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  Economist Backs Microsoft Penalties
Time: 09:38 EST/14:38 GMT | News Source: Associated Press | Posted By: Byron Hinson

The antitrust penalties sought against Microsoft by nine states will help consumers whether or not Microsoft's Windows operating system monopoly is degraded, an economist testified Thursday. Carl Shapiro, an economics professor at the University of California at Berkeley, said the added pressure placed on Microsoft by a new range of non-Microsoft products that work as well with Windows will ultimately bring new inventions. "Microsoft's rallying cry in this case has been 'freedom to innovate,'" Shapiro testified, "An effective remedy will ensure that Microsoft's rivals are also free to innovate."

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#1 By 1896 (62.11.36.58) at 4/11/2002 9:48:31 AM
it seems to me that Mr. Shapiro means " "An effective remedy will ensure that Microsoft's rivals are also free to innovate for free using MS R&D." How much is it the yearly tuition fees at Berkley?

#2 By 20 (68.53.242.24) at 4/11/2002 12:03:10 PM
It will be a cold day in hell before I listen to some Economics expert from CALIFORNIA.. you know, the state that doesn't understand simple concepts like SUPPLY and DEMAND in, for example, the power industry?

#3 By 3339 (65.198.47.10) at 4/11/2002 2:02:12 PM
"It doesn't take an economist (from academida none the less) to see the flaws in this arguement."

So if you are so brilliant, anon, where is this flaw in the argument that in order to correct MS's monopoly remedies must be forward looking and geared towards eroding the application barrier to entry? Hmmm, it's obvious, I know, of course, so you should be able to whip it right out... But we haven't heard it from you yet. What is it?

#4 By 3339 (65.198.47.10) at 4/11/2002 2:30:38 PM
But that is the argument; that MS has to be restrained. Shapiro says that one of the most necessary remedies is licensing Office and IE to another party, etc... You haven't explained why that argument is invalid--you've just shown that you don't like MS being constrained.

#5 By 3339 (65.198.47.10) at 4/11/2002 3:14:50 PM
Coach, one detail does not invalid the Antitrust case. But I could attack that detail if it was necessary to (the R&D of Red Hat is the entire pool of linux development inside and outside it's company, within IBM, HP, Corel, individuals, etc... so you can't assess the desire to innovate based on $$$ spent--that's MS's style. You can't do a straight budget total to budget toal comparison. Also there is an issue of the proportion of that budget to the value of the company as well if that was valid--for example, MS's R&D budget is much , much smaller than Apple's if viewed as a % of their total value or revenue or whatever benchmark you want to use... Just because RH was one of the witnesses doesn't mean one comparison to them invalidates the entire case).

But anyway, this economist is only making an argument for what is an appropriate remedy for a company already found guilty. I assume that's what #12 was referring to before he disappeared. You are trying to make the argument that MS wasn't found guilty of monopolization now, Coach? And this is addressing the network effects--unless... are you trying to slip into that silly argument that due to network effects Microsoft could quickly lose its monopoly so no remedy is necessary because it will disappear on its own naturely? That argument sounded kind of good 2 years ago after Penfield made his decision and you softies went nuts--I think that the last year and a half have clearly shown that MS's monopoly strength has increased because of its ability to network its dominance into other markets. I don't know, I won't go further with my argument w/o knowing what you are trying to refer to with network effects.

This post was edited by sodajerk on Thursday, April 11, 2002 at 15:20.

#6 By 2 (24.54.153.167) at 4/11/2002 3:16:50 PM
11#.. oh? lol

#7 By 3339 (65.198.47.10) at 4/11/2002 3:28:03 PM
Kill, I've got to stop talking to you--this is ridiculous... Do you know how frequently the Appeals Court makes a decision en banc? Do you know what that is? Do you know how often they make a unanimous decision. Could MS appeal this to the Supreme Court? Yes. Is there any possibility that it would result in the overturning of the Appeals Court decision to accept the findings of fact? About .000001 % of a chance. And then that would just start the whole thing over again.

