MS breakup will cost $30 billion?

ibbey writes "According to a study released today, breaking up MS will cost consumers $30 Billion dollars due to development, marketing and support costs required for third parties to adapt their software to "new Windows descendants," and by fracturing the market resulting in higher retail costs."

Comments

Fear, Uncertainty and Doubt

[barlowg]

Clearly this article is full of FUD. Those who believe that a Microsoft breakup will cause undue harm to consumers is dearly wrong. Clearly, this move will benefit consumers with increased competition in all areas, as MS will no longer be able to force the use of their products through integration that other vendors cannot match.

One point that I greatly disagreed with was that software will cost more. At the moment, free software has moved into a position to be a clear competitor to MS products. If a MS breakup occurred, more software would be developed for these platforms, making platforms with inexpensive, well developed, effective software. Obviously this breakup would cost MS money, they would be forced to actually produce good products instead of well integrated, buggy software. If MS has to spend $30 billion, so be it. They have the money from all the years MS has exploited computer users.

One other point that was truly ludicrous was that by breaking up MS, the Justice Department would be punishing them for being too successful. Rather, this would be punishment for destroying competition and exploiting customers.

MS has hurt the computer industry for too long. The computer industry should have the opportunity to use the best product, instead of being forced to use software from one company because of that company's monopoly position. Breaking up MS and opening Windows source code is the necessary measure.
--
Gregory J. Barlow
fight bloat. use blackbox.

Liebowitz's study

[RyanGWU82]

I was at the "Which Remedies? Appraising Microsoft II" conference yesterday, at which Liebowitz first introduced the results of his paper.

Liebowitz made the assumption that Microsoft would be split into three entities, each of which developing their own competing version of Windows, without any interoperability standards or agreements. Therefore, when companies introduce new applications, they'd have to port it to three different operating systems. Liebowitz (and, presumably, research assistants) directly contacted executives at a number of large software firms (he didn't say how many firms). He specifically refused to talk to assistants, but rather only to executives. He asked them how much they expected their R&D, tech support, and sales budgets to increase, if they had to support three OSs rather than one.

Liebowitz then multiplied these numbers by overall industry revenue figures. He determined that R&D costs would increase by 78%, technical support costs would rise 46%, and sales and marketing costs would rise by 5-10%. He then decided that his overall projections were too high, so he divided the end result by three. (I'm not making this up!). He finally came to the conclusion that software costs would rise about 6-and-a-half percent, or $30 billion.

He also said that Microsoft was a "temporary natural monopoly," which got a small hoot from the economists in the crowd. He said that in the computer industry, there is "sequential replacement of a dominant firm." First VisiCalc, then Lotus 1-2-3, then Excel. First CP/M, then MS-DOS, then Windows, then 32-bit Windows. However, Mark Cooper (Research Director, Consumer Federation of America) rebutted this. Cooper said that there may be sequential replacement of dominant products, but that Microsoft has ended up producing the dominant product in every industry. (i.e. going from MS-DOS to Windows to Windows 95 may reduce the MS-DOS monopoly, but not the Microsoft monopoly as a whole.)

That's pretty much what's interesting about Liebowitz's speech. If anyone wants me to put up the rest of my notes from the conference, let me know.

Personally, I don't like the angle of the ZDnet article. They interviewed two of the three pro-Microsoft panelists at the conference, yet left out any commentary from the other twelve panelists!

Ryan

The Cato Institute

[zaks]

Liebowitz has authored other studies and papers defending Microsoft's position. "Dismal Science Fictions: Network Effects, Microsoft and Antitrust Speculation," co-authored by Stan Liebowitz and Stephen Margolis and published last year by the Cato Institute, examined lock-in, antitrust, and the link between quality and software market share, refuting arguments that Microsoft's lock-in position allows it to engage in exclusionary or predatory business practices. The Cato paper was a preview of a book, tentatively titled "Technology, Innovation and Market Competition," due out this year.

Anyone who watches C-SPAN with any kind of regularity knows that the CATO Institute is an incredibly right wing organization. I once saw them actually defending global warming - the reasoning was that winter costs our economy more than the greenhouse effect.

The real reason behind all of this is that they're rabidly against any kind of government intervention in the economy, be it to stop companies polluting the air or monopolizing software.

If you start off with this kind of an ideological assumption, you can prove virtually anything - pigs can fly, global warming is good, and Microsoft is not a monopoly. The only thing you have to do to write these surveys is fit the facts to what you and your friends at the CATO Institute have been believing all along - capitalism is best left unchecked.

Even if you agree with their ideology (and I obviously don't), is this a way to do independent research?