Microsoft and antitrust advocacy

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There has been some recent discussion expressing concern (or indignation) that in many of the recent antitrust actions involving the internet and software industries, Microsoft has been leading the charge for competition. For instance, take this recent post from Google alleging Microsoft backing behind recent antitrust action against it in Texas. Now I don’t want to comment on the merits of that case but instead on Microsoft’s advocacy of strong antitrust action.

This is a turn-around for the company that during the 1990s resisted all such things. But one cannot help but acknowledge that over the past decade, Microsoft’s old monopolies have been broken down. Who would have thought back in the days of Windows NT that Microsoft, within a decade, would be challenged by Apple and a new start-up. Actually, Microsoft argued that at the time although we all took that to be just posturing. I’m still not sure they really believed it even though it turned out to be true.

But I think the narrative that is appropriate is that the antitrust action against Microsoft, while it didn’t end up breaking it up, actually worked. Microsoft has largely behaved itself since. It no longer aggressively bundles or bullies OEMs into exclusives. What is more, in its more competitive segments, it is actually a strong consumer performer. Think about video games, for one. And it is improving in its traditional monopoly areas too where it is forced to compete on products rather than with heavy handed contracting.

There is no better example of this than search. If you have used Bing — especially to do things like book flights or look for images or use maps — you will know that it is actually superior to Google. Competition is working there on Microsoft. The issue now is whether it will work on Google.

Here is the worry: Google’s new narrative in these actions is that this is a dynamic industry and they face lots of competition and potential competition — just look to Microsoft’s example! But if the correct story is that Microsoft faced real competition only because antitrust action tied its hands on anticompetitive acts, then Google’s line is incorrect and, what is worse, may lead to bad policy outcomes. Think to Google’s recent acquisitions in search in Japan that took it from a 70:30 duopoly to monopoly. This is not what we want.

In this regard, I can think of no better advocate for this narrative than Microsoft. Who better to tell the world that antitrust policy in high tech environments actually works. Yes, they are interested but it is not an argument against antitrust action to simply point to Microsoft involvement.

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