If the DOJ settlement doesn't get accepted and K-K approves a stiff remedy, everyone is going to start to encourage MS to stop fighting it.

#8 By 2332 (129.21.145.80) at 4/11/2002 3:30:44 PM
Ya know, I've posted many times about the insanity of anti-trust laws and mixing socialist and capitalist economics together. When I post these things, nobody replies to them.

Yet you all still love posting the exact same comments over and over again, ignoring the opposing opinion's points.

I'm sure I'm guilty of glossing over some valid points because of larger issues, but so many of you gloss over the larger issues while concentrating on the smaller points.

I'm not going to bother reiterating my views... you all know them by now. Perhaps we should just all stop talking about this.

#9 By 3339 (65.198.47.10) at 4/11/2002 3:49:09 PM
kill, I told you--I'm not talking to you. We don't have to keep moving back in time. I was much more interested in whatever theory someone may have for why the remedy shouldn't be forward looking and comprehensive.

Penfield's bias isn't going to lead to the acceptance of the settlement because the settlement results from the Appeals Court decision which accepted it, the current proceedings accept all of the evidence of the initial trial and use the Findings of Fact as a foundation. If Bias is ultimately found to be substantial enough reason to overrule this (which I highly doubt--that would mean that MS would take this to the SC based on that reasoning, in which case the SC would probably not hear the case based on the AC's unanimous ruling) that would happen about 3 years from now, and that would mean that the ENTIRE case would need to be retried. I don't know why you'd want that to happen.

#10 By 135 (209.46.107.141) at 4/11/2002 4:38:44 PM
#25 - Have you ever considered that perhaps we are tired of you ranting and raving while overlooking the most obvious factor that MS's competitors do the same thing?


#11 By 3339 (65.198.47.10) at 4/11/2002 4:40:20 PM
okay, some of these ideas aren't as idiotic so I'll keep talking to you. The reason I continued on my last post is because I don't think you understand the sequence of events here and how an appeal would work. The Appeals Court already reviewed Penfield's decisions and accepted them unanimously and en banc--en banc means normally not all the judges of the 5th Circuit hear a case (just five of them, in this case it was all seven). If MS argued to the Supreme Court it would have to be based on some issue of consistutionality--for it to be a bias issue, the Supreme Court would have to overrule the Appeals Court--so what constitutional grounds are there for this? None, the Appeals Court acted appropriately, they all voiced the opinions even though they didn't have to, and they agreed unanimously. They spent about 40 pages in their decision on this issue, AND microsoft chose not to appeal when they made this decision... They could try now but they will get more flatly rejected by the Supreme Court this time than they did last time--just trust me on that, they have little legal ground, and the SC isn't interested in setting that kind of standard--overruling an en banc Appeal Court ruling. Any appeal to the Supreme Court that gets heard will have to be based on more exotic Antitrust issues. Or on the issue of K-K pursuing 2 different tracks.

So, yes, you are moving back in time.

As for the defense that you provide that this is a very narrowly scoped case--it doesn't negate the fact that any antitrust remedy is supposed to prevent future monopolistic action AND is supposed to deny the monopoly of the illegally obtained fruits of their monopolization.

#12 By 4209 (163.192.21.14) at 4/11/2002 4:48:06 PM
I think SodaJerk overlooks the fact that being a Monopoly is not illegal. Especially when there is no real competition. Apple is a monopoly in thereown little way, since there is no one else to compete with them because they do not allow it. I wish peopel would stop with the whole MS is a Monopoly and they need to be dealt with crap. There is no way no matter what the court does that is ever going to take away MS monopoly, it will however make it easier to compete with them. But the competition needs to get off there lazy ass before this will happen. They still are not doing that instead they want the US Gov to do it for them, and that is what pisses me off the most. The competition is using our tax paying dollars to fight MS instead of there own money. The states can do what they want, as long as they are not doing it for the competition, which is what they are doing it for. The competition is linning the politicians pockets to get there way in court. That is wrong and I for one am sick of watching and hearing about it. I am sure if MS really wanted to they could buy there way out of this just as the competition is buying there way in. And no I have no proof of this it is all my opinion. It is what it looks like to an outsider. And I did not read this article I am just sick to death of hearing about how evil MS is and how they should give there code out and design a modular OS. Do you really think that the average consumer even wants a dumbed down OS so they must spend money on all of the components? No they want one piece of software that works out of the damn box. God man this is so stupid to hear people say it is easy and they should do it or be forced to do it. Why should they, that is like telling Ford or any other company to make a product that needs other products to be purchased to work. That is like Ford making a car, and Dodge putting the engine in and Chevy putting on the wheels. Just so Ford does not corner the market on there car.

