The Department of Justice’s Antitrust Assault on Microsoft: Who is the Predator and Who is the Victim?

by | Nov 6, 1999

Microsoft did not gain its market share by having the government outlaw its competitors: Microsoft earned its position in the free-market as the result of freedom of competition. Microsoft is not a predator; Microsoft is the victim.

Microsoft did not gain its market share by having the government outlaw its competitors: Microsoft earned its position in the free-market as the result of freedom of competition. Microsoft is not a predator; Microsoft is the victim.

Last night, I turned on my television to witness the spectacle of one of U.S. Attorney General Janet Reno’s talking heads giggling like a terrorist who had blown up an American embassy. The source of his pleasure was the Department of Justice’s victory against a giant “predator” that had “hurt” competitors and “exploited” consumers.

Who was this law-breaking”predator”? An anarchist who tried to overthrow the Puerto Rican government? A “pro-lifer” who firebombed an abortion clinic? A “murderer” wanted in sixteen states? No, the so-called “predator” was American businessman Bill Gates and the Microsoft Corporation, creator of the world’s best-selling personal computer operating system: Microsoft Windows.

Is Microsoft a “predator”? A predator is someone who uses physical force like Mao, Fidel Castro, or Adolph Hitler who terrorizes innocent civilians and puts them in concentration camps, or a member of the mafia who hunts down a neighborhood business owner for not obeying his wishes. A predator is someone who initiates the use of physical force. Microsoft has pointed a gun at no one. Microsoft’s power is not political, but economic: the power to produce and offer values in the form of products and services. A far stronger case for predatory acts can be made against the Department of Justice–who seeks to use the coercive power of the state to violate Microsoft’s rights by taking control over its property, Microsoft Windows.

Is Microsoft a coercivemonopoly“? Not in the proper, derogatory sense of the term. All harmful, coercive monopolies are the result of the government giving a business a “monopoly” — exclusive control of a given market by outlawing the entry of competitors. Unlike the old AT&T Bell monopoly, or today’s U.S Post Office monopoly, Microsoft did not gain its market share by having the government outlaw its competitors: Microsoft earned its position in the free-market as the result of freedom of competition.

Freedom of competition is not some egalitarian, “perfect” ideal where all competitors end up with an equal market share of a given industry. Whether in sports or business, the whole point of market competition is to beat your competitors–even to the point of having them going out of business. “Bigness” should not be confused with monopolistic; size is not a criterion of wrongdoing; success is not proof of a crime.

Did Microsoft halt “innovation”? Innovation is the process of discovering and putting into practice a better way of doing things. No private business can stop other companies from innovating except by out-innovating them, or by buying them out (in which case the buyer would want the acquired company to innovate even more). The only way to halt innovation is by the threat of physical force, which is a legal power that only governments possess.

Did Microsoft “twist the arms” of its competitors? This sloppy metaphor is a vicious lie. Only the government has the legal power to twist — and even break — arms. The only “twisting” Microsoft engaged in was the legitimate practice of setting the terms of sale for its property. By what stretch of the imagination, does the Department of Justice conflate physical violence with Microsoft’s refusal to license its products to vendors who do not accept its terms? This is not coercion because if a vendor refuses Microsoft’s offer and walks away (and they are free to do so), the vendor will be no worse off then if they did not deal with Microsoft in the first place. For a real example of “arm-twisting,” see what happens when you refuse to hand over half your income to the IRS next April.

Did Microsoft “hurt” competitors like Netscape by giving away a free Internet browser with its Windows operating system (when Netscape wanted to charge you $30)? No more so, then when McDonald’s bundles its patties with a free hamburger bun will hurt other bread makers. Such actions may frustrate the competing breadmaker’s wishes, but their rights are left untouched.

Did Microsoft violate the “rules of competition”? It is the objective legal application of the political principle of individual rights to the economic realm of production and trade that gives rise to the rules of competition under a free-market. To objectively determine whether Microsoft violated the rules of market competition, one has to decide whether Microsoft violated anyone’s rights by initiating physical force (or fraud) against them. Microsoft did not violate the rights (life, liberty, and property) of anyone.

Yet, in the name of “protecting” competition, it is the inalienable principle of individual rights that the antitrust process violates in favor of such subjective considerations as the “public interest” (which fails to include the interests of the members of the public who do not side with the Department of Justice); the “consumer interest” (which the Department of Justice has awarded itself the title of official spokesperson for); and “relevant markets” (the government defines the relevant market small enough so that Microsoft becomes the only seller, even though Microsoft comprises less than 4% of the computer industry). Such “protection” is like helping a man to see by thrusting burning coals into his eyes.

The real danger to market competition is the illegitimate use by the government of its legal monopoly on the use of physical force. The purpose of government is to protect the rights of market participants; and not to influence and determine the winners. It is not Microsoft that should be reigned in but the power-lusting, fascist government bureaucrats that comprise the Antitrust division of the Department of Justice.

By allowing judges and regulators to sidestep the objective criterion of individual rights in favor of subjective considerations, such as the “public interest,” the antitrust laws effectively grant the government the power to violate Microsoft’s rights, i.e., the power to take over and control Microsoft’s property and use it against Microsoft’s self-interest.

Thanks to the antitrust laws once a judge has arbitrarily classified a business as a “monopoly”, the government is given free rein to plunder of vast sums of money from Microsoft’s bank account (through triple fines for so-called “damages”); replace Microsoft CEO Bill Gates with a government “overseer” who will make the critical strategic decisions for Microsoft; force Microsoft to advertise and distribute its competitor’s products; and to compel Microsoft to give up its “trade secrets” and intellectual property to the very competitors who condemn it.

From start to finish, the entire antitrust process is no more than a witch-hunt geared to sacrifice successful American businesses–such as Microsoft, ALCOA, US Steel, Standard Oil — on the guillotine of egalitarianism to appease envious competitors and anti-capitalist intellectuals. Or, to quote Alan Greenspan, who upon a complete examination of the theory and history of the antitrust laws wrote that,

“Whatever damage the antitrust laws may have done to our economy, whatever distortions of the structure of the nation’s capital they may have created, these are less disastrous than the fact that the effective purpose, the hidden intent, and the actual practice of the antitrust laws in the United States have led to the condemnation of the productive and efficient members of our society because they are productive and efficient.” [1]

Microsoft is not a predator. Microsoft is the victim. The real predator is the Department of Justice operating under an immoral, non-objective body of laws known as antitrust.



[1] Alan Greenspan, quoted in “Antitrust,” in Ayn Rand’s Capitalism The Unknown Ideal.

Mark Da Cunha is the editor of Capitalism Magazine and creator of Twitter: @capitalismorg

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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