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CAPITALISM:
A Treatise on Economics

by
George Reisman


The Clearest and Most Comprehensive Contemporary Defense of the Capitalist Economic System Available

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A Brief for Microsoft*

FIRST OF TWO PARTS


By


George Reisman
**

         Federal Judge Robert Penfield Jackson found in the government’s case against Microsoft that the latter’s web browser, the Internet Explorer, is not, as Microsoft claimed, an integral part of its Windows operating system, but rather a separate, distinct product. This finding has been taken as one of great importance and as signifying a major defeat for Microsoft.

           It may well be that, in the topsy-turvey world of antitrust, this finding will in fact play a major role in the imposition of penalties against Microsoft and perhaps in the very destruction of the company. Nevertheless, in the judgment of this writer, the finding is of no more philosophical significance than would be the very similar finding that rear-view mirrors and automobiles are separate, distinct products. (At one time rear-view mirrors did not come as a standard feature of new automobiles but were sold and installed in an aftermarket.)

            To any computer user it should be obvious that Microsoft’s web browser represents the addition of a degree of functionality to its Windows operating system comparable to that accompanying the addition of a rear-view mirror to an automobile and that Microsoft is as logical a provider of web browsers as automobile companies are of rear-view mirrors.

            Furthermore, as soon as one sees matters in this light, it also becomes obvious that whatever questionable tactics Microsoft may have employed with respect to other companies, such as America On Line and Compaq Computer, in its quest to gain prominence for its browser, such tactics were utterly unnecessary and were irrelevant to the ultimate outcome. Fundamentally, the situation was the same as when the automobile companies decided to manufacture their cars with rear-view mirrors already attached.  Just as it was not necessary for the automobile companies to twist anyone’s arm to facilitate the sale of cars with rear-view mirrors attached, so it was not necessary for Microsoft to twist anyone’s arm to facilitate the sale of its operating system with a web browser attached. All that Microsoft had to do to establish its browser as an overwhelming favorite was to offer it as part of Windows, which is exactly what it did, beginning with the latest releases of Windows 95 and Windows NT and then Windows 98 and all subsequent versions of Windows.

            If follows that all aspects of  Judge Jackson’s findings with respect to Microsoft’s behavior toward other companies in connection with Internet Explorer simply do not relate to any substantive matter as far as Internet Explorer’s success is concerned. Its success was virtually certain without any inappropriate behavior on Microsoft’s part. What is present in the case against Microsoft is sound and fury about a finding of fact that is essentially ludicrous, buttressed by more sound and fury about alleged wrongful tactics on Microsoft’s part that it had absolutely no reason ever to employ. (And, indeed, this cannot help but call into question whether Microsoft’s behavior was in fact inappropriate or, if inappropriate, was not the result of foolish overzealousness on the part of subordinates rather than the policy of the company’s top management.  For it would certainly be very strange indeed for people as intelligent as those running Microsoft to behave as alleged by the government in Judge Jackson’s courtroom without any rational need whatever to do so.)  

 


*Copyright © 2000 by George Reisman. All rights reserved.

 

This article appeared on the Editorial Page of The Orange County Register, March 13, 2000.

**George Reisman is Professor of Economics at Pepperdine University's Graziadio School of Business and Management and is the author of
Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996).

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