Of Kids and Con Men

Microsoft seems to be trying to use kids and education to lull everyone into believing them. The hope seems to be that maybe no one will question that Microsoft's proposed settlement allows it to extend its monopoly product leverage into the educational market. It also seems that Microsoft would like everyone to believe that promising to be good monopolists under an honor system is a reasonable solution to anticompetitive practices. Perhaps next they'll suggest convicted drug dealers should be allowed to pay their debts to society by giving free crack to our kids, assuming of course they promise to not run other dealers out of the market. Give me a break.

The laudable goal of helping our kids with a proposed settlement that Microsoft wants to direct at schools may well be a cue that we're being suckered. Recently, Steve Jobs, the ever effervescent technology leader and CEO of both Apple and Pixar, chimed in with a chorus of other commentators to pooh-pooh on Microsoft's scandalous proposal to settle for its crime of being a naughty monopoly. Microsoft's proposal to settle a class-action, civil, antitrust lawsuit with various states and private parties could have it paying $1.6 billion to schools, mostly by way of Microsoft software, as a settlement for its past misdeeds. Mr. Jobs claimed to be "baffled" by the proposal.

The reason for Mr. Jobs' and others' apparent consternation is if Microsoft gives its software to schools, it will incur no real penalty. Commentators state that approximately $840 million of the settlement will come by way of Microsoft software, which would actually cost Microsoft approximately a paltry $1 million. That's because making copies of its own software is essentially free for Microsoft. Furthermore, Apple and others fear that dumping that much Microsoft software into schools will shore up Microsoft's market position in the educational sector, where up until this point Microsoft has not managed to clearly dominate. Many commentators and Mr. Jobs have suggested Microsoft give the schools the entire settlement in cash. Of course, there is some degree of jibber jabber over the amount of cash that Microsoft should give to the educational sector, however, it seems that no one dares question the choice of market itself. That's crazy.

Only Microsoft Is Paying Attention to Relevant Markets

The fact that Microsoft chose the educational market, alone, should be a red flag to any practicing antitrust attorney. Most antitrust attorneys know that market definition at trial is largely determinative of the outcome. "Because market power is often inferred from market share, market definition generally determines the result of the case." Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 469 n.15 (1992) (citing Robert Pitofsky, New Definitions of Relevant Market and the Assault on Antitrust, 90 Colum. L. Rev. 1805, 1806-13 (1990)). For example, if Microsoft's marketplace were considered to be all software made anywhere for any processor, it would only hold a small percentage of that market. That's because most of the world's software is not made by Microsoft. For example, there is a lot of software in calculators, microwaves, cars, airplanes, missiles, telephones, mainframes, televisions, etc. Thus, if a court decided that the relevant market was all software, then it would have been very likely that Microsoft would not have been found to be a monopoly. On the other hand, if the relevant market was said to be Intel compatible personal computers, then Microsoft easily would be deemed a monopoly. You've probably heard this before, but it is important to note that it is not illegal, per se, to be a monopoly. However, once you are found to be a monopoly, it is illegal to abuse your monopoly power in anticompetitive ways. 15 U.S.C.A. Sect. 2; U. S. v. Grinnell Corp., 86 S.Ct. 1698 (1966); Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1353 (Fed.Cir. 1999). Regardless, depending on how the market is defined, one can pretty much predict if an accused company will be found to be a monopoly.

Continued with Part 2, "Microsoft's Solution Ignores The Victims"

(Page 1 | 2 | 3)