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Date:      Mon, 20 Apr 1998 08:25:27 -0600
From:      Brett Glass <brett@lariat.org>
To:        chat@FreeBSD.ORG
Subject:   Nader paper mentions FreeBSD
Message-ID:  <199804201425.IAA20391@lariat.lariat.org>

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>------------------------------------------------------------
>Info-Policy-Notes | News from Consumer Project on Technology
>------------------------------------------------------------
>April 20, 1998
>
>
>              Microsoft's Ambitions and Antitrust Policy
>
>                   Ralph Nader and James Love
>
>             Remarks at the Cato Institution Policy Forum 
>                   on Antitrust and Microsoft
>                         April 20, 1998 
>         (http://www.essential.org/antitrust/ms/catoapril20.html)
> 
>1.      What is at stake?
>
>In his day, John D. Rockefeller tried to monopolize oil production,
>refining and distribution.  Alcoa sought to protect its monopoly in
>manufacturing aluminum.  AT&T tried to monopolize local and long
>distance transmission of telephone calls and the manufacturing and sale
>of telephone handsets or devices that would connect to telephone lines.
>For decades IBM dominated the computer mainframe software and hardware
>market.  Intel is trying to monopolize the manufacturing of hardware
>used to run personal computers.
>
>Microsoft is more ambitious, and the implications of its global strategy
>are far more far important.  Microsoft wants to use a core monopoly in
>software operating systems to dominate an enormous range of new and
>important areas of electronic commerce, and Microsoft wants to
>monopolize the software used to navigate the Internet and to navigate
>the next generation of television and multimedia programs.
>
>If Microsoft were to succeed in every area it is active, it would have
>the most important control over commerce and worldwide information flows
>of any firm, ever.
>
>Increasingly, we are talking about technology that is used as a gateway
>for many businesses, publishing ventures and civic communications, and
>Microsoft wants to dominate, influence or control the content itself,
>not just the transmission.
>
>This elevates the disputes over Microsoft use of its Operating System as
>a matter of public policy.
>
>2.      How is this done?
>
>In the software area, Microsoft engages in a very wide range of
>anticompetitive acts --- many of them are very similar to techniques
>used by Standard Oil, AT&T or IBM, before each of these companies faced
>antitrust action.
>
>One strategy of a monopolist is to deter entry or investment by rivals
>by engaging in predatory pricing.  Standard Oil used cross subsidies to
>selectively cut prices, so it could bankrupt its rivals.  AT&T used
>cross subsidies to selectively cut prices, and drive rivals out of
>business. IBM used cross subsidies to selectively cut prices, and drive
>rivals out of business.  Microsoft does this too.
>
>Microsoft can take a rival's core product, and spend countless millions
>in R&D or acquisitions, and then offer a competing product for free, or
>bundle it with Windows or with Microsoft Office --- the suite of office
>productivity applications which are nearly as ubiquitous as the
>operating system.
>
>For example, faced with Microsoft's decision to spend hundreds of
>millions of dollars on a free alternative, Netscape is unlikely to
>justify continued R&D spending on its browser.  And when Microsoft
>announced that it would include copies of its Outlook  product in
>Microsoft Office, Netmanage announced it would discontinue further
>development of Ecco Pro (http://www.netmanage.com/products/eccopro/).
>
>Microsoft benefits from predatory pricing in two ways:
>
>-       once the threat of competition is less, it can later
>        raise prices,
>
>-       Microsoft's tough reputation scares off other new
>        entrants.
>
>But there are also technological strategies for predation, such as those
>concerned with Interoperability.  These too have many parallels with
>other monopolies.
