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The 800-pound Gorilla

I’m always amused when I hear someone arguing that Microsoft was totally innocent in their anti-trust trial, and that this was just a case of the government trying to punish a company for being successful. Nothing could be further from the truth. Now in all fairness, a lot of these people have a vested interest in Microsoft, so their opinions are understandable. And there’s not much you can do about those people — greed will win with them every time. However, a lot of these people who side with Microsoft just don’t understand much at all about the computer industry — but if they did, I’ll bet most of them would then understand why the outcome of this case was so dreadfully wrong. So what we’re going to do here is give you an example in terms that you might be able to better understand — and then ask you just how innocent or guilty you think Microsoft is. It’s story time…..

Let’s say you own several retail stores that sell home entertainment stuff — stereos, TV’s, DVD players, etc. You’re quite successful — business is good, you’re making a good living, your employees are happy, your customers love you — all is well. Then one day the local power company sees how successful you are and decides to get in on the action. So they start selling stereos and TV’s — only they don’t really “sell” them, they just give them away for free! You see, since they have a monopoly on providing electricity in the community, they can just increase the rates ever so slightly in order to cover the costs of giving away the stereos and TV’s. You naturally are upset, but try your best to compete with them — after all the products you sell are much higher quality and the customer service and support you provide is much better as well. And so you are still managing to somehow stay in business, although it’s certainly a struggle and you’re having to let employees go and cut back on your own personal lifestyle. But then the power company still sees you as some kind of threat to them, so they then start making slight changes in the way that electricity goes in to homes so that your equipment no longer works properly, while theirs does. You’re continually having to modify your products so that they work, thus hurting your business and running up your costs even more — until finally, in spite of everything you can do, you’re forced to declare bankruptcy and cease operations. Everything you have invested over the years is gone.

Think this story is far-fetched? Well, it’s not “kinda, sorta like” what Microsoft has done — it’s EXACTLY what Microsoft has done time and time again to their competitors! If this happened to you, would you just take your losses and say “Oh well, that’s just the way free markets work” or would you be mad as hell? Now how do you feel about the Microsoft anti-trust settlement?