Monday, May 01, 2006

Enshrining the arbitrary

I’ve never understood how antitrust regulators get away with their arbitrary product and market definitions. Consider this report on the Microsoft antirust case in the EU.

On Monday and Tuesday, the panel [the EU Court of First Instance] heard a discussion of the [EU antitrust] Commission finding that Microsoft illegally bundled in its Windows Media player to damage rival makers of streaming audio and video, such as RealNetworks Real Player.

Judge John Cooke, who led the inquiry and will write a draft decision, questioned the reasoning and conclusions of the Commission.

"Is it correct to (say) that Microsoft's action was necessarily abusive?" Cooke asked at one point.

Commission lawyer Per Hellstrom argued that Microsoft should have sold Windows Media Player as a separate program, competing on a level playing field with other streaming audiovisual software such as RealNetworks Real Player.

But Cooke probed the wisdom of that approach.

"The Commission appears to have taken a policy stand that it wants to separate the operating system from the applications market," he said to Hellstrom. [David Lawsky and Sabina Zawadzki, Reuters]
If Microsoft can’t add functionality to its OS, what else does it have left? Nada. Yet for how long has it had to do this dance, and prove that it has a ‘legitimatize’ reason to make its products better, as if profit itself isn’t reason enough?

I think the whole Microsoft case underscores the futility in attempting to debate the arbitrary on its terms. As long as the law allows arbitrary definitions, it can be interpreted to mean anything. Yet when has Microsoft ever made this point in court or with the public? The only possible outcome to such a failure is to let the enemy define his terms, and leave the possibility of those terms being overthrown to whim.

My take: antitrust must be fought on fundamental moral terms first; not to is to leave your firm to the hand of fate.

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