>
>In high tech markets, it is often the case that products must
>interoperate with each other.  AT&T tried to limit the ability of
>competitors products to interoperate with the AT&T telephone network, by
>withholding technical information, using proprietary technologies, or by
>changing standards to create incompatibilities of rivals products. IBM
>did this.  Intel is doing this now.  Microsoft has done this for a long
>time, going back to the days when programmers coined the phrase, "DOS
>isn't done until Lotus won't run," referring to Microsoft's introduction
>of minor changes in DOS that created problems with Lotus 123, the
>spreadsheet program that is a competitor to Microsoft's Excel.   If
>Microsoft can't make its own products look better by taking advantage of
>technical back doors, it can make a rivals products perform badly, or it
>can make its own products technically essential, as it is trying to do
>with the browser.
>
>When you combine both predatory pricing and technological predation,
>firms and investors decide on their own to keep out of Microsoft's way. 
>Consider the following quote from an April 18 story by Lisa Bowen in
>Ziff Davis's ZDNET web site:
>(http://www.zdnet.com/zdnn/content/zdnn/0418/308142.html)
>
>        A further challenge for the DOJ is showing that 
>        Microsoft is actually  stifling innovation because 
>        it's hard to measure Microsoft's products against 
>        those that never make it to market. 
>
>        There's no question that many developers are shying 
>        away from independent projects in areas that Microsoft 
>        might consider. At Microsoft's Windows CE development 
>        conference, developers lined up during a 
>        question-and-answer session to ask the software behemoth 
>        which products it doesn't plan to develop, as if they 
>        were looking for crumbs.
>
>        Other software makers said they attended the conference 
>        to check out Microsoft's plans to make sure they stay out 
>        of the company's road.
>
>        A new area of predation for Microsoft concerns Internet
>navigation. 
>One of the major reasons that Microsoft wants to have a monopoly on
>Internet Browsers, is so that Microsoft can design the Windows operating
>system to have as much control as possible on navigation itself.   There
>are several aspects of this.
>
>        Microsoft wants to write the default bookmarks and menu options
>for
>content based upon current and new Internet technologies.  The
>unsuccessful experiments with so called "push" channel technologies was
>one attempt.  The new Microsoft "Start" page project is a more elaborate
>version. Microsoft has also designed its Browser so it can periodically
>check in with Microsoft to reset bookmarks, menus and other items with
>ones Microsoft's suggests, gently but ever so steadily taking consumers
>"where Microsoft wants them to go today."  Microsoft is developing its
>own search engine, which it hopes will replace Yahoo and other popular
>search sites.
>
>        This is a "path of least resistance" strategy, based upon the
>idea that
>time and attention are the ultimate scarce resource in the information
>age.
>
>        Will it work?  Consider commercial airline reservation systems. 
>One
>study indicated that professional air travel agents using online
>reservation systems would pick the first fare they saw 53 percent of the
>time, and a fare from the 1st screen 93 percent of the time.
>
>        When Microsoft bought Web TV, it changed the travel menu so that
>Expedia, the Microsoft travel service, appeared first in the travel
>menu.  Sabre told us their Travelocity web site lost is prominent menu
>location, and was moved to page 6, next to Tom's Travel, in an
>alphabetical listing. How many people in the audience ever look at page
>6 when you use an Internet search engine?
>
>What will happen if Microsoft succeeds in its wildest dreams and
>determines which flower shop, which citizen group, and which car dealer
>appears on page 1 and which one appears on page 6?  What if Microsoft
>could determine what information appears on page 1 when a person
>searches for information about Representative Rick White or legislation
>concerning digital copyright?
>
>3.      What Should Be Done.
>
>        In 1997, we organized a conference to Appraise Microsoft's
>Global
>Strategy.  I believe we now have a fairly good idea of where some of the
>problems are.  It is time to shift the debate to the issue of remedies. 
>What can and what should be done about the Microsoft Monopoly?  This
>will be the focus of our next Microsoft conference.
