This time it's Bill Gates himself who is repeating the mantra that Microsoft never hurt consumers, and that it is only consumers who will suffer if the corporation is forced to make Windows compatible with competitors' software.
If previous court rounds are any
indication, many consumers and most economists will side with Gates. Most
consumers don't want to struggle with installing different software
programs. And economists generally argue that unlike Standard Oil and
other monopolies of the past, which were bad for consumers, monopolies of
the present are good for consumers.
What's amazing about all this
is that the 1890 Sherman Antitrust Act was not passed to protect
consumers, and the monopolies of the past were not bad for consumers. At
least not according to Sen. John Sherman. "Corporations tend to cheapen
transportation, lower the cost of production and bring within the reach of
millions comforts and luxuries formerly enjoyed by thousands," he told his
colleagues on the Senate floor when introducing his eponymous bill. Even
the mother of all monopolies, Standard Oil, wasn't bad for consumers. Or
so believed journalist Henry Demarest Lloyd, Standard Oil's staunchest
enemy and the person who more than any other was responsible for the
agitation that resulted in the Sherman act. When Lloyd exposed Standard
Oil's many tricks, his article created such a scandal that the Atlantic
Monthly had to reprint its March 1881 issue five times.
Oil, Lloyd had discovered, obtained lower freight rates from the railroads
while insisting that the same discounts not be given to its competitors.
This, of course, was unfair but not to consumers. The price of kerosene
that consumers paid actually went down.
Perhaps even more stunning
to contemporary readers of Lloyd's article is the fact that by today's
standards, Standard Oil wasn't even unfair to its competitors. The
president of the Pennsylvania Railroad Co. offered to mediate between the
independent oil producers and Standard Oil. If they joined the trust they
would get the same rates, he suggested.
Isn't such a buyout every
entrepreneur's dream? It wasn't then.
"More American than he,"
Lloyd reported, "they refused."
One refiner described the meeting
this way: "We gave him very distinctly to understand that we didn't
propose to go into any 'fix up,' where we would lose our identity, or sell
out, or be under anybody else's thumb."
In 1894, Lloyd retold the
Standard Oil story in book form, calling it "Wealth Against Common
Wealth." This time his focus was Samuel van Syckel, an innovative refiner.
John D. Rockefeller wanted to buy him out and offered him a comfortable
lifetime salary and shares in Standard Oil, but Van Syckel would not sell.
"I want to make oil," he told Rockefeller, becoming the hero of Lloyd's
book. Once again consumers were not the issue.
joined the push for antitrust legislation on behalf of producers. The
public agreed and Sherman responded to the outcry. The "single object" of
his bill, he told the Senate, was to protect "industrial liberty." Could
he have said it any more plainly?
The dominance of Microsoft, not
only in operating systems but also in office products, is a matter of
convenience, not technological necessity. It is the result of consumers'
need to communicate with each other and of Microsoft's bold exploitation
of this need. As Assistant Atty. Gen. Joel Klein persuasively argued in
the trial phase, Microsoft deliberately makes its products incompatible
with the products of other manufacturers. This forces consumers to choose
the same products--Microsoft's.
Consumers do not seem to mind. But
rival producers do.
Of course, protecting competitors may come at
some cost to consumers, because with different manufacturers involved,
compatibility glitches are bound to occur. If manufacturers have a legal
duty to avoid them, their incidence will be low, but there is no doubt
that some inconveniences are bound to remain.
Nevertheless, if this
is the price that we have to pay as consumers to maintain the opportunity
for all of us to become entrepreneurs, it is a very good deal indeed. The
competing interests of both consumers and producers must be weighed,
because there is more to life than consumption.