues to the company, which presumably still distributes it to shareholders, suppliers and employees. In more prosaic terms, monopolies "make articles scarce, make them dear and make them bad". I have no idea how many copies of major MSFT products there are but scarce is not true, and quite a lot of people obviously disagree with you on dear and bad. Office utterly dominates its market niche, and it is in large part due to quality and ease of use. Network effects help some but you can't leverage a reputation in one sector too far in another, otherwise Microsoft's accounting software would be the default, and it's not, Quicken is.
pohl 17y ago
Why would it be hard? All you need to do is express it conditionally: if you have a monopoly in some market, then you can't... This is exactly what the Sherman Antitrust Act did. If your interest is genuine, you can always read the Conclusions Of Law document from the case. http://www.justice.gov/atr/cases/f218600/218633.htm http://www.justice.gov/atr/cases/f218600/218633.htm If you're also curious how the conditional was met, read the Findings Of Fact. http://www.justice.gov/atr/cases/f3800/msjudgex.htm http://www.justice.gov/atr/cases/f3800/msjudgex.htm
- byrneseyeview 17y ago
  Because you have to define a "market". If a product has no substitutes at all, you're right that it's a monopolized market -- but it's also clearly a market that couldn't exist without the company that's producing the product, and didn't exist until that company did produce the product -- so no matter what they charge, the change in consumer utility must be zero or positive.
  - pohl 17y ago
    Don't take my phrasing too literally. "Market" was my term. I wasn't quoting the law and I am not a lawyer. From scanning the FoF document that I linked to, it appears that the appropriate jargon is "relevant market", and it appears that an utter lack of substitutes is not the criterion. Rather, look at the following from section III: "33. Microsoft enjoys so much power in the market for Intel-compatible PC operating systems that if it wished to exercise this power solely in terms of price, it could charge a price for Windows substantially above that which could be charged in a competitive market. Moreover, it could do so for a significant period of time without losing an unacceptable amount of business to competitors. In other words, Microsoft enjoys monopoly power in the relevant market."
    - rbanffy 17y ago
      "it could charge a price for Windows substantially above that which could be charged in a competitive market" Weren't people complaining exactly about 7's pricing?

robin_reala 17y ago

There’s nothing illegal about keeping things proprietary, but as I understand it (and I am most certainly not a lawyer) it becomes a monopolistic practise to do that when you already have a monopoly in the market. That is, it’s not having a monopoly that’s bad, it’s leveraging it to keep you in a monopoly that’s the issue.

abrahamsen 17y ago

Anti-trust laws basically says that if you have a practical monopoly on one area, you are not allowed to tie your products in that area with products in other areas. This is how Microsoft can violate anti-trust laws despite usually being more open than their competitors. Lego has nowhere near a monopoly on toys (or even on building bricks), and Apple is not in a monopoly situation on computers or operating systems. However, Apple's traditional closedness do bring them in trouble with regard to music distribution, where the iTunes store is in such a dominating position that tying it too closely to the iPod has brought Apple in the spotlight of EU anti-trust control.

