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Wednesday, July 11, 2001

Microsoft ruling a victory for consumer choice

In what was probably the ruling of the new millennium, the U.S. Court of Appeals recently decided Microsoft should not be broken up as recommended by District Judge Thomas Jackson. What can often be overlooked in this case is that the court agreed with Judge Jackson that Microsoft is a monopoly and handed the case to a lower court, which will determine a proper remedy. That was the big news because it legally reinforced what everyone already knew: Microsoft is not only dominating the market, but anti-competitive too.

That is good for consumers also. In a capitalist society, healthy competition means higher quality and a lower cost for products and services. The key word here is "healthy." Companies shouldn't hide behind laws, or lobby the government to earn higher profits, nor should they use unfair means to snuff out competitors. Instead, competitive companies produce a thriving marketplace to the benefit of consumers. Consumers are the winners in a capitalist economy because they have access to a wide range of products and services.

That's exactly what I want as a consumer: choice. And in a sense, I do have some choice over my computer software and Internet services. When I entered college three years ago, I made a conscious effort to stop using Microsoft products as much as possible. Today, I use an Apple PowerBook running non-Microsoft software for a wide variety of tasks, including e-mail and web browsing. However, my system isn't totally "clean"; I have Microsoft Office: Mac 2001 basically because it's the only usable Mac productivity software available.

But while I am almost able to succeed at my lofty goal, I find myself cornered into a 3 percent market share. This means I have fewer software products to choose from (although it was pointed out to me that only the best software make it to the Mac because developers use Windows users as "beta testers") and those available are priced at a premium. On the other hand, Windows users, who make up more than 80 percent of computer users, have a wide range of cheap software to choose from.

Also, with this dominant base, Microsoft can leverage on it to deliver more products and services to consumers, thus expanding its share in and ultimately conquering software markets other than operating systems. The recent lawsuit was based on Microsoft's bundling of Internet Explorer with Windows in order to dominate the Web browser arena.

However, I think that bundling is part and parcel of any company's strategy because it increases market share. For example, Apple bundles Mail, an e-mail client, with Mac OS X. While it lacks certain features, it is sufficient for the average user. Bundling also adds value to an otherwise mundane product. Windows is great by itself, but now you also have the added advantage of owning a Web browser right out of the box. Any consumer in his or her right mind would jump at such an opportunity.

But would consumers jump if Microsoft bundled software unfairly? I recently read about a dispute between Kodak and Microsoft over digital imaging software. Kodak had been developing one for Windows XP, the upcoming Windows operating system. However, Kodak developers found out later that Microsoft had also built its own software and made it easier to install and run than Kodak's. This might not be a problem except that Microsoft had been working closely with Kodak to develop the latter's software, making them partners in a sense. Kodak has now learned how cooperation with Microsoft can often lead to cannibalization.

Then, there's Microsoft's integration of its ambitious net strategy for ruling the Internet in all of its XP-branded products. What seems like a good idea -- simplifying how customers access and use Internet products and services -- becomes more sinister when you look at the technologies applied. Microsoft intends for customers to store their personal and confidential information on a central, Microsoft-operated system to ease the constant entering of such information, like address and credit card numbers, at e-commerce sites. But this is like giving your house keys to a building manager -- it will ensure you always know where your keys are, but you'll never know when the manager might enter your house without your knowledge.

If you're willing to give up both choice and privacy, then you should be comfortable with Microsoft's strategies. After all, you're shackled into using one company's products and services. And that's what makes Microsoft a monopoly -- it reduces consumers' choices to one. It might lead to good products, if that is what consumers demand, but in the end consumers lose their freedom in deciding what software they need to use their computers in the best way they want. After all, those machines on your desk are called personal computers, not "Microsoft-owned-and-operated computers."

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