On May 18, 1998, the U.S. Justice Department, 20 states and Washington, D.C., formally filed antitrust lawsuits against Microsoft. During a press conference, U.S. Assistant Attorney General Joel Klein and several state attorney generals painted Microsoft as an enemy of the people for “anti-competitive” and “monopolistic” practices. They called this day the “D-Day for consumers” — and a victory for “free enterprise.”
|What are these “friends of consumers” really after? Egged on by Microsoft’s competitors and consumer crusader Ralph Nader, the justice department seeks to downsize Microsoft, and admitted as much.|
Microsoft’s evil crime? It has integrated its Internet browser into its Windows 98 operating system and is offering it as a take-it-or-leave-it condition of sale. That’s “coercion,” according to the justice department.
What about Microsoft’s property rights? If placing an all-or-none condition of sale on one’s own property constitutes coercion, then we’re all criminals. The justice department’s logic would outlaw software integration as such, thus forcing consumers to purchase add-ons separately — a blatant waste of time and money. Furthermore, it hands government dictatorial control over software design.
What are these “friends of consumers” really after? Egged on by Microsoft’s competitors and consumer crusader Ralph Nader, the justice department seeks to downsize Microsoft, and admitted as much.
To accomplish this they are deploying that phony economic doctrine of Perfect Competition, which allegedly exists in an economic sector when many small firms exist with equal market share. If one firm acquires “too much” market share, thus approaching a “monopoly,” the government must bulldoze the playing field to remove the “imperfections,” all in the name of consumer protection and free enterprise.
|The essence of a free market is not “perfect” competition, but freedom of competition — freedom to produce and trade without coercion.|
A true free market is driven by the voluntary — non-coercive — decisions of buyers and sellers, and under certain conditions many small firms might prevail. But not always. For example, people might prefer shopping at a superstore because it can offer lower prices and one-stop shopping. Likewise, they might prefer purchasing the most widely used operating system to avoid compatibility problems.
Under true free enterprise the government’s role is not to force companies into somebody’s dogmatic small-is-beautiful utopia. The government’s role is to protect individual rights, including property rights, while otherwise leaving people free to produce, compete and trade on a voluntary basis.
The essence of a free market is not “perfect” competition, but freedom of competition — freedom to produce and trade without coercion. True competition also includes marketing strategies, such as conditions of sale, designed to expand market share. If Microsoft can integrate products into one operating system, and offer them cheap, Microsoft and consumers benefit.
|If a company tries to exploit its earned “monopoly” by jacking up prices, investors will seize the opportunity by investing in competent competitors.|
But under Perfect Competition, pursuing greater market share is destructive regardless of market conditions because it is “monopolistic.”
The only way to approach a monopoly under true free enterprise is to offer consumers better products at lower prices, which requires keeping production costs low and quality high. If a company tries to exploit its earned “monopoly” by jacking up prices, investors will seize the opportunity by investing in competent competitors.
Competition doesn’t cease when a company achieves high market share — look what Microsoft did to IBM! Only a coercive monopoly harms consumers because, effectively, a gun — not performance — is used to acquire it.
Perfect Competition obliterates the distinction between coercive and non-coercive monopolies. Governments have established coercive monopolies in postal service, transportation and utilities in the name of consumer protection. Big is bad, it seems, except big government.
Perfect Competition is a rationalization for governments to violate individual rights by forcibly regulating competition. Competition laws, such as Canada’s Competition Act, or the U.S. antitrust laws, are based on it.
|The antitrust laws used to attack Microsoft serve as a vehicle for envious competitors (such as Sun Microsystems and Netscape) or political power lusters (such as Ralph Nader) to enlist power-hungry politicians and bureaucrats to persecute successful corporations like Microsoft — because they are successful.|
As Ayn Rand summarized: “Under the [U.S.] antitrust laws, a man becomes a criminal from the moment he goes into business … if he charges prices some bureaucrats judge as too high, he can be prosecuted for … ‘intent to monopolize’; if he charges prices [too low], he can be prosecuted for ‘unfair competition’ or ‘restraint of trade’; and if he charges the same price as his competitors, he can be prosecuted for ‘collusion’ or ‘conspiracy.'”
These competition laws are purposely vague, contradictory and elastic in order to hand government the ominous, unbridled power to persecute virtually any company it pleases. Other laws properly exist under free enterprise to protect consumers and competitors from physical coercion, fraud and property theft. What the competition laws do is make ambition, creativity and superlative performance a crime because these are the virtues that lead to increased market share (the Perfect Competition criteria for evil) in a free market.
The antitrust laws used to attack Microsoft serve as a vehicle for envious competitors (such as Sun Microsystems and Netscape) or political power lusters (such as Ralph Nader) to enlist power-hungry politicians and bureaucrats to persecute successful corporations like Microsoft — because they are successful. It is an intellectual obscenity for the “friends of consumers” to deploy such terms as “D-Day for consumers” and “victory for free enterprise” to defend this vicious assault on free enterprise. Any society that regards Microsoft — a creative, productive and beneficent enterprise — as its enemy, while regarding a gang of gun-wielding bureaucrats — who attack the good for being good — as its saviour, is a society that is morally sick and headed for hell.
The immoral and destructive assault on Microsoft should be halted immediately. People need protection from coercive and omnipotent governments, not from the beneficial products that Microsoft and other companies provide via freedom of competition in a free market.
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