qeorge 17y ago
Anti-trust laws basically says that if you have a practical monopoly on one area, you are not allowed to tie your products in that area with products in other areas. Its not that simple. Monopolies are not inherently illegal, they only become illegal when they are maintained artificially. Also, the Sherman Antitrust act is usually applied more subjectively than most statutes, with the final decision turning on whether or not the alleged violation is "harmful" (to the consumer or the market as a whole). In other words: if your product is simply better and you have a de facto monopoly as a result, that's legal. If you protect your monopoly by making competition itself impossible, that's illegal (but hard to prove).
byrneseyeview 17y ago
Anti-trust laws basically says that if you have a practical monopoly on one area, you are not allowed to tie your products in that area with products in other areas. And I suppose we can all agree that Microsoft has a monopoly on -- what, exactly? The idea of a monopoly is inherently slippery. I could write a memo in word, or I could write it in Emacs, or I could send it via Skype, or I could use any of a basically infinite variety of methods to communicate. Lego has a monopoly on their exact product set, a dominant mind-share in their general category, and an extremely valuable brand name -- if you define toys as narrowly as you define office software, it's easy to claim that they have a monopoly. But even if they do, the worst you can say about them is that they're keeping a large fraction of the economic value they produce. The most harm a monopolist can cause is for their product to be as good a value as the next-best product, and to extract excess profits to the extent that it's a more valuable product for which they can charge a higher price. Which doesn't sound especially worrisome (especially since they invest the extra profits in things that ought to make us happy -- I heard a talk by a Microsoft employee who was willing to claim, in front of journalists, lawyers, and two Google employees, that Microsoft was responsible for 2-3% of all US R&D spending).
- ZeroGravitas 17y ago
  The worst I can say about monopolies is that they destroy economic value. http://en.wikipedia.org/wiki/Monopoly#Monopoly_and_efficiency http://en.wikipedia.org/wiki/Monopoly#Monopoly_and_efficienc... Microsoft has removed Billions from the economy, even above the Billions they transferred from others to themselves. In more prosaic terms, monopolies "make articles scarce, make them dear and make them bad". All in all, not good and while it is generally recognized that Microsoft makes things shoddy and expensive compared with a free market, I find it a shame that it's not better recognised that they have limited the spread of computing technology.
  - barry-cotter 17y ago
    Microsoft has removed Billions from the economy, even above the Billions they transferred from others to themselves. I think this is incoherent, and I'm certain it's wrong. A monopoly has no incentive to "remove" money from the economy. A profit maximising monopolist in the practically impossible position of being able to price discriminate perfectly such that every customer willing to buy its product at a price above the marginal cost of selling it to them will capture all value created by its product/service, but that just means there's no consumer surplus. Value is still created, it just accrues to the company, which presumably still distributes it to shareholders, suppliers and employees. In more prosaic terms, monopolies "make articles scarce, make them dear and make them bad". I have no idea how many copies of major MSFT products there are but scarce is not true, and quite a lot of people obviously disagree with you on dear and bad. Office utterly dominates its market niche, and it is in large part due to quality and ease of use. Network effects help some but you can't leverage a reputation in one sector too far in another, otherwise Microsoft's accounting software would be the default, and it's not, Quicken is.

pohl 17y ago

Why would it be hard? All you need to do is express it conditionally: if you have a monopoly in some market, then you can't... This is exactly what the Sherman Antitrust Act did. If your interest is genuine, you can always read the Conclusions Of Law document from the case. http://www.justice.gov/atr/cases/f218600/218633.htm http://www.justice.gov/atr/cases/f218600/218633.htm If you're also curious how the conditional was met, read the Findings Of Fact. http://www.justice.gov/atr/cases/f3800/msjudgex.htm http://www.justice.gov/atr/cases/f3800/msjudgex.htm

byrneseyeview 17y ago
Because you have to define a "market". If a product has no substitutes at all, you're right that it's a monopolized market -- but it's also clearly a market that couldn't exist without the company that's producing the product, and didn't exist until that company did produce the product -- so no matter what they charge, the change in consumer utility must be zero or positive.
- pohl 17y ago
  Don't take my phrasing too literally. "Market" was my term. I wasn't quoting the law and I am not a lawyer. From scanning the FoF document that I linked to, it appears that the appropriate jargon is "relevant market", and it appears that an utter lack of substitutes is not the criterion. Rather, look at the following from section III: "33. Microsoft enjoys so much power in the market for Intel-compatible PC operating systems that if it wished to exercise this power solely in terms of price, it could charge a price for Windows substantially above that which could be charged in a competitive market. Moreover, it could do so for a significant period of time without losing an unacceptable amount of business to competitors. In other words, Microsoft enjoys monopoly power in the relevant market."
  - rbanffy 17y ago
    "it could charge a price for Windows substantially above that which could be charged in a competitive market" Weren't people complaining exactly about 7's pricing?