MS, Stan Liebowitz,and Criticism of Network Effects

[James Love <love@cptech.org>]

Last Weeks disclosure (by the LA Times) that Microsoft was preparing a
massive "stealth" pr effort has received a lot of attention in the new
media.  Today's Wall Street Journal adds an interesting bit about
Microsoft's use of Professor Stan Liebowitz, who is frequently quoted in
articles criticizing models of "network effects" or "path dependency" --
theories which are often used by those who argue Microsoft has monopoly
power.  

   jamie

----------
April 13, 1998

Public Relations Strategy Reports
Put Microsoft on the Defensive

By DAVID BANK and JOHN SIMONS
Staff Reporters of THE WALL STREET JOURNAL

A public-relations strategy has turned into a public-relations
embarrassment for Microsoft Corp.

The company has been on the defensive since Friday, when reports
surfaced of a proposal by Microsoft's PR firm in Washington to generate
favorable news articles, op-ed pieces and letters to the editor in many
of the states where Microsoft is under investigation by state attorneys
general for possible antitrust violations. Details of the proposal from
Edelman Public Relations were first reported in the Los Angeles Times.

     [snip]

The proposed media campaign is the latest move in what has become a
heated lobbying campaign by both sides in the Microsoft issue. And
Microsoft isn't alone in seeking to generate the appearance of a
groundswell of public support. Among Washington lobbyists the tactic is
known as "AstroTurf" lobbying, named for its artificial grassroots
appearance.

Microsoft also has used similar tactics in the past. In 1995, Stan
Liebowitz, an economist at the University of Texas, was hired as a
consultant by Microsoft's Washington law firm, Preston Gates. A week
into his work, Mr. Liebowitz said he was asked to produce an op-ed piece
criticizing theories of "path dependency," the notion that consumers are
sometimes "locked in" to a product, even if it is inferior, simply
because its manufacturer holds a dominant position in the marketplace.
The economic theory is often used by Microsoft's opponents as an
explanation for Microsoft's continued dominance of personal computing
standards.

Mr. Liebowitz says he hasn't had a financial relationship with Microsoft
since 1995. For the past several months, he has been on a speaking and
press tour, arranged by Edelman Public Relations, the PR firm that
proposed the broader Microsoft media offensive, but Mr. Liebowitz
insists that he isn't acting on behalf of Microsoft.


    [snip]