Apparently we have arrived at the long run and we are not dead.
Do you remember the Microsoft anti-trust case? The anti-trust division of the US Department of Justice sought the breakup of Microsoft for anti-competitive practices mostly centering around integrating Internet Explorer into the Windows operating system. In fact, an initial ruling found Microsoft in violation of an agreement not to tie new software products into Windows and mandated a breakup, separating the operating systems business from the software applications business. This ruling was overturned on appeal and evnetually the case was settled with an agreement that imposed no further restrictions on Microsoft’s ability to bundle software but did require Microsoft to share APIs with third-party developers for a 5 year period.
Today, all of the players in that case are mostly irrelevant. AOL, Netscape, Redhat. Java. Indeed, Microsoft itself is close to irrelevance in the sense that any attempt today at exploiting its operating system market power to extend its monopoly would cause at most a short-run adjustment period before it would be ignored.
Microsoft was arguing at the time that it was constantly innovating to maintain its market position and it was impossible to predict from where the next threat to its dominance would appear. Whether or not the first part of their claim was true, the second part certainly turned out to be so. It is hard to see a credible case that the Microsoft anti-trust investigation, trial, and settlement played anything more than a negligible role in bringing us to this point. Indeed the considerations there, focusing on the internals of the operating system and contracts with hardware manufacturers, are orthogonal to developments in the market since then. The operating system is a client and today clients are perfect substitutes. The rents go to servers and servers live on the internet unconstrained by any “platform” or “network effects”, indeed creating their own.
The lesson of this experience is that in a rapidly changing landscape, intervention can wait. Even intervention that looks urgent at the time. Almost certainly the unexpected will happen that will change everything.
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June 30, 2009 at 6:10 am
jb
I came to the same conclusions a couple of years ago, which was a bit humbling because I had supported the intervention at the time.
March 21, 2014 at 4:39 am
Micon
Who knows? Studies where people got phone calls semeed to help. It’s probably like with a personal trainer. When the training with the trainer stops, almost every person regresses. Anyone can stay dry in the eye of the hurricane. It’s in the hurricane that we are tested.
June 30, 2009 at 6:36 am
my
Is it at least conceivable that the case and the government intervention encouraged google and others to go after Microsoft in a way that they would not have done otherwise? and that it affected the way Microsoft responded?
June 30, 2009 at 9:57 pm
egl
“The operating system is a client and today clients are perfect substitutes.”
Perfect? That’s stretching things a bit: I use Linux, Mac OS X, and Windows and can tell you that each has a different set of available software and peripherals. Even the browsers are not perfect substitutes: there are many situations where only Internet Explorer will do.
I think “my” is on to something: I’ve been in the software business since the DOS days, and IMHO today’s Microsoft is a “kinder and gentler” competitor than it used to be. It’s not a pussycat and still has tremendous resources to apply to a problem, but they show an awareness of limits on their behavior that wasn’t there in the 80’s and early 90’s.
July 1, 2009 at 9:45 am
tjb
The reason the client is irrelevant is that Microsoft owns the client. Try buying a laptop with linux installed. Microsoft put out Vista which everyone knows was a failure, and still have Dell charging $30 for a “free windows 7 upgrade”. Netscape is gone and AOL is on the way. With C# microscope has blurred the central focus of java for web development. Intervention wasn’t unnecessary, it just wasn’t tried thanks to the Bush admin. So, yes, lets compete in servers — the only place not owned by M.
May 3, 2010 at 10:14 am
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