#13 By 3339 (65.198.47.10) at 4/11/2002 5:14:34 PM
mctwin, you 're providing a summation of idiotic softie arguments now... Please...

1. Apple is not a monopoly
2. The stupid car analogies don't work because none of them are monopolies either
3. There are no competitors? What? No one else makes software? This isn't about just the OS. This is about browsers, media players, services deliver to cellphones, middleware, everything... in all these categories there are competitors.
4. MS isn't using their money to fight this? What? You did see that in 96 they contributed 60,000 to political campaigns, and now it's at 60,000,000 a year, right? Tons of people hear say MS has the money and time to drag this out till everyone else is dead and the gov't gives up. You think that's not only not the case, but not possible? Please. MS is much more effectively using their money and the press to fight this thing; competitors suing MS mostly hurts them and they are doing it because they have to.
5. Nobody is fighting for a stripped down OS; if you want all the MS crap, you'll have it
6. I most definitely would like to strip off a few things, and I don't know a single person using Messenger so I'm sure quite a few would like to rip that piece of crap out.
...

Rant, are you saying that's right or wrong? Because, yes, I think other businesses will be allowed to do things that MS should be prevented from doing, yes.

This post was edited by sodajerk on Thursday, April 11, 2002 at 17:17.

#14 By 3339 (65.198.47.10) at 4/11/2002 6:22:43 PM
SO was most definitely a monopoly, adn the issue there was their verticle integration.. they were buying thre railroad lines, shipping facilities, treatment facilities, refineries and charging more for other oil companies to use their facilities which of course they didn't have to pay fees to use. That's ridiculous.

Do you think utilities shouldn't exist? Because utilities exist because these are services that aren't profitable for free enterprise to provide. That's why they were government controlled and subsidized to start. MS isn't similar at all in that they and their competitors have always been in private markets.

The benefit that MS provides in no way mitigates being a monopoly. MS tried to use this an as argument and the Appeals Court quite effectively ripped it to shreds. At one point MS used their R&D numbers too; that was funny. They were trying to suggest that a monopoly doesn't improve its products because they control the market so they don't have to--the Appeals Court laughed at that one.

But basically, you are saying that if a company provided the best product amongst its competitors and kept improving it, it would be okay to kill off the competition and control a monopoly? That's ridiculous. The whole point is to preserve a free market so that capitalism can do its work; capitalism can't work without competitors--you get stuck with little "states" of economic power like China, Japan, and Russia.

#15 By 3339 (65.198.47.10) at 4/11/2002 7:39:00 PM
Coach, you acted as if you knew about SO, and yet you don't seem to get that I was talking about the railroads owned by SO--that they did exactly what you think is okay and that's wrong. Just because you have enough money to buy the markets around your competitors and can buy their transportation lanes and their refineries, etc--and it benefits you r company allowing you to sell a cheaper and better product, doesn't make it legal.

Yes, I am saying this.

"The benefit that MS provides in no way mitigates it being a monopoly."

What? Even if them being a monopoly is on the whole better for consumers we must have the government come in and break it up? I know you do not mean that so I will let you correct yourself.

