Re: How Much Has Bill Overcharged America?

[John Robert BEHRMAN <jbehrman@netropolis.net>]

  This question is best framed as ...
  
       "How much by way of a tax has MS collected from its OEM customers for its
       DOS/Windows product?".
  
  Anti-trust law is based on the notion that merchants are free to profit from
  commerce but that only sovereign governments can lawfully levy or collect taxes,
  especially excise taxes, which are simply what the monopoly rent component of a
  price amounts to. So, the tax-like nature of a monopoly price overcharge goes to
  the question of damages. It is also a question that can be answered with two
  kinds of evidence:
  
       First, expert witnesses -- accountants and engineers -- can say with a high
       degree of certainty what DOS/Windows licenses would have cost if not
       freighted with the costs of other MS software.
  
       Second, the basis for such witnesses' testimony and other interesting
       evidence can be gathered by demanding the production of MS books and using
       FBI and SEC accountants to actually collect evidence, including indications
       of destroying or concealing evidence. The US Government is not the jake-leg
       trial lawyer in <The Rainmaker>. The most telling evidence, more than
       enough to compel a hard settlement, will be the way DOS/Windows royalty is
       booked uniformly but collected catch as catch can.
  
  If MS continues to willingly ship software to non-US OEMs for net royalty
  collections far less than what it actually collects here, then the difference
  would confirm what other evidence would also show: charging whatever the traffic
  will bear. The foreign angle would reveal that MS collects royalty efficiently
  in the US, thanks to our laws and government, but inefficiently and probably not
  at all in some cases, abroad. Nonetheless, it builds market share by investing
  excess royalties from the DOS/Windows monopoly here on foreign or new markets,
  even unprofitable ones.
  
  To be sure, MS has its foreign concession-holders and licensing agreements, but
  the reality is likely to be multi-layered. There is a really intersting case now
  being litigated in South Africa over tobacco firms' practice of having
  high-price, "official" licencees but distributing the bulk of their product
  through smuggling. Outside the US, software is generally available at a very
  high, official price or through goods smuggled in. Much of such smuggling
  originates here in Houston, where probably more software is exported as drilling
  mud additive than as installable or embedded technology.
  
  Apart from the DoJ, the US Government is wholly dedicated to the interests of
  MS. If that sounds like the left of government bureaucracy not knowing what the
  right hand is up to, that would be becuase they usually do not. This is a huge
  problem we have, one that other countries study carefully and exploit fully. I
  would, too, in their place.
  
  In any event, intellectual property -- not intellectual capital, by the way --
  is not really fit for international commerce. Even the world's only two
  superpowers, MS and US, together are very limited in the scope and scale of what
  they can do to collect royalty abroad, especially where (1) the Market Leninism
  of the Red Chinese, (2) the mix of organized crime and pyramid finance that
  passes for capitalism in Japan, (3) the European system of barter, and (4) the
  retro-virus of piracy are in place. Welcome to the real and old world.
  
  So, what thorough analysis of MS books and certain government records would
  reveal, is that not only have mostly Texas OEM firms been paying an MS tax,
  rather than just an efficiently and uniformly priced license fee, but the tax is
  discriminatory: It falls heavily on US firms, lightly on most others, not at all
  on some. That means that the mostly Texas OEM firms have been cross-subsidizing
  their competitors through the agency of MS, through the sheer negligence of the
  US Government, and, of course, through the generally feckless conduct of the
  Attorney General of Texas.
  
  This is a strategy of reverse economic and technological development which is
  fully consistent, however, with maximizing the role of American lawyers in
  international war and commerce. Moreover, from "Bruiser Stone" to "Leo
  Drummond", our legal elite will prosper whether their idiot notions of
  intellectual property succeed or fail, just like both "personal injury" and
  "insurance defense" lawyers are both symbiotes of the policy sales rackets. The
  reality is that intellectual property can only be policed effectively in
  domestic markets. In foreign trade, capital and technology are only subject to
  conventions of war and commerce, not even to sound laws, much less to junk laws
  that corrupt legislatures pass by the page for whosoever will pay them.
  
  This superiority of convention over law is not new, nor is it altogehter a bad
  thing. We have and can continue to do well in the digital trades worldwide owing
  to (1) a huge US domestic market, (2) many fine and unique domestic institutions
  of war and commerce, from our quaint federal government to our old anti-trust
  laws, and (3) the energetic and complex culture of enterprise we have and most
  countries do not. What would be sheer folly, however, would be to suspend all of
  that in a fit of corrupt or romantic deference not so much to Bill Gates, who I
  genuinely like, but to his henchmen, not least, his cereal-box lawyer.
  
  What MS is doing with IE4 on the NT, UNIX and other platforms is what it will
  have to do, DoJ or not, eventually everywhere. But, letting MS get away with
  about a billion of monopoly rent from its DOS/Windows "cash cow" is simply
  criminal, which is to say, qualifies for punative damages under Texas law. The
  monopoly rent is used to cross-subsidize second-rate software or to mask
  "earned" but not "collected" royalties. Moreover, the US Government should act
  swiftly in the interest of MS shareholders, not just MS license-holders great
  and small. The bulk of MS monopoly rent is not distributed as MS dividends. It
  probably destabilizes the company.
  
  Remember, in <The Rainmaker> that when all was said and done, Great Benefit had
  been looted by its own managment. That should not be a great surprise. Such
  "debit insurance" firms were and are bunko. The hypothetical one in Grisham's
  book was located in Ohio, a solid Union state, but peddled its policies in the
  former Confederate states. That is the history of the insurance industry of the
  United States in a nutshell. That such firms prey on poor people, white or
  black, export capital abroad, and are little more than fancy shells for rich
  thieves should not come as a surprise to any Southern patriot. And, please
  recognize that "Leo Drummond" in John Grisham's book was a Southern patriot,
  too, before he became a comfortable and arrogant insurance lawyer. The tragedy
  of Drummond is a theme in Southern literature probably missed by other
  audiences.
  
  It will be a tragedy for us all, Texas especially, if MS gets away with its mix
  of lawyerized bunko and rich-kid vandalism. It is no favor to MS shareholders to
  put up with "marketing innovations" as a substitute for "technology innovation",
  which is what most of them think they are investing in. And, we will end up in
  some sort of "Opium War" over MS royalties.
  
  Who needs that? and PLAYON JRBehrman sends.....
  
  
  charles mueller wrote:
  
  >         Pieter Nagel has raised a super question:  "The majority of consumer
  > software is vastly OVERPRICED."  By how much?
  >
  >         It's a critical question in antitrust.  Monopolies overcharge.
  > Important monopolies overcharge a lot.  The size of the overcharge tells the
  > court how important this particular monopoly is.  If it's small change--de
  > minimis, in legal lingo--don't sweat it.  If it's big bucks, maybe we need
  > to do something about it.
  >
  > <snip>
  
  >        So how much has Bill Gates overcharged America so far?
  
  >         Charles Mueller, Editor
  >         ANTITRUST LAW & ECONOMICS REVIEW
  >         http://webpages.metrolink.net/~cmueller
  >
  >
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