What is not in dispute about Microsoft are these facts:
1) Microsoft is engaged in constant innovation (it spent $100m developing
its web browser Internet Explorer), 2) Microsoft has kept its products
extremely affordable, 3) competition is extremely intense in the software
industry and 4) consumers would switch to other operating systems
if they were cheaper and/or better.
What is in dispute is whether or not Microsoft has violated antitrust laws by engaging in anti-competitive practices. Given the above facts, it is hard to understand exactly what Microsoft has done to damage consumers.
In fact, Microsoft has behaved like all firms that emerge as industry leaders. It operates so efficiently, and offers high quality products at such low prices that no other firm has yet been successful at unseating Microsoft as the industry leader. Microsoft could not get to that position of market dominance and maintain that position for years, without being extremely successful at creating value for consumers.
Despite its dominant position in the software market, Microsoft cannot ignore consumers because it faces intense competition from several sources. First, it faces existing competition for operating system software. Consumers who are not satisfied with Windows 98 as their operating system have other choices: Macintosh, UNIX, OS/2, DOS, and LINUX.
Secondly, Microsoft also faces the very real threat of potential competition for software products from firms that will gladly enter the software industry if Microsoft ever raise its prices or produces inferior products. Microsoft cannot prevent new firms from entering the software industry, and there are hundreds of firms with the capability of producing operating system software should Microsoft ever fail to serve consumers.
Therefore, both existing competitors and potential competitors discipline Microsoft and give it strong incentives to operate efficiently and cater to consumers. If and when Microsoft ignores consumers, its will lose market share immediately to its competitors. The intense competitive pressures of the dynamic computer market do more to protect the interests of consumers than any current or proposed government intervention in the computer industry.
If Microsoft was pleasing consumers, then why the investigation? An analysis of antitrust history reveals why: 95% of antitrust cases involve one firm bringing a complaint and legal action against one of its competitors using the unlimited resources of the government!
The Microsoft case is no different. Consumers weren't complaining to the Justice Department about the price or value of Microsoft's products. Microsoft's competitors, like Netscape, went whining to the government. If an inefficient producer cannot achieve victory in the marketplace, it can always try to gain a legal advantage over a more efficient rival with the government as a "partner" in an antitrust case.
It is important in any discussion of monopoly is to understand the economic distinction between a) a private, dominant firm like Microsoft with a large market share, and b) a coercive monopoly created by an act of government.
A firm like Microsoft achieves market power because of its extremely competitive behavior, efficiency, low prices, and quality products. A coercive monopoly achieves a large market share through some form of legal protection against competition, which can only be created by the government itself, and not by the market.
A coercive monopoly is the real threat to consumers, because it is legally insulated against all competition, and can use the resources of the government to squash competition. The United States Post Office is a classic examples of a coercive monopoly. Try to compete against the Post Office for first-class mail, and what happens? You go to jail!
Given that distinction, Microsoft is not a coercive monopoly, because it has no legal ability to limit competition or prevent entry into the software industry. Bill Gates, unlike the Post Office, cannot use the government to put his competitors out of business or in jail.
Antitrust laws are supposed to protect consumers.
The facts show that Microsoft is being condemned by its rivals and by the
government for being too successful, too efficient and too competitive,
behaviors that have benefitted consumers immensely. If the government
really cares about consumers, it should leave Microsoft alone, and break
up real monopolies - the anti- consumer, coercive monopolies that the government
itself has created like the post office, social security system and the