>
>        The current DOJ litigation deals with narrow issues concerning
>restrictive contracts and product bundling.  The easiest remedies would
>limit the use of restrictive contracts, such as contracts that prevent
>Internet Service Providers or OEMs from giving consumers the opportunity
>to choose non-Microsoft products.  Practical rules regarding product
>bundling are more difficult, as is the issue of predatory pricing, which
>DOJ and the EC have ignored.  But there are several other types of
>remedies which may be more useful.
>
>Issues regarding interoperability are very important. The European
>Community's 1984 undertaking with IBM was mostly about interoperability
>issues. (http://www.essential.org/antitrust/ms/1984ibmeu.html). There
>has been much antitrust work on interoperability that relates to
>telephone monopolies.  In recent years, the Federal Trade Commission has
>negotiated agreements with several other software companies to open user
>interfaces, such as the FTC's 1995 agreement with Silicon Graphics, Inc
>(Docket No. C-3626), which required SGI to "establish and maintain an
>open architecture, and publish Application Program Interfaces ("APIs"),
>for . . . computers and operating systems in such manner that [third
>party] software developers and producers may develop and sell  . . .
>software, for use on [SGIs] computers, in competition with [SGI]."
>
>        More relevant is last week's landmark ruling in the Intergraph
>v. Intel
>case, where a federal judge ruled that Intel's CPU platform is an
>essential facility - and ordered Intel to provide non-discriminatory
>access to technical data needed to develop products which interoperate
>with the Intel CPU.  (http://www.intergraph.com/intel/highlights.stm ).
>Now that the "tel" half of Wintel is considered an essential facility,
>what about the "Win" half? Biases of Internet navigation and related
>areas are very important, particularly if Microsoft succeeds in
>monopolizing the browser market, dominating the search engine market,
>and becoming the front end for new video set top boxes.  Policy makers
>and the public need to debate conduct rules which would prevent a
>dominant OS vendor, like Microsoft, from exercising undue influence over
>Internet information searching and navigation technologies.
>
>        There are also other remedies that challenge Microsoft on a more
>basic
>level.  We are asking OEMs to offer consumers the opportunity to
>purchase alternative operating systems, not owned by Microsoft.
>(http://www.essential.org/antitrust/ms/ipnmarch91998.html) These include
>both commercial competitors, like Rhapsody, BeOS or OS2,  and a new
>generation of powerful free operating systems, such as Linux or FreeBSD,
>which are rapidity maturing as alternatives.
>
>        We believe there are factors which make it more feasible for a
>new OS
>to succeed.   Larger and cheaper hard disks and computer memory make it
>possible to run multiple operating systems on the same computer.  We do
>this now at our offices.  Secondly, the Internet and new Internet
>standards bodies make it easier to share data across OS platforms.  
>Third, new software development tools make it easier to port software
>applications across platforms.
>
>        There remain barriers for new OS platforms, however. The most
>important
>of which concern device drivers, which are still scarce for Windows
>alternatives.  Making matters more difficult would be efforts by
>Microsoft and Intel to control the architecture of a new generation of
>high performance device drivers.
>
>        Leading Original Equipment Manufactures (OEMs) for personal
>computers,
>like Dell, Micron, Gateway 2000, Packard Bell, Compaq and others need to
>be free from retaliation by Microsoft if the OEMs offer non-Microsoft
>products, including choices of software operating systems. This may be
>difficult in practice if Microsoft can discriminate in its pricing of
>the software OEMs need for the current corporate and consumer market. 
>If Microsoft were required to use non-discriminatory licensing of
>Windows and Microsoft Office, OEMs would be free to offer consumers
>additional choices. 
>
>        Essential Information has created an Internet email list to
>discuss these issues.  You can participate by sending a note to
>listproc@essential.org with the message "sub am-info yourfirstname
>yourlastname."  Archives of this list are available on the Internet at
>http://www.essential.org/listproc/am-info/ (no period). The Consumer
>Project on Technology also maintains a web page on Microsoft antitrust
>issues at  http://www.essential.org/antitrust/microsoft/microsoft.html
>(no period).
>
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