No, need for correction I am saying exactly what I said. You are making a specious claim that a break up (which isn't even happening) is necessarily worse. I am saying whether or not you judge a monopolists products or services as good or bad does not mitigate what the punishment should be. Do monopoly remedies need to balance the harm they will create vs. improving competition? Of course--will this remedy end the monopoly? NO. WIll it kill MS? NO. A monopoly is bad for capitalism no matter what. To think it's okay for a monopoly to exist just because it appears to be good is to not understand why we've got antitrust laws. That's like saying it would be okay for Bush to become dictator if he was a good dictator.

"But basically, you are saying that if a company provided the best product amongst its competitors and kept improving it, it would be okay to kill off the competition and control a monopoly?"

Where did I say that? I said the problems were largely unaddressed by the ruling. I think it is a very complicated issue. Are you suggesting that no matter how bad a competitors products are, the government must prop them up to provide competition?

You didn't say that, but that's what is the result of your defense. Consumers are satisfied and competitors are weak therefore Microsoft doesn't need to have their monopoly taken away from them. That's a complete misunderstanding of moopoly law, adn now that you realize what I am saying, maybe now you appreciate how radical this is. But it has been the law of our land for nearly 100 years. I am not saying that the gov't should prop up competition though--I am saying that the gov't should restrain the monopoly. This is different. For example, you or someone may bitch that a provision benefits AOL, but does it actually benefits all competitors? If it opens up the playing field to all competitors, it's more likely that in some way it's retraining the monopoly more than its propping up a competitor. For example, take including Java in Windows--this is probably the most controversial thing. Even this I don't see as propping up JSun--they don't really benefit directly since they do not make money from it (the JVM). What is does help is the community of developers--it opens up this field and also grows toward shrinking some of MS's dominance.

This post was edited by sodajerk on Thursday, April 11, 2002 at 19:52.

#16 By 4209 (64.78.96.11) at 4/11/2002 8:20:16 PM
SodaJerk, once again you did not read what I said. I said Apple is a monopoly in there own way, meaning no one else makes Apple PC's and only a few make software for it. Just because they do not have market share to make them a monopoly does not mean that they can't be one. Anyway, the car analogy was to prove a point about a product and dissecting that product so others can gain market share. I never said they were a monopoly. I stated once again in a round about way, that MS just needs to allow the OEM's to add what they want without fear of repercussion. That is all they should have to do. It is not up to the government to decide what a company can make and not make, that is not the American Way. You always seem to avoid the obvious, MS has never harmed a consumer, which is one of the affects of a monoploy. Remember AT&T, they harmed consumer by never expanding or innovating, and holding there network so no one else could use it. Also back in the early day of Broadcasting many TV, Radio and Newspaper operations were split up because they monopolized there market. Small cities would have one radio station and one tv station and one newspaper all owned by the same company, and that was all they had. The FCC made them sell 2 of the 3 becasue they were the only source of news in those cities, now there are many of each in most cities, but the law remains. The FCC is changing its ways though since times have changed. In the OS market there are quite a few, in the browser market there are a few to chose from, the problem is that most people use MS's, now is it because they function better or is it because no one knows of the others. Well then these companies have to both step up to the plate and make a better product and advertise it. That is once again the American way, companies make a better product than the competitor and then they advertise it. It shoudl not be up to MS to advertise for there competitors. They did there innovation and advertising and selling already.

