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Editorial - Feds Slap Down Free
Enterprise Again 07/20/94 DENVER,
COLORADO, U.S.A., 1994 JUL 20 (NB) --
By Jim Mallory, Midwest Bureau Chief.
Federal regulators have done it again
-- telling a company, in this case
Microsoft, how to run their
business.
Unless you live in a cave
somewhere in Tibet you know by now
that the business cops in our
nation's capital used their muscle
this week to make Microsoft, one of
the most successful businesses in
modern history, change their
operating system pricing structure
and tear up the non-disclosure
agreements with competitors that
specify what the competitor can do
with the privileged information they
are provided by Microsoft.
So what, you say? Well, put
yourself in Microsoft's shoes.
Suppose you're a widget company that
has grown from nothing to a multi-
billion dollar worldwide enterprise,
with your stock selling for over $50
per share. Suddenly, due only to the
carping of your competitors, you're
told by the federal gumshoes that you
have to reduce the price of your
widgets. During the second World War
that was known as price controls.
The folks in the trenchcoats also
tell you it's a no-no to limit how
your competitors can use the
proprietary information you provide
them that lets their widgets
interface with your widgets, which is
an advantage to the consumer since
they can buy anyone's widgets and
know they will work together.
That's what the Department of
Justice has done to Microsoft. It
wasn't the PC makers that were
complaining about how Microsoft
priced its operating system MS-DOS.
It was the competitors, mostly
Novell.
Ironically, there are numerous
similarities between Novell and
Microsoft. Both publish operating
systems and network software. Novell
is very successful with its NetWare
network operating system while
Microsoft has had little luck with
its LAN Manager. Microsoft has been
hugely successful with the MS-DOS
operating system while Novell
couldn't get the public to accept DR-
DOS, even though it does some things
MS-DOS doesn't.
Also ironically, the whole thing
doesn't mean a thing to the consuming
public. Microsoft says the difference
in cost to the OEM (original
equipment manufacturer) will be about
$0.50 more per machine under the new
"per system" pricing rather than the
"per processor" method previously
used by most OEMs.
If you prefer DR-DOS (recently
renamed) or Unix as your operating
system of choice, you can have it. In
some cases it may cost you extra, and
that's the crux of Novell's
complaint. They believe the automatic
installation of MS-DOS on nearly
every PC shipped gives Microsoft an
advantage over its competitors since
the customer is in effect paying
twice for an operating system.
However, some companies offer the
consumer a choice. Compaq Computer
Corporation ships several operating
systems on CD-ROM disks with some of
its servers and lets the user choose
which one to install using an
installation routine called
"SmartStart."
So if the Justice-Microsoft
"agreement" probably won't have any
noticeable effect on the end user,
why all the hue and cry? Because it's
another government intrusion into the
free enterprise system. And when that
happens, it always costs the consumer
money.
Microsoft has to send reports to
Justice to prove they are complying.
Microsoft spent millions of dollars
to provide information to the
government during its investigation.
The government spend untold dollars
to investigate Microsoft. And since
all successful companies pass along
all costs to the consumer, guess who
ends up paying all those dollars.
Apparently the feds didn't learn
anything from the results of the AT&T
breakup. The Baby Bells that were
created, like mercury in a dish of
water, will re-assemble themselves.
And consumers will use the computer
software that does the job for them
best regardless of what Uncle Sam
says.
(Jim Mallory/19940719)