Friday, November 28, 1997

When monopoly is really monopoly

By Molly Ivins

AUSTIN -- The first thing you have to admit about Microsoft is that it is a monopoly. Large as life and twice as natural. There it stands, with more than 90 percent of the market in PC operating systems. In addition to what it already controls, Microsoft is also moving rapidly to control all access to the Internet and moving into content, as well.

Monopolies are the reason we have anti-monopoly laws on the books. Microsoft may be about the newest, cutting-edge information technologies, but the problem it represents is old and familiar. The railroads, Big Steel, Standard Oil -- been there, done that.

On the other hand, Bill Gates is correct when he argues this monopoly is different; the problem is, he's making the wrong argument about why it's different. Gates' argument is that instead of monopoly power being used to jack up prices (the obvious goal of monopoly), prices are falling. In fact, Microsoft is using cost-cutting to increase its market share. As the Wolf said when Little Red Riding Hood commented on the size of his teeth, "The better to eat you with, my dear."

What really makes Microsoft different is the staggering amount of power it represents. Controlling all of one commodity (a vertical monopoly) or all of one important step in the manufacturing of competing producers (horizontal monopoly) represents enormous financial power. But controlling access to information is the ultimate power.

Think about it. One strong caveman with a big club could control maybe two or three other cavemen. One medieval knight on horseback could probably keep 100 people in line. One tank can easily back off a thousand folks. But someone in charge of all the information going to X amount of people can control X amount. That's why the first thing dictators do is take over the media in their countries.

Cartoonists are fond of portraying monopolies as giant octopuses, and that is indeed what Microsoft resembles. Many observers believe the Justice Department is leading up to a full-scale assault on "Wintel," the combination monopoly Microsoft enjoys with Intel, the chip producer that controls about 80 percent of that market. The question is whether the software-chip alliance uses its power to keep competitors out of the business.

According to Business Week, one example of Microsoft's tactics is "tying," forcing a customer to buy one product in order to get another. Compaq Computer Corp. has released documents that show Microsoft threatened to terminate its contract to install the Windows 95 operating system on its computers if Compaq did not also display the icon for Microsoft's Internet Explorer browsing system on its computer desktop. That would tend to increase the use of the Microsoft browser.

Business Week also reports the rival browser Netscape currently has 60 percent of the web-browser market, but if Microsoft can continue to require PC makers to ship Explorer with every Windows machine, then Microsoft can take the lead away. The Justice Department is suing Microsoft on grounds it tried to corner the market on browsers.

Another Microsoft maneuver caused a lawsuit by Sun Microsystems, the company that developed a universal computer language called Java. Java is the Esperanto of computers; according to the San Francisco Chronicle, it is a language programmers can use to write one software program that will work on any kind of computer or electronic device.

Microsoft licensed Java for its Internet Explorer 4.0 browser, but Sun claims Microsoft changed key components in the language so it will not run on other operating systems. Sun has sued on accusations of trademark infringement, false advertising, breach of contract and unfair competition. The company alleges Microsoft is "attempting to break Java's cross-platform compatibility and deliver a technology that appears to be Java but only works with its own products."

As Microsoft moves into the content area, it could, by using such tactics, come to dominate electronic commerce, education and even the U.S. banking system, according to Sun CEO Scott McNealy, who recently joined Ralph Nader in a two-day conference on Microsoft and its global strategy. The San Francisco Chronicle reports Bill Wendell, founder of an Internet-based real estate sales company, calls Microsoft "a virtual monopoly propping up a virtual cartel." Ray Hammond, a futurologist, said at the conference: "Perhaps only a Roman emperor could have surpassed the influence Gates will have over individual lives in the early 21st century -- if he and his company continue unchecked."

Complaining about Gates is a favorite pastime among techies: He is the man who took the wonderful, free world of information exchange on the Internet and turned it into a capitalist tool. He has also driven his old arch-rival Apple Computer, always the more fun and user-friendly of the two companies, to near-extinction, creating still more non-fans.

But just because Gates is resented for extraneous reasons doesn't mean his methods should not be examined and corrected. A monopoly is a monopoly is a monopoly.

Creators Syndicate, Inc.