#17 By 3339 (65.198.47.10) at 4/11/2002 8:43:02 PM
mctwin, do you get stupider and stupider--I thought at one time you might have posted one or two intelligent posts. Ford is the only maker of Ford cars. Coke is the only maker of Coke. Victorira Secrets is the only maker of Victoria Secrets underware. Do you think saying this sort of crap over and over again gets you anywhere. You can't try to make up an analogy that mirrors MS or software producst or markets unless that company is like MS--get it. Monopolies are unique in the way they are treated. Your analogies are sooo freaking stupid because you are taking a company that has behaved fairly and has to duke it out with their competiotrs and then crippling them in an irrelevent way. Do you get that. You have been drooling behind MS for too long to even get an image of how the industry was hurt--that's too bad. I remember having far, far more advanced word processors than Word today ten years ago that could fit on a floppy. I have no idea how to express what might have been had it not been for MS. I do remember just 4 years ago MS jumping up and down, loving Java--and now I have to put up with fools here daily saying that they would never touch it, even though they are using a clone of it right now that doesn't have cross-platform functionality. I definitely feel harmed though by having to come in to work to work on shitty products. But that's a burden I can live with, do you really want me to explain all the stupid crap I find in this software? Tell you everytime IE makes my computer crash? Tell you about the number of licenses MS wants for a piece of shit method of configuring serrvers, etc.. This good monopoly concept is a joke too. There is no good monopoly. Actually, AT&T had a much better reputation as an innovator, reliable, quality service when they were a monopoly--oh well, monopolies often go the way of the dodo. Cities don't have 3 TV channels and 1-2 papers anymore, they have 20 TV channels, 200 cable channels, 1 paper, 10 weekly magazines, and 40 web sites--it had to change. Is the telecomm act a good thing and are they doing it right? No. That doesn't change our other laws or the fact that you want the law to have an exception for MS because you want to crawl up their as and be the best softy you can be. But can you deal with how stupid your arguments are? Do you realize that you have to go for a fascist/Objectivist/Screw Our Laws/I'm Uber-Capitalist kind of argument like RMD to get anywhere with your postion (not that that leads anywhere either). Give up this silliness or move away.

#18 By 135 (208.50.201.48) at 4/11/2002 9:18:28 PM
#32 - See there you go again.

If the reason why Microsoft is a monopoly is because of these particular actions, then how can you possibly argue that these particular actions are good for anyone to do? You can't, which is why you keep falling back to this tired old whine.

#19 By 135 (208.50.201.48) at 4/11/2002 9:20:14 PM
killunix - Yes, it's always been that way with sodajerk. Personally I'm surprised he has so much free time on his hands to type out four page diatribes that make no logical sense.

#20 By 3339 (65.198.47.10) at 4/11/2002 9:43:44 PM
No, Coach, you are using monopoly sloppily--it's not predicated on size or market share, it's based on behaviors. There isn't a monopoly that doesn't qualify because it's a "good" one. This stuff is silliness. Can MS arbitrarily control the price of Windows, could it force OEMs to do this or that, can it force ISVs to do this or that, can it advance its own products in other markets based on its dominance,etc.... I understand network effects--you are the one who's doing very little to explain by what you mean by this "mysterious network effect" that's going to come by and sweep MS awayt. uhh-huh... explain that to me more. And the "possibility" of some network effect means there is no need of a remedy? You've got to clarify this a bit more.

I know enough about SO. I can just imagine the crap Bork is writing about SO, no thanks, but still to be nice I'll check it out anyway.

#21 By 3339 (65.198.47.10) at 4/11/2002 9:48:41 PM
troll, do you notice that I am rebutting ancillary arguments raised by people who are shifting away from my arguments? I would like to focus--I started by saying what was wrong with the economist argument that the remedy should be forward looking and comprehensive. I can't help it if I have to explain to people why Apple isn't a monopoly and that that isn't relevent to Microsoft, that there is no such thing as a tolerable monopoly, etc, etc, etc. Do you yourself have a point? 95% of your posts deal exclusively with me.

Oh, I forgot that I had to argue with kill over Penfield's bias too--Jesus, I'm the one he keeps shifting my point? I think my point is very clear: MS is a monopoly, they have always behaved in a manner to extend their market penetration and dominance outside of simply improving their products and they will continue to do so, we need an effective remedy, the RPFJ is not that, the next best thing is not that either but will at least improve the situation, and you are all too paranoid in Microsoft-spitten to realize that this doesn't "cripple" MS and only serve Sun and AOL.

This post was edited by sodajerk on Thursday, April 11, 2002 at 21:52.

#22 By 3339 (65.198.47.10) at 4/11/2002 9:53:39 PM
"The best thing to do is just ignore him." Almost all your posts are fixated with me. That's bizarre.

#23 By 3339 (65.198.47.10) at 4/11/2002 10:09:14 PM
Okay, Coach, I read your silly slate stories. Yes, I usually don't like Bork, but there's only too paragraphs of Bork and I think that they are a decent enough defense against the specious arguments of this guy Kinsley--and I still think Bork's a great big sell out. What's your point about SO though? And I see why there is one "network effect" in your mind--because Kinsley says so. Why don't you just go and read the first 40 pages of the Appeals Court ruling--they provide a much more nuanced and relevent explanation of the network effect argument.

#24 By 3339 (64.175.43.4) at 4/11/2002 11:14:54 PM
Coach, control by your definition is the same thing as ownership. Has Apple done anything to compete with another company and used the unfair advantage of it being their platform to put the other company out of business? No. In some cases they compete with other companies, but they haven't done anything with their platform to impair the other product. That's the point.

No, no, I'm sorry--I finally got what you were talking about--there are actually very many different types of network effects...(If you read the AC ruling, they actually suggest that they can't determine whether or not MS could maintain it's monopoly for example because another product could suplant the PC, and network it's way into a new dominance over the OS--but let's not get sidetracked.)

You are completely overturning the entire crux of the antitust case--the Courts actually designed the market space and the behaviors around the network effect as manifested in the application barrier to entry. Network effects don't invalidate antitrust law--they complicate them. You are saying that sicne because people are ingrained to Windows they are entitled to be a monopoly? Yes? Weird, the way people think.

I think it's very easy to see a number of ways that MS is a monopoly--from a legal standpoint. A fair number of them have been addressed in the trial, and there are a few others in markets besides the browser. From a personal standpoint, yes, I would create a far nastier picture by drawing in the vast number of networked markets they enter, the network effects of their advertising and PR, their developer comunity, thei cash hordes, their FUD and vaporware (that's an important one, but I realize that's impossible--although I bet a lot of you wouldn't know that when the original consent decree was issued back in 1996 Posner was aiming t control their ability to promise features far in advance which generally didn't function as promised, weren't delivered on time, adn only achieved their desirabiity after they had convinced their customers to drop other alternatives...). Anyway, none of that is how I see them as a monopoly--that's a rough overview.

Let's just take this classic example: Microsoft doesn't want to comply with potential remedies so it says it can't and that it will just close up shop entirely, no longer offering products. Would that have injurious effects on consumers? Yes. Would you consider that bribery to get what they want? Yes. Would any other business in the world suggest ceasing to exist faced with a difficult market condition, or would they just fight on? I don't know, how can you say they aren't a monopoly? Have you ever heard of a company behaving that way? We'd rather cease to exist then to conform to the laws of the country. Please.

#25 By 3339 (64.175.43.4) at 4/11/2002 11:28:47 PM
(Do you want more examples? This one will use marketshare, but I will show you rea power--power that Apple could never wield.) Be signs a deal with Toshiba and nearly does with Compaq to have their OS loaded on their boxes. MS finds out, and tells them that if they do they won't receive marketing money and pricing incentives which would basically double the costs of those OEMs. Those OEMs cannot survive if MS can double their operating cost, and 95% of the computers have Windows on them so they have to do what MS says. If MS didn't control 95% of the market, the situation would be much more different-- the OEMs would be far more likely to say screw off if MS only controlled 40-60% of the market--i.e. these companies could survive by serving 50-30% of the world PC market. etc...

Get that... Now, let's duplicate that with Apple... (theoretically speaking)
Apple only has 3% of the market so the OEM says screw off. Or for that matter, Apple doesn't strongarm the OEM in the first place, they say, "That's fine; we like demonstrating our Startup Control Panle which allows mulitple boot volumes and startup devices." (See, even if you do have the marketshare/power, yes, you coudl theoretically behave appropriately. MS rpoves over and over again that it will use all sorts of exclusive dealings, incentives, predatory pricing, and retaliatory tactics to MAGNIFY network effects.)

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