Bill Gates, Microsoft’s founder and Chairman, had to testify before the Senate Judiciary Committee this week because his competitors, the government, and his other foes have manipulatively vilified him. They unjustly characterize Microsoft’s dominance in computing as that which prevents others from competing against it on a “level playing field” or at all; thus it harms or eliminates “competition” and “consumer choice,” discourages innovations, and thereby fosters lower quality products at higher prices-all of which constitute “forceful,” “monopolistic,” “unfair,” “anti-competitive” practices.
|Capitalism is based on individual rights: the producer’s right to exercise his mind to create and be the sole property owner of his products, which subsumes his right to do whatever he chooses with them.|
Based on past voluntary agreements between them, Microsoft now requires personal computer manufacturers to either install their Internet Explorer (IE) Web browser icon on the desktop start-up screen as an integrated part of Windows 95, or lose their licenses to sell these operating systems on their computers. This take-it-or-leave-it clause allegedly leaves Microsoft in violation of its 1995 anti-trust “settlement,” a settlement based on a “consent decree” the Justice Department imposed on Bill Gates, which he signed to avoid government’s forceful dissolution of his company. [Clearly such “consent” was not voluntarily, and thus is not binding — MDC] These demands threaten an antitrust suit against Microsoft’s planned integration of Internet Explorer and Windows 98. Since IE will be an integral part of that operating system, these suits contain grave implications for Microsoft’s future.
“Up to now it’s been a wild and wonderful free-for-all in high tech, a little like Dodge City,” says ex-Stanford economist Brian Arthur. “The problem is, a gang has come into town, bought up the main saloon and is using that to buy up the whole street.” When Microsoft, a dominant company whose “power” comes from offering innovative, cheaper, popular products through honest, long-ranged business practices, is characterized as analogous to “a gang” — that is, a potential initiator of physical force, it begets the actual unwarranted force against it by government.
|Bill Gates thus has the right to either destroy or withhold his products or sell them at astronomical prices or at prices comparable to or lower than market value — or give them away, as he is doing with Internet Explorer.|
These distortions stem, in part, from the premises on which people incorrectly base capitalism, such as “consumer choice” and “competition.” Before an individual can offer his products on a market for others to choose to buy or compete against, government must first uphold his freedom to create and keep his products. Capitalism, therefore, is based on individual rights: the producer’s right to exercise his mind to create and be the sole property owner of his products, which subsumes his right to do whatever he chooses with them. Bill Gates thus has the right to either destroy or withhold his products or sell them at astronomical prices or at prices comparable to or lower than market value-or give them away, as he is doing with Internet Explorer.
All of these legitimate actions, however, are potential violations of anti-trust, since its arbitrary laws dismiss individual rights as subordinate to the bureaucrats’ whimsical basis for capitalism, be it “competition,” “consumers,” “the public good,” or whatever they feel is inviolable at the moment.
“Tough antitrust enforcement-which bars large companies from becoming abusive monopolies and fixing prices-is as much an American success story as Microsoft,” Newsweek writes in an article entitled “The Fed’s Case Against Bill Gates.” “It is this arcane legal regime, more than cultural differences, that keeps U.S. businessmen from acting like Japanese keiretsu lords or European cartelmeisters, who often casually fix industry prices in their stagnant economies.”
|Newsweek manipulatively lumps Microsoft, a dominant free-market company, with government-backed monopolies, such as the Bromkonvention, a German chemical cartel of the late nineteenth and early twentieth centuries, that used government’s legalized monopoly on coercion to forcibly dictate prices and obstruct competitors from entering their market.|
Newsweek manipulatively lumps Microsoft, a dominant free-market company, with government-backed monopolies, such as the Bromkonvention, a German chemical cartel of the late nineteenth and early twentieth centuries, that used government’s legalized monopoly on coercion to forcibly dictate prices and obstruct competitors from entering their market. Microsoft’s dominance materialized not through such coercive governmental measures, but by primarily offering higher-quality, lower-priced products that consumers judged to be more worthy of buying than those offered by its competitors. If a town’s fruit-eaters buy only from a vendor who offers fresher, tastier, cheaper fruit, and the vendors with comparatively inferior, costlier fruit are thereby eliminated from that market, “fruit-eater choice” has not been harmed or eliminated. Similarly, it is precisely because computer manufacturers and most consumers choose to buy Microsoft’s products over others that its dominance exists and is no threat to limiting “consumer choice.” Instead, it is reflective of the predominant choices of consumers.
Microsoft, a once “little-guy” company compared to IBM or Apple, has compelled other companies to compete not on their past laurels, which fosters stagnation, but by pursuing its innovative laurels. And despite Microsoft’s dominance, the rapidly innovating industry of computers subjects it to intense competitive pressure. Continuous innovations and the expanding division of labor creates competition within and outside of computing; similar to how the Internet’s electronic-mail creates competition for the post office’s coercive monopoly. [Now here is something Janet Reno should be going after! — Editor] Under capitalism, a company’s domination of a free market is never a license for it to stagnate, since competition always and prevalently exists. The fear that Microsoft will stagnate, drive up prices, and limit or eliminate competitors and “consumer choice” are thus distortions. In reality, when producers such as Gates are shackled, then innovations are undercut, fair competition eliminated, and consumers are harmed, since inferior, costlier products often prevail instead.
|Microsoft’s dominance materialized not through such coercive governmental measures, but by primarily offering higher-quality, lower-priced products that consumers judged to be more worthy of buying than those offered by its competitors.|
Netscape and Sun Microsystems, Microsoft’s primary competitors, do not seek freedom of competition, but rather the abuse of government’s coercive powers to guarantee themselves unearned competitive advantages. The fundamental purpose of antitrust is to guarantee that no company considerably outperform others, so that “competition,” the alleged foundation of capitalism, is “level” and “fair.” This artificial “guarantee” requires that the dominant competitors in a certain field, such as Microsoft, be denied their right to compete with or expand on their full potential. Thus, enacting artificial competition into the market, via anti-trust laws, is established by only one possible means: forcibly undercutting the abilities of the dominant company-that is, shackling Microsoft’s abilities so it will be reduced to its competitors level or “playing field.” But it is no more just to shackle Mr. Gates because of his considerable abilities than it would be to force football’s Dan Marino or basketball’s Michael Jordan to compete with one of their hands tied behind them because their athletic abilities are comparatively too outstanding.
These injustices cannot be effected without first distorting and maligning Microsoft’s legitimate abilities and practices, of the kind its competitors are often unable to match, as “coercive,” “unfair,” “anti-competitive.” The Justice Department and Microsoft’s competitor’s applying of these terms to Bill Gates are what psychologists call projection, since in reality these terms properly apply only to them. With these measures against Microsoft, the people who envy the competent, the innovative, the successful independent men of the mind shed more of their false robes of justice to further reveal the naked injustice of the antitrust laws they champion.
Freedom and capitalism will continue to erode unless these injustices are fully exposed and replaced by the consistent upholding of individuals rights as supreme and inalienable. Meanwhile, as Bill Gates and producers like him are forcibly reduced to operating with more of their abilities shackled, the fantastic values that countless individuals gain from their production will also erode.