Author: Yogi Schulz
Many have been quick to criticize Bill Gates and Microsoft, almost interchangeably, for anti-competitive business practices. Is this sour grapes coming from less successful competitors? Is the dominance of Microsoft in operating systems and application software driving up costs for all of us as well as stifling competition and innovation?
The robber baron controversy is fueled by the ongoing struggle with the U. S. Department of Justice over whether Microsoft is engaging in anti-competitive business practices and whether Microsoft is acting in violation of a previous consent decree (1).
As always, there is no easy answer because there are so many vested interests. Bill Gates is reviled in some circles and revered in others. His company, Microsoft, is feared in many circles and lauded in others.
To some, Bill Gates has become the robber baron of the late 20th century (2) who engages in the classical monopolist behavior that the anti-trust legislation of the United States is specifically designed to prevent. In this view, Microsoft is gouging virtually everyone on the planet through artificially high software prices that it can enforce by intimidating peers and competitors alike.
Bill Gates, well known for his competitiveness, has simply let success go to his head. His fears about non-existent competitive forces have made him paranoid. To protect its dominant position and to maximize revenue and net income, Microsoft is stifling competition and software innovation.
In the robber baron view, the Department of Justice is right on target in its efforts to clip the wings of Microsoft and allow more competition into the world of operating systems and application software.
Alternatively, we can view Bill Gates as the biggest productivity saviour of all time (3). In this view, the operating system and related application software from Microsoft has taken the drudgery and clerical error out of many administrative tasks and allowed us all to express our talents as we create the documents and presentations that are the crucial products of the Information Age. We have all received massive productivity benefits from these computers. Microsoft rightfully deserves a share of these benefits.
It’s easy to forget the manual world of yesteryear. Word processing was called the steno pool and letters were prepared by hand or with manual typewriters. Spreadsheets were created manually with pencils on specially printed columnar sheets. Presentations were gorgeous works of art created by the graphics department at great expense for only the most extraordinary occasions. Databases were called the Rolodex or ledger cards and offered no error checking. Communication occurred through hand-written messages, telex or the telephone. Research meant going to the library to arduously pour through large volumes of small-print indices.
[See the adjacent table for the dominant product in each of these categories for each of the major computing eras into the past.]
Microsoft is not single-handedly responsible for rocketing our civilization forward out of the dark ages of manual information processing. IBM arguably deserves most of the credit for that progress. We can however, credit Microsoft with making these advances in information processing available at the dramatically lower price point most of us can afford.
In this view, “the Justice Department action is premature. If successful, it would create a major barrier to the integration of information and communication technology. This will have a negative effect on growth far beyond the effect on Microsoft. (4)”
I think that everyone should just calm down. We’ve seen many instances where firms have dominated an industry or an emerging technology for a time. Good examples include IBM in computers, General Motors in cars and Xerox in copiers. But as time marches on corporate arrogance grows, technology changes and opportunities arise for competitors to the point where even the future of the once dominant player is cast into doubt. I see every reason to believe that history will repeat itself in the Microsoft case. In the mean time we can all benefit from the terrific software that Microsoft is making available at prices that are lower than any time in history. It feels like a win-win to me.
- Microsoft’s Future, Steve Hamm, Business Week, 19 January 1998, p. 58 – 68.
- Bill Gates, Robber Baron, Columnist Robert Kuttner, Business Week, 19 January 1998, p. 20.
- I’m humble, I’m respectful, Amy Cortese, Business Week, 9 February 1998, p. 40 – 42.
- Is Bill Gates Just Doing What he Should?, Letter from James J. Higgins, Business Week, 9 February 1998, p. 10.
|Word processing||Word||Word PerfectWord Star||Wang, Xerox||DCF, runoff|