Brad DeLong: Consumer Harm and the Microsoft Case:
Surfing across the web, I was surprised to find Sloan School Dean Richard Schmalensee (in David Evans and Richard Schmalensee (2000), "Be Nice to Your Rivals: How the Government Is Selling an Antitrust Case Without Consumer Harm in United States v. Microsoft," pp. 45-86 in Robert Hahn and Robert Litan, eds., (2000), Did Microsoft Harm Consumers?: Two Opposing Views (Washington: Brookings-AEI: 0844771511)) claim that none of the actions for which Microsoft's is being tried harmed consumers.
Schmalensee and his coauthor David Evans claim that "in United States v. Microsoft the government could not show that Microsoft’s actions had harmed consumers—-or ever would" (p. 45) and that "none of the actions to which the government objects has harmed consumers or is likely to do so" (p. 72). I was surprised. I was surprised because I am a consumer--albeit a small, low-volume one. And I have no doubt that I have been harmed by Microsoft's actions.
One concrete case in which I was harmed by Microsoft came a couple of years ago, when I was adding America Online software to one of our home computers to ready it for the internet. Netscape Navigator--at the time the best internet web browsing program--was not on the AOL installation disk. Why was Navigator not there? Because Microsoft had paid AOL not to distribute it. As Judge Penfield Jackson wrote ("Findings of Fact," ¶ 139), "Microsoft [attained] a commitment from [Internet Service Providers, including AOL]... to inhibit promotion and distribution of Navigator.
I did eventually manage to install Navigator. But I had to download it from Netscape's website. With slow download speeds and a dropped connection or two, this churned up an hour and a half of my time. Evans and Schmalensee claim that Microsoft's conduct to keep Netscape from using "distribution channels" did not harm consumers: "Netscape Navigator was (and is) widely distributed and readily available.... Millions of people downloaded Navigator from Netscape’s Web site or from thousands of other Internet sites..." (pp. 77-78). But I don't see it that way: my hour and a half is gone forever. Microsoft's deal with AOL succeeded in creating significant hassle costs for consumers (like me) who wanted to install Netscape Navigator. And I was harmed by it.
The other concrete case in which I speak from personal experience of consumer harm from Microsoft's conduct comes from my experience as a webmaster. I maintain my rather large website--http://www.j-bradford-delong.net/--which is prominent and substantial enough to have made the Economist newsmagazine's list of the top ten websites worldwide on which to look for information about economics.
If you had asked me four years ago whether by now my website would make substantial use of Sun Microsystems's Java and related technologies, I would have said "of course." But today I make minimal use of Java and Javascript. Why? Because it does not work reliably across platforms. Versions of my web pages that work fine when accessed by Netscape Navigator and its associated Java implementations don't work when accessed by Internet Explorer and Microsoft's JVM. Versions that work fine with Explorer Javascript generate error messages with Navigator Javascript. Whenever I put up a page that uses Java or Javascript, I get a flood of complaining emails because some people find that the page doesn't work right.
Why? Because ("Findings of Fact," ¶ 386-393) Microsoft set out to create versions of Java and related technologies that would be subtly incompatible with the standard reference versions. They succeeded. Thus every time I want to use these technologies on my website, I recognize that it will take me nearly twice as long and twice as much work. So I don't do it.
Thus consumers--my users--are harmed. My website is not as good or as interesting as it could be. It is not as interesting or as informative as it would have been had Microsoft not taken aggressive steps to undermine the portability and cross-platform effectiveness of Java and related technologies.
Evans and Schmalensee appear to claim that Microsoft's "pollution" of Sun's and Netscape's standards did consumers no harm. They say that all Judge Penfield Jackson found was a:
conjecture... that, but for Microsoft’s behavior... Java technologies might have opened the door to competition for PC operating systems in the future... (p. 46).
But they are wrong. My ability to build my website better is compromised now--and has been compromised for years. My users' access to information is harmed now--and has been harmed for years.
Evans and Schmalensee conclude their argument with a flourish:
How could the court have made the sweeping indictment... with so much evidence that Microsoft’s actions have benefited consumers and so little evidence of consumer harm... a company whose major sin was developing better browsing software and including that software at no additional charge in the world’s most popular operating system? (p. 83).
Let me say that in my view I would be better off, and the users of my website would be better off, had Microsoft decided not to contest the market for internet browsers. Internet Explorer is a nice piece of software, given away for free. But whatever positive utility I have derived from Internet Explorer has not made up for the fact that, because of Microsoft, setting up computers for the web and trying to use Java and related technologies to improve my website has become much more of a pain in